[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 29

Labor


________________________

Part 1927 to End

                         Revised as of July 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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[[Page iii]]




                            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                                               241
          Chapter XXV--Employee Benefits Security 
          Administration, Department of Labor                      315
          Chapter XXVII--Federal Mine Safety and Health Review 
          Commission                                               851
          Chapter XL--Pension Benefit Guaranty Corporation         905
  Finding Aids:
      Table of CFR Titles and Chapters........................    1223
      Alphabetical List of Agencies Appearing in the CFR......    1243
      List of CFR Sections Affected...........................    1253

[[Page iv]]


      


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

                     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.

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

[[Page v]]



                               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 
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    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
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EFFECTIVE AND EXPIRATION DATES

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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 
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PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
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``[RESERVED]'' TERMINOLOGY

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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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this volume.

[[Page vii]]

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    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    July 1, 2017.

                                
                                      
                            

  

[[Page ix]]



                               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, part 1900-Sec. 1910.999, part 1910.1000-
end of part 1910, 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, 2017.

    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).

    For this volume, Susannah C. Hurley and Ann Worley were Chief 
Editors. The Code of Federal Regulations publication program is under 
the direction of John Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                             TITLE 29--LABOR




                  (This book contains part 1927 to End)

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

          SUBTITLE B--Regulations Relating to Labor (Continued)

                                                                    Part

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

[[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..........................          39
1952            Approved State plans for enforcement of 
                    State standards.........................          39
1953            Changes to State plans......................          47
1954            Procedures for the evaluation and monitoring 
                    of approved State plans.................          52
1955            Procedures for withdrawal of approval of 
                    State plans.............................          58
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..................          69
1960            Basic program elements for Federal employee 
                    occupational safety and health programs 
                    and related matters.....................          77
1975            Coverage of employers under the Williams-
                    Steiger Occupational Safety and Health 
                    Act of 1970.............................         103
1977            Discrimination against employees exercising 
                    rights under the Williams-Steiger 
                    Occupational Safety and Health Act of 
                    1970....................................         107
1978            Procedures for the handling of retaliation 
                    complaints under the Employee Protection 
                    provision of the Surface Transportation 
                    Assistance Act of 1982 (STAA), as 
                    amended.................................         113
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.................................         122

[[Page 6]]

1980            Procedures for the handling of retaliation 
                    complaints under section 806 of the 
                    Sarbanes-Oxley Act of 2002, as amended..         130
1981            Procedures for the handling of 
                    discrimination complaints under section 
                    6 of the Pipeline Safety Improvement Act 
                    of 2002.................................         139
1982            Procedures for the handling of retaliation 
                    complaints under the National Transit 
                    Systems Security Act and the Federal 
                    Railroad Safety Act.....................         147
1983            Procedures for the handling of retaliation 
                    complaints under section 219 of the 
                    Consumer Product Safety Improvement Act 
                    of 2008.................................         158
1984            Procedures for the handling of retaliation 
                    complaints under section 1558 of the 
                    Affordable Care Act.....................         168
1985            Procedures for handling retaliation 
                    complaints under the Employee Protection 
                    Provision of the Consumer Financial 
                    Protection Act of 2010..................         178
1986            Procedures for the handling of retaliation 
                    complaints under the employee protection 
                    provision of the Seaman's Protection ACT 
                    (SPA), as amended.......................         187
1987            Procedures for handling retaliation 
                    complaints under section 402 of the FDA 
                    Food Safety Modernization Act...........         196
1988            Procedures for handling retaliation 
                    complaints under section 31307 of the 
                    Moving Ahead for Progress in the 21st 
                    Century Act (MAP-21)....................         205
1990            Identification, classification, and 
                    regulation of potential occupational 
                    carcinogens.............................         214
1991-1999       [Reserved]

[[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.
1928.52  Protective frames for wheel-type agricultural tractors--test 
          procedures and performance requirements.
1928.53  Protective enclosures for wheel-type agricultural tractors--
          test procedures and performance requirements.

Appendix A to Subpart C of Part 1928--Employee Operating Instructions
Appendix B to Subpart C of Part 1928--Figures C-1 through C-16

               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: Sections 4, 6, and 8 of the Occupational Safety and 
Health Act of 1970 (29 U.S.C. 653, 655, 657); and Secretary of Labor's 
Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-
90 (55 FR 9033), 6-96 (62 FR 111), 3-2000 (65 FR 50017), 5-2002 (67 FR 
65008), or 4-2010 (75 FR 55355), as applicable; and 29 CFR 1911.
    Section 1928.21 also issued under 49 U.S.C. 1801-1819 and 5 U.S.C. 
533.

    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.

[[Page 8]]

    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.
    (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). ROPS shall be provided 
by the employer for each tractor operated by an employee. Except as 
provided in paragraph (b)(5) of this section, a ROPS used on wheel-type 
tractors shall meet the test and performance requirements of 29 CFR 
1928.52, 1928.53, or 1926.1002 as appropriate. A ROPS used on track-type 
tractors shall meet the test and performance requirements of 29 CFR 
1926.1001.
    (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 
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

[[Page 9]]

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; 69 
FR 18803, Apr. 9, 2004; 70 FR 77003, Dec. 29, 2005]



Sec. 1928.52  Protective frames for wheel-type agricultural tractors
--test procedures and performance requirements.

    (a) Purpose. The purpose of this section is to establish the test 
and performance requirements for a protective frame designed for wheel-
type agricultural tractors to minimize the frequency and severity of 
operator injury resulting from accidental upsets. General requirements 
for the protection of operators are specified in 29 CFR 1928.51.
    (b) Types of tests. All protective frames for wheel-type 
agricultural tractors shall be of a model that has been tested as 
follows:
    (1) Laboratory test. A laboratory energy-absorption test, either 
static or dynamic, under repeatable and controlled loading, to permit 
analysis of the protective frame for compliance with the performance 
requirements of this standard.
    (2) Field-upset test. A field-upset test under controlled 
conditions, both to the side and rear, to verify the effectiveness of 
the protective system under actual dynamic conditions. Such testing may 
be omitted when:
    (i) The analysis of the protective-frame static-energy absorption 
test results indicates that both FERis and FERir 
(as defined in paragraph (d)(2)(ii) of this section) exceed 1.15; or
    (ii) The analysis of the protective-frame dynamic-energy absorption 
test results indicates that the frame can withstand an impact of 15 
percent greater than the impact it is required to withstand for the 
tractor weight as shown in Figure C-7.
    (c) Descriptions--(1) Protective frame. A protective frame is a 
structure comprised of uprights mounted to the tractor, extending above 
the operator's seat. A typical two-post frame is shown in Figure C-1.
    (2) Overhead weather shield. When an overhead weather shield is 
available for attachment to the protective frame, it may be in place 
during tests provided it does not contribute to the strength of the 
protective frame.
    (3) Overhead falling object protection. When an overhead falling-
object protection device is available for attachment to the protective 
frame, it may be in place during tests provided it does not contribute 
to the strength of the protective frame.
    (d) Test procedures--(1) General. (i) The tractor weight used shall 
be that of the heaviest tractor model on which the protective frame is 
to be used.
    (ii) Each test required under this section shall be performed on a 
new protective frame. Mounting connections of the same design shall be 
used during each such test.

[[Page 10]]

    (iii) Instantaneous deflection shall be measured and recorded for 
each segment of the test; see paragraph (e)(1)(i) of this section for 
permissible deflections.
    (iv) The seat-reference point (``SRP'') in Figure C-3 is that point 
where the vertical line that is tangent to the most forward point at the 
longitudinal seat centerline of the seat back, and the horizontal line 
that is tangent to the highest point of the seat cushion, intersect in 
the longitudinal seat section. The seat-reference point shall be 
determined with the seat unloaded and adjusted to the highest and most 
rearward position provided for seated operation of the tractor.
    (v) When the centerline of the seat is off the longitudinal center, 
the frame loading shall be on the side with the least space between the 
centerline of seat and the protective frame.
    (vi) Low-temperature characteristics of the protective frame or its 
material shall be demonstrated as specified in paragraph (e)(1)(ii) of 
this section.
    (vii) Rear input energy tests (static, dynamic, or field-upset) need 
not be performed on frames mounted to tractors having four driven wheels 
and more than one-half their unballasted weight on the front wheels.
    (viii) Accuracy table:

------------------------------------------------------------------------
               Measurements                           Accuracy
------------------------------------------------------------------------
Deflection of the frame, in. (mm).........  5 percent of the deflection
                                             measured.
Vertical weight, lb (kg)..................  5 percent of the weight
                                             measured.
Force applied to the frame, pounds force    5 percent of the force
 (newtons).                                  measured.
Dimensions of the critical zone, in. (mm).  0.5 in. (12.5 mm).
------------------------------------------------------------------------

    (2) Static test procedure. (i) The following test conditions shall 
be met:
    (A) The laboratory mounting base shall be the tractor chassis for 
which the protective frame is designed, or its equivalent;
    (B) The protective frame shall be instrumented with the necessary 
equipment to obtain the required load-deflection data at the locations 
and directions specified in Figures C-2 and C-3; and
    (C) When the protective frame is of a one- or two-upright design, 
mounting connections shall be instrumented with the necessary equipment 
to record the required force to be used in paragraph (d)(2)(iii)(E) and 
(J) of this section. Instrumentation shall be placed on mounting 
connections before installation load is applied.
    (ii) The following definitions shall apply:

W = Tractor weight (see 29 CFR 1928.51(a)) in lb (W in kg);
Eis = Energy input to be absorbed during side loading in ft-lb (Eis in 
          J [joules]);
Eis = 723 + 0.4 W (Eis = 100 + 0.12 W);
Eir = Energy input to be absorbed during rear loading in ft-lb (Eir in 
          J);
Eir = 0.47 W (Eir = 0.14 W);
L = Static load, lbf [pounds force], (N) [newtons];
D = Deflection under L, in. (mm);
L-D = Static load-deflection diagram;
Lmax = Maximum observed static load;
Load Limit = Point on a continuous L-D curve where the observed static 
          load is 0.8 Lmax on the down slope of the curve (see Figure C-
          5);
Eu = Strain energy absorbed by the frame in ft-lb (J); area under the L-
          D curve;
FER = Factor of energy ratio;
FERis = EuEis;
FERir = EuEir;
Pb = Maximum observed force in mounting connection under a static load, 
          L lbf (N);
Pu = Ultimate force capacity of a mounting connection, lbf (N);
FSB = Design margin for a mounting connection; and
FSB = Pu/Pb

    (iii) The test procedures shall be as follows:
    (A) Apply the rear load according to Figure C-3, and record L and D 
simultaneously. Rear-load application shall be distributed uniformly on 
the frame over an area perpendicular to the direction of load 
application, no greater than 160 sq. in. (1,032 sq. cm) in size, with 
the largest dimension no greater than 27 in. (686 mm). The load shall be 
applied to the upper extremity of the frame at the point that is midway 
between the center of the frame and the inside of the frame upright. 
When no structural cross member exists at the rear of the frame, a 
substitute test beam that does not add strength to the frame may be used 
to complete this test procedure. The test shall be stopped when:
    (1) The strain energy absorbed by the frame is equal to or greater 
than the required input energy Eir; or

[[Page 11]]

    (2) Deflection of the frame exceeds the allowable deflection (see 
paragraph (e)(1)(i) of this section); or
    (3) Frame load limit occurs before the allowable deflection is 
reached in rear load (see Figure C-5).
    (B) Using data obtained under paragraph (d)(2)(iii)(A) of this 
section, construct the L-D diagram shown in Figure C-5;
    (C) Calculate Eir;
    (D) Calculate FERir;
    (E) Calculate FSB as required by paragraph (d)(2)(i)(C) of this 
section;
    (F) Apply the side-load tests on the same frame, and record L and D 
simultaneously. Side-load application shall be at the upper extremity of 
the frame at a 90 angle to the centerline of the vehicle. The side load 
shall be applied to the longitudinal side farthest from the point of 
rear-load application. Apply side load L as shown in Figure C-2. The 
test shall be stopped when:
    (1) The strain energy absorbed by the frame is equal to or greater 
than the required input energy Eis; or
    (2) Deflection of the frame exceeds the allowable deflection (see 
paragraph (e)(1)(i) of this section); or
    (3) Frame load limit occurs before the allowable deflection is 
reached in side load (see Figure C-5).
    (G) Using data obtained in paragraph (d)(2)(iii)(F) of this section, 
construct the L-D diagram as shown in Figure C-5;
    (H) Calculate Eis;
    (I) Calculate FERis; and
    (J) Calculate FSB as required by paragraph (d)(2)(i)(C) of this 
section.
    (3) Dynamic test procedure. (i) The following test conditions shall 
be met:
    (A) The protective frame and tractor shall be tested at the weight 
defined by 29 CFR 1928.51(a);
    (B) The dynamic loading shall be accomplished by using a 4,410-lb 
(2,000-kg) weight acting as a pendulum. The impact face of the weight 
shall be 27 1 in. by 27 1 in. (686 25 mm by 686 25 mm), and shall be 
constructed so that its center of gravity is within 1.0 in. (25.4 mm) of 
its geometric center. The weight shall be suspended from a pivot point 
18 to 22 ft (5.5 to 6.7 m) above the point of impact on the frame, and 
shall be conveniently and safely adjustable for height (see Figure C-6);
    (C) For each phase of testing, the tractor shall be restrained from 
moving when the dynamic load is applied. The restraining members shall 
have strength no less than, and elasticity no greater than, that of 
0.50-in. (12.7-mm) steel cable. Points of attachment for the restraining 
members shall be located an appropriate distance behind the rear axle 
and in front of the front axle to provide a 15 to 30 angle between a 
restraining cable and the horizontal. For impact from the rear, the 
restraining cables shall be located in the plane in which the center of 
gravity of the pendulum will swing, or alternatively, two sets of 
symmetrically located cables may be used at lateral locations on the 
tractor. For impact from the side, restraining cables shall be used as 
shown in Figures C-8 and C-9;
    (D) The front and rear wheel-tread settings, when adjustable, shall 
be at the position nearest to halfway between the minimum and maximum 
settings obtainable on the vehicle. When only two settings are 
obtainable, the minimum setting shall be used. The tires shall have no 
liquid ballast, and shall be inflated to the maximum operating pressure 
recommended by the manufacturer. With the specified tire inflation, the 
restraining cable shall be tightened to provide tire deflection of 6 to 
8 percent of the nominal tire-section width. After the vehicle is 
restrained properly, a wooden beam no less than 6-in.  x  6-in. (150-mm 
x  150-mm) in cross section shall be driven tightly against the 
appropriate wheels and clamped. For the test to the side, an additional 
wooden beam shall be placed as a prop against the wheel nearest to the 
operator's station, and shall be secured to the base so that it is held 
tightly against the wheel rim during impact. The length of this beam 
shall be chosen so that it is at an angle of 25 to 40 to the 
horizontal when it is positioned against the wheel rim. It shall have a 
length 20 to 25 times its depth, and a width two to three times its 
depth (see Figures C-8 and C-9);
    (E) Means shall be provided for indicating the maximum instantaneous 
deflection along the line of impact. A simple friction device is 
illustrated in Figure C-4;

[[Page 12]]

    (F) No repairs or adjustments shall be made during the test; and
    (G) When any cables, props, or blocking shift or break during the 
test, the test shall be repeated.
    (ii) H = Vertical height of the center of gravity of a 4,410-lb 
(2,000-kg) weight in in. (H in mm). The weight shall be pulled back so 
that the height of its center of gravity above the point of impact is: H 
= 4.92 + 0.00190 W (H = 125 0.170 W) (see Figure C-7).
    (iii) The test procedures shall be as follows:
    (A) The frame shall be evaluated by imposing dynamic loading from 
the rear, followed by a load to the side on the same frame. The pendulum 
swinging from the height determined by paragraph (d)(3)(ii) of this 
section shall be used to impose the dynamic load. The position of the 
pendulum shall be so selected that the initial point of impact on the 
frame is in line with the arc of travel of the center of gravity of the 
pendulum. When a quick-release mechanism is used, it shall not influence 
the attitude of the block;
    (B) Impact at rear. The tractor shall be restrained properly 
according to paragraphs (d)(3)(i)(C) and (d)(3)(i)(D) of this section. 
The tractor shall be positioned with respect to the pivot point of the 
pendulum so that the pendulum is 20 from the vertical prior to impact 
as shown in Figure C-8. The impact shall be applied to the upper 
extremity of the frame at the point that is midway between the 
centerline of the frame and the inside of the frame upright. When no 
structural cross member exists at the rear of the frame, a substitute 
test beam that does not add to the strength of the frame may be used to 
complete the test procedure; and
    (C) Impact at side. The blocking and restraining shall conform to 
paragraphs (d)(3)(i)(C) and (d)(3)(i)(D) of this section. The center 
point of impact shall be at the upper extremity of the frame at a point 
most likely to hit the ground first, and at a 90 to the centerline of 
the vehicle (see Figure C-9). The side impact shall be applied to the 
longitudinal side farthest from the point of rear impact.
    (4) Field-upset test procedure. (i) The following test conditions 
shall be met:
    (A) The tractor shall be tested at the weight defined in 29 CFR 
1928.51(a);
    (B) The following provisions address soil bank test conditions.
    (1) The test shall be conducted on a dry, firm soil bank. The soil 
in the impact area shall have an average cone index in the 0-in. to 6-
in. (0-mm to 152-mm) layer of not less than 150. Cone index shall be 
determined according to American Society of Agricultural Engineers 
(``ASAE'') recommendation ASAE R313.1-1971 (``Soil cone penetrometer''), 
as reconfirmed in 1975, which is incorporated by reference. The 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The path 
of vehicle travel shall be 12 2 to the top edge of the bank.
    (2) ASAE recommendation R313.1-1971, as reconfirmed in 1975, appears 
in the 1977 Agricultural Engineers Yearbook, or it may be examined at: 
Any OSHA Regional Office; the OSHA Docket Office, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Room N-2625, Washington, DC 20210 
(telephone: (202) 693-2350 (TTY number: (877) 889-5627)); or the 
National Archives and Records Administration (``NARA''). (For 
information on the availability of this material at NARA, telephone 
(202) 741-6030 or access the NARA Web site at http://www.archives.gov/
federal_register/code_of_federal_regulations/ibr_locations.html.) Copies 
may be purchased from the American Society of Agricultural Engineers, 
2950 Niles Road, St. Joseph, MI 49085.
    (C) An 18-in. (457-mm) high ramp (see Figure C-10) shall be used to 
assist in upsetting the vehicle to the side; and
    (D) The front and rear wheel-tread settings, when adjustable, shall 
be at the position nearest to halfway between the minimum and maximum 
settings obtainable on the vehicle. When only two settings are 
obtainable, the minimum setting shall be used.
    (ii) Field upsets shall be induced to the rear and side as follows:
    (A) Rear upset shall be induced by engine power, with the tractor 
operating in gear to obtain 3 to 5 mph (4.8 to 8.0 kph) at maximum 
governed engine rpm by driving forward directly up

[[Page 13]]

a minimum slope of 60 5 as shown in Figure C-11, or by an alternative 
equivalent means. The engine clutch may be used to aid in inducing the 
upset; and
    (B) To induce side upset, the tractor shall be driven under its own 
power along the specified path of travel at a minimum speed of 10 mph 
(16 kph), or at maximum vehicle speed when under 10 mph (16 kph), and 
over the ramp as described in paragraph (d)(4)(i)(C) of this section.
    (e) Performance requirements--(1) General requirements. (i) The 
frame, overhead weather shield, fenders, or other parts in the operator 
area may be deformed in these tests, but shall not shatter or leave 
sharp edges exposed to the operator, or encroach on the dimensions shown 
in Figures C-2 and C-3, and specified as follows:

d = 2 in. (51 mm) inside of the frame upright to the vertical centerline 
          of the seat;
e = 30 in. (762 mm) at the longitudinal centerline;
f = Not greater than 4 in. (102 mm) to the rear edge of the crossbar, 
          measured forward of the seat-reference point (``SRP'');
g = 24 in. (610 mm) minimum; and
m = Not greater than 12 in. (305 mm), measured from the seat-reference 
          point to the forward edge of the crossbar.

    (ii) The protective structure and connecting fasteners must pass the 
static or dynamic tests described in paragraphs (d)(2), (d)(3), or 
(d)(4) of this section at a metal temperature of 0 F (^18 C) or below, 
or exhibit Charpy V-notch impact strengths as follows:

10-mm  x  10-mm (0.394-in.  x  0.394-in.) specimen: 8.0 ft-lb (10.8 J) 
          at ^20 F (^30 C);
10-mm  x  7.5-mm (0.394-in.  x  0.296-in.) specimen: 7.0 ft-lb (9.5 J) 
          at ^20 F (^30 C);
10-mm  x  5-mm (0.394-in.  x  0.197-in.) specimen: 5.5 ft-lb (7.5 J) at 
          ^20 F (^30 C); or
10-mm  x  2.5-mm (0.394-in.  x  0.098-in.) specimen: 4.0 ft-lb (5.5 J) 
          at ^20 F (^30 C).


Specimens shall be longitudinal and taken from flat stock, tubular, or 
structural sections before forming or welding for use in the frame. 
Specimens from tubular or structural sections shall be taken from the 
middle of the side of greatest dimension, not to include welds.
    (2) Static test-performance requirements. In addition to meeting the 
requirements of paragraph (e)(1) of this section for both side and rear 
loads, FERis and FERir, shall be greater than 1.0, and when the ROPS 
contains one or two upright frames only, FSB shall be greater than 1.3.
    (3) Dynamic test-performance requirements. The structural 
requirements shall be met when the dimensions in paragraph (e)(1) of 
this section are used in both side and rear loads.
    (4) Field-upset test performance requirements. The requirements of 
paragraph (e)(1) of this section shall be met for both side and rear 
upsets.

[70 FR 77004, Dec. 29, 2005]



Sec. 1928.53  Protective enclosures for wheel-type agricultural 
tractors--test procedures and performance requirements.

    (a) Purpose. The purpose of this section is to establish the test 
and performance requirements for a protective enclosure designed for 
wheel-type agricultural tractors to minimize the frequency and severity 
of operator injury resulting from accidental upset. General requirements 
for the protection of operators are specified in 29 CFR 1928.51.
    (b) Types of tests. All protective enclosures for wheel-type 
agricultural tractors shall be of a model that has been tested as 
follows:
    (1) Laboratory test. A laboratory energy-absorption test, either 
static or dynamic, under repeatable and controlled loading, to permit 
analysis of the protective enclosure for compliance with the performance 
requirements of this standard; and
    (2) Field-upset test. A field-upset test under controlled 
conditions, both to the side and rear, to verify the effectiveness of 
the protective system under actual dynamic conditions. This test may be 
omitted when:
    (i) The analysis of the protective-frame static-energy absorption 
test results indicates that both FERis and FERir (as defined in 
paragraph (d)(2)(ii) of this section) exceed 1.15; or
    (ii) The analysis of the protective-frame dynamic-energy absorption 
test results indicates that the frame can withstand an impact 15 percent 
greater than the impact it is required to withstand for the tractor 
weight as shown in Figure C-7.
    (c) Description. A protective enclosure is a structure comprising a 
frame and/

[[Page 14]]

or enclosure mounted to the tractor. A typical enclosure is shown in 
Figure C-12.
    (d) Test procedures--(1) General. (i) The tractor weight used shall 
be that of the heaviest tractor model on which the protective enclosure 
is to be used.
    (ii) Each test required under this section shall be performed on a 
protective enclosure with new structural members. Mounting connections 
of the same design shall be used during each test.
    (iii) Instantaneous deflection shall be measured and recorded for 
each segment of the test; see paragraph (e)(1)(i) of this section for 
permissible deflections.
    (iv) The seat-reference point (``SRP'') in Figure C-14 is that point 
where the vertical line that is tangent to the most forward point at the 
longitudinal seat centerline of the seat back, and the horizontal line 
that is tangent to the highest point of the seat cushion, intersect in 
the longitudinal seat section. The seat-reference point shall be 
determined with the seat unloaded and adjusted to the highest and most 
rearward position provided for seated operations of the tractor.
    (v) When the centerline of the seat is off the longitudinal center, 
the protective-enclosure loading shall be on the side with least space 
between the centerline of the seat and the protective enclosure.
    (vi) Low-temperature characteristics of the protective enclosure or 
its material shall be demonstrated as specified in paragraph (e)(1)(ii) 
of this section.
    (vii) Rear input energy tests (static, dynamic, or field-upset) need 
not be performed on enclosures mounted to tractors having four driven 
wheels and more than one-half their unballasted weight on the front 
wheels.
    (viii) Accuracy table:

------------------------------------------------------------------------
               Measurements                           Accuracy
------------------------------------------------------------------------
Deflection of the enclosure, in. (mm).....  5 percent of the deflection
                                             measured.
Vertical weight, pounds (kg)..............  5 percent of the weight
                                             measured.
Force applied to the enclosure, pounds      5 percent of the force
 force (newtons).                            measured.
Dimensions of the critical zone, in. (mm).  0.5 in. (12.5 mm).
------------------------------------------------------------------------

    (ix) When movable or normally removable portions of the enclosure 
add to structural strength, they shall be placed in configurations that 
contribute least to structural strength during the test.
    (2) Static test procedure. (i) The following test conditions shall 
be met:
    (A) The laboratory mounting base shall be the tractor chassis for 
which the protective enclosure is designed, or its equivalent; and
    (B) The protective enclosure shall be instrumented with the 
necessary equipment to obtain the required load-deflection data at the 
locations and directions specified in Figures C-13 and C-14.
    (ii) The following definitions shall apply:

W = Tractor weight (see 29 CFR 1928.51(a)) in lb (W" in kg);
Eis = Energy input to be absorbed during side loading in ft-lb (E"is in 
          J [joules]);
Eis = 723 + 0.4 W (E"is = 100 + 0.12 W");
Eir = Energy input to be absorbed during rear loading in ft-lb (E"ir in 
          J);
Eir = 0.47 W (E"ir = 0.14 W");
L = Static load, lbf [pounds force], (N) [newtons];
D = Deflection under L, in. (mm);
L-D = Static load-deflection diagram;
Lmax = Maximum observed static load;
Load Limit = Point on a continuous L-D curve where the observed static 
          load is 0.8 Lmax on the down slope of the curve (see Figure C-
          5);
Eu = Strain energy absorbed by the protective enclosure in ft-lbs (J); 
          area under the L-D curve;
FER = Factor of energy ratio;
FERis = Eu/Eis; and
FERir = Eu/Eir.

    (iii) The test procedures shall be as follows:
    (A) When the protective-frame structures are not an integral part of 
the enclosure, the direction and point of load application for both side 
and rear shall be the same as specified in 29 CFR 1928.52(d)(2);
    (B) When the protective-frame structures are an integral part of the 
enclosure, apply the rear load according to Figure C-14, and record L 
and D simultaneously. Rear-load application shall be distributed 
uniformly on the frame structure over an area perpendicular to the load 
application, no greater than 160 sq. in. (1,032 sq. cm) in size, with 
the largest dimension no greater than 27

[[Page 15]]

in. (686 mm). The load shall be applied to the upper extremity of the 
structure at the point that is midway between the centerline of the 
protective enclosure and the inside of the protective structure. When no 
structural cross member exists at the rear of the enclosure, a 
substitute test beam that does not add strength to the structure may be 
used to complete this test procedure. The test shall be stopped when:
    (1) The strain energy absorbed by the structure is equal to or 
greater than the required input energy Eir; or
    (2) Deflection of the structure exceeds the allowable deflection 
(see paragraph (e)(1)(i) of this section); or
    (3) The structure load limit occurs before the allowable deflection 
is reached in rear load (see Figure C-5);
    (C) Using data obtained in paragraph (d)(2)(iii)(B) of this section, 
construct the L-D diagram for rear loads as shown in Figure C-5;
    (D) Calculate Eir;
    (E) Calculate FERir;
    (F) When the protective-frame structures are an integral part of the 
enclosure, apply the side load according to Figure C-13, and record L 
and D simultaneously. Static side-load application shall be distributed 
uniformly on the frame over an area perpendicular to the direction of 
load application, and no greater than 160 sq. in. (1,032 sq. cm) in 
size, with the largest dimension no greater than 27 in. (686 mm). Side-
load application shall be at a 90 angle to the centerline of the 
vehicle. The center of the side-load application shall be located 
between point k, 24 in. (610 mm) forward of the seat-reference point, 
and point l, 12 in. (305 mm) rearward of the seat-reference point, to 
best use the structural strength (see Figure C-13). This side load shall 
be applied to the longitudinal side farthest from the point of rear-load 
application. The test shall be stopped when:
    (1) The strain energy absorbed by the structure is equal to or 
greater than the required input energy Eis; or
    (2) Deflection of the structure exceeds the allowable deflection 
(see paragraph (e)(1)(i) of this section); or
    (3) The structure load limit occurs before the allowable deflection 
is reached in side load (see Figure C-5);
    (G) Using data obtained in paragraph (d)(2)(iii)(F) of this section, 
construct the L-D diagram for the side load as shown in Figure C-5;
    (H) Calculate FERis; and
    (I) Calculate FERir.
    (3) Dynamic test procedure. (i) The following test conditions shall 
be met:
    (A) The protective enclosure and tractor shall be tested at the 
weight defined by 29 CFR 1928.51(a);
    (B) The dynamic loading shall be accomplished by using a 4,410-lb 
(2,000-kg) weight acting as a pendulum. The impact face of the weight 
shall be 27 1 in. by 27 1 in. (686 25 mm by 686 25 mm), and shall be 
constructed so that its center of gravity is within 1.0 in. (25.4 mm) of 
its geometric center. The weight shall be suspended from a pivot point 
18 to 22 ft (5.5 to 6.7 m) above the point of impact on the enclosure, 
and shall be conveniently and safely adjustable for height (see Figure 
C-6);
    (C) For each phase of testing, the tractor shall be restrained from 
moving when the dynamic load is applied. The restraining members shall 
have strength no less than, and elasticity no greater than, that of 
0.50-in. (12.7-mm) steel cable. Points of attachment for the restraining 
members shall be located an appropriate distance behind the rear axle 
and in front of the front axle to provide a 15 to 30 angle between the 
restraining cable and the horizontal. For impact from the rear, the 
restraining cables shall be located in the plane in which the center of 
gravity of the pendulum will swing, or alternatively, two sets of 
symmetrically located cables may be used at lateral locations on the 
tractor. For the impact from the side, restraining cables shall be used 
as shown in Figures C-15 and C-16;
    (D) The front and rear wheel-tread settings, when adjustable, shall 
be at the position nearest to halfway between the minimum and maximum 
settings obtainable on the vehicle. When only two settings are 
obtainable, the minimum setting shall be used. The tires shall have no 
liquid ballast, and shall be inflated to the maximum operating pressure 
recommended by the manufacturer. With specified tire inflation, the 
restraining cable shall be tightened to provide tire deflection of 6

[[Page 16]]

to 8 percent of nominal tire section width. After the vehicle is 
retrained properly, a wooden beam no smaller than 6-in.  x  6-in. (150-
mm  x  150-mm) cross-section shall be driven tightly against the 
appropriate wheels and clamped. For the test to the side, an additional 
wooden beam shall be placed as a prop against the wheel nearest the 
operator's station, and shall be secured to the base so that it is held 
tightly against the wheel rim during impact. The length of this beam 
shall be chosen so that it is at an angle of 25 to 40 to the 
horizontal when it is positioned against the wheel rim. It shall have a 
length 20 to 25 times its depth, and a width two to three times its 
depth (see Figures C-15 and C-16);
    (E) Means shall be provided for indicating the maximum instantaneous 
deflection along the line of impact. A simple friction device is 
illustrated in Figure C-4;
    (F) No repair or adjustments shall be made during the test; and
    (G) When any cables, props, or blocking shift or break during the 
test, the test shall be repeated.
    (ii) H = Vertical height of the center of gravity of a 4,410-lb 
(2,000-kg) weight in in. (H in mm). The weight shall be pulled back so 
that the height of its center of gravity above the point of impact is: H 
= 4.92 + 0.00190 W (H = 125 + 0.107 W) (see Figure C-7).
    (iii) The test procedures shall be as follows:
    (A) The enclosure structure shall be evaluated by imposing dynamic 
loading from the rear, followed by a load to the side on the same 
enclosure structure. The pendulum swinging from the height determined by 
paragraph (d)(3)(ii) of this section shall be used to impose the dynamic 
load. The position of the pendulum shall be so selected that the initial 
point of impact on the protective structure is in line with the arc of 
travel of the center of gravity of the pendulum. When a quick-release 
mechanism is used, it shall not influence the attitude of the block;
    (B) Impact at rear. The tractor shall be restrained properly 
according to paragraphs (d)(3)(i)(C) and (d)(3)(i)(D) of this section. 
The tractor shall be positioned with respect to the pivot point of the 
pendulum so that the pendulum is 20 from the vertical prior to impact 
as shown in Figure C-15. The impact shall be applied to the upper 
extremity of the enclosure structure at the point that is midway between 
the centerline of the enclosure structure and the inside of the 
protective structure. When no structural cross member exists at the rear 
of the enclosure structure, a substitute test beam that does not add to 
the strength of the structure may be used to complete the test 
procedure; and
    (C) Impact at side. The blocking and restraining shall conform to 
paragraphs (d)(3)(i)(C) and (d)(3)(i)(D) of this section. The center 
point of impact shall be at the upper extremity of the enclosure at a 
90 angle to the centerline of the vehicle, and located between a point 
k, 24 in. (610 mm) forward of the seat-reference point, and a point l, 
12 in. (305 mm) rearward of the seat-reference point, to best use the 
structural strength (see Figure C-13). The side impact shall be applied 
to the longitudinal side farthest from the point of rear impact.
    (4) Field-upset test procedure. (i) The following test conditions 
shall be met:
    (A) The tractor shall be tested at the weight defined in 29 CFR 
1928.51(a);
    (B) The following provisions address soil bank test conditions.
    (1) The test shall be conducted on a dry, firm soil bank. The soil 
in the impact area shall have an average cone index in the 0-in. to 6-
in. (0-mm to 152-mm) layer of not less than 150. Cone index shall be 
determined according to American Society of Agricultural Engineers 
(``ASAE'') recommendation ASAE R313.1-1971 (``Soil cone penetrometer''), 
as reconfirmed in 1975, which is incorporated by reference. The 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. The path 
of vehicle travel shall be 12 2 to the top edge of the bank.
    (2) ASAE recommendation R313.1-1971, as reconfirmed in 1975, appears 
in the 1977 Agricultural Engineers Yearbook, or it may be examined at: 
Any OSHA Regional Office; the OSHA Docket Office, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Room

[[Page 17]]

N-2625, Washington, DC 20210 (telephone: (202) 693-2350 (TTY number: 
(877) 889-5627)); or the National Archives and Records Administration 
(``NARA''). (For information on the availability of this material at 
NARA, telephone (202) 741-6030 or access the NARA Web site at http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.) Copies may be purchased from the American Society 
of Agricultural Engineers 2950 Niles Road, St. Joseph, MI 49085.
    (C) An 18-in. (457 mm) high ramp (see Figure C-10) shall be used to 
assist in upsetting the vehicle to the side; and
    (D) The front and rear wheel-tread settings, when adjustable, shall 
be at the position nearest to halfway between the minimum and maximum 
settings obtainable on the vehicle. When only two settings are 
obtainable, the minimum setting shall be used.
    (ii) Field upsets shall be induced to the rear and side.
    (A) Rear upset shall be induced by engine power, with the tractor 
operating in gear to obtain 3 to 5 mph (4.8 to 8.0 kph) at maximum 
governed engine rpm by driving forward directly up a minimum slope of 
60 5 as shown in Figure C-11, or by an alternate equivalent means. 
The engine clutch may be used to aid in inducing the upset; and
    (B) To induce side upset, the tractor shall be driven under its own 
power along the specified path of travel at a minimum speed of 10 mph 
(16 kph), or at maximum vehicle speed when under 10 mph (16 kph), and 
over the ramp as described in paragraph (d)(4)(i)(C) of this section.
    (e) Performance requirements--(1) General requirements. (i) The 
protective enclosure structural members or other parts in the operator 
area may be deformed in these tests, but shall not shatter or leave 
sharp edges exposed to the operator. They shall not encroach on a 
transverse plane passing through points d and f within the projected 
area defined by dimensions d, e, and g, or on the dimensions shown in 
Figures C-13 and C-14, as follows:

d = 2 in. (51 mm) inside of the protective structure to the vertical 
          centerline of the seat;
e = 30 in. (762 mm) at the longitudinal centerline;
f = Not greater than 4 in. (102 mm) measured forward of the seat-
          reference point (``SRP'') at the longitudinal centerline as 
          shown in Figure C-14;
g = 24 in. (610 mm) minimum;
h = 17.5 in. (445 mm) minimum; and
j = 2.0 in. (51 mm) measured from the outer periphery of the steering 
          wheel.

    (ii) The protective structure and connecting fasteners must pass the 
static or dynamic tests described in paragraphs (d)(2), (d)(3), or 
(d)(4) of this section at a metal temperature of 0 F (^8 C) or below, 
or exhibit Charpy V-notch impact strengths as follows:

10-mm  x  10-mm (0.394-in.  x  0.394-in.) specimen: 8.0 ft-lb (10.8 J) 
          at ^20 F (^30 C);
10-mm  x  7.5-mm (0.394-in.  x  0.296-in.) specimen: 7.0 ft-lb (9.5 J) 
          at ^20 F (^30 C);
10-mm  x  5-mm (0.394-in.  x  0.197-in.) specimen: 5.5 ft-lb (7.5 J) at 
          ^20 F (^30 C); or
10-mm  x  2.5-mm (0.394-in.  x  0.098-in.) specimen: 4.0 ft-lb (5.5 J) 
          at ^20 F (^30 C).

    Specimens shall be longitudinal and taken from flat stock, tubular, 
or structural sections before forming or welding for use in the 
protective enclosure. Specimens from tubular or structural sections 
shall be taken from the middle of the side of greatest dimension, not to 
include welds.
    (iii) The following provisions address glazing requirements.
    (A) Glazing shall conform to the requirements contained in Society 
of Automotive Engineers (``SAE'') standard J674-1963 (``Safety glazing 
materials''), which is incorporated by reference. The incorporation by 
reference was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51.
    (B) SAE standard J674-1963 appears in the 1965 SAE Handbook, or it 
may be examined at: any OSHA Regional Office; the OSHA Docket Office, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-2625, 
Washington, DC 20210 (telephone: (202) 693-2350 (TTY number: (877) 889-
5627)); or the National Archives and Records Administration (``NARA''). 
(For information on the availability of this material at NARA, telephone 
(202) 741-6030 or access the NARA Web site at http://www.archives.gov/
federal_register/code_of_federal_regulations/ibr_locations.html.) Copies 
may be purchased from the Society of Automotive

[[Page 18]]

Engineers, 400 Commonwealth Drive, Warrendale, Pennsylvania 15096-0001.
    (iv) Two or more operator exits shall be provided and positioned to 
avoid the possibility of both being blocked by the same accident.
    (2) Static test-performance requirements. In addition to meeting the 
requirements of paragraph (e)(1) of this section for both side and rear 
loads, FERis and FER ir shall be greater than 1.0.
    (3) Dynamic test-performance requirements. The structural 
requirements shall be met when the dimensions in paragraph (e)(1) of 
this section are used in both side and rear loads.
    (4) Field-upset test performance requirements. The requirements of 
paragraph (e)(1) of this section shall be met for both side and rear 
upsets.

[70 FR 77004, Dec. 29, 2005, as amended at 71 FR 41145, July 20, 2006]



     Sec. 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.



   Sec. Appendix B to Subpart C of Part 1928--Figures C-1 through C-16
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[[Page 33]]



[71 FR 41146, July 20, 2006]



               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 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

[[Page 34]]

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 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

[[Page 35]]

    (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.
    (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.

[[Page 36]]

    (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 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 \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

[[Page 37]]

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 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 Primary Drinking Water Regulations (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

[[Page 38]]

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 
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, as amended at 76 FR 33612, June 8, 2011]

Subparts J-L [Reserved]

[[Page 39]]



                      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 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_List of Approved State Plans for Private-Sector and State and 
                       Local Government Employees

Sec.
1952.1  South Carolina.
1952.2  Oregon.
1952.3  Utah.
1952.4  Washington.
1952.5  North Carolina.

[[Page 40]]

1952.6  Iowa.
1952.7  California.
1952.8  Minnesota.
1952.9  Maryland.
1952.10  Tennessee.
1952.11  Kentucky.
1952.12  Alaska.
1952.13  Michigan.
1952.14  Vermont.
1952.15  Nevada.
1952.16  Hawaii.
1952.17  Indiana.
1952.18  Wyoming.
1952.19  Arizona.
1952.20  New Mexico.
1952.21  Virginia.
1952.22  Puerto Rico.

 Subpart B_List of Approved State Plans for State and Local Government 
                                Employees

1952.23  Connecticut.
1952.24  New York.
1952.25  New Jersey.
1952.26  The Virgin Islands.
1952.27  Illinois.
1952.28  Maine.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); 29 CFR part 1902; 
Secretary of Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012).



Subpart A_List of Approved State Plans for Private-Sector and State and 
                       Local Government Employees



Sec. 1952.1  South Carolina.

    (a) The South Carolina State plan received initial approval on 
December 6, 1972.
    (b) The South Carolina State plan received final approval on 
December 18, 1987.
    (c) Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance officer 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 
staffing 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/south_carolina.html.



Sec. 1952.2  Oregon.

    (a) The Oregon State plan received initial approval on December 28, 
1972.
    (b) The Oregon State plan received final approval on May 12, 2005.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/oregon.html.



Sec. 1952.3  Utah.

    (a) The Utah State plan received initial approval on January 10, 
1973.
    (b) The Utah State plan received final approval on July 16, 1985.
    (c) 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,

[[Page 41]]

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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/utah.html.



Sec. 1952.4  Washington.

    (a) The Washington State plan received initial approval on January 
26, 1973.
    (b) OSHA entered into an operational status agreement with 
Washington.
    (c) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/washington.html.



Sec. 1952.5  North Carolina.

    (a) The North Carolina State plan received initial approval on 
February 1, 1973.
    (b) The North Carolina State plan received final approval on 
December 18, 1996.
    (c) 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 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/north_carolina.html.



Sec. 1952.6  Iowa.

    (a) The Iowa State plan received initial approval on July 20, 1973.
    (b) The Iowa State plan received final approval on July 2, 1985.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/iowa.html.



Sec. 1952.7  California.

    (a) The California State plan received initial approval on May 1, 
1973.
    (b) OSHA entered into an operational status agreement with 
California.

[[Page 42]]

    (c) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/california.html.



Sec. 1952.8  Minnesota.

    (a) The Minnesota State plan received initial approval on June 8, 
1973.
    (b) The Minnesota State plan received final approval on July 30, 
1985.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/minnesota.html.



Sec. 1952.9  Maryland.

    (a) The Maryland State plan received initial approval on July 5, 
1973.
    (b) The Maryland State plan received final approval on July 18, 
1985.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/maryland.html.



Sec. 1952.10  Tennessee.

    (a) The Tennessee State plan received initial approval on July 5, 
1973.
    (b) The Tennessee State plan received final approval on July 22, 
1985.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/tennessee.html.



Sec. 1952.11  Kentucky.

    (a) The Kentucky State plan received initial approval on July 31, 
1973.
    (b) The Kentucky State plan received final approval on June 13, 
1985.
    (c) 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

[[Page 43]]

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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/kentucky.html.



Sec. 1952.12  Alaska.

    (a) The Alaska State plan received initial approval on August 10, 
1973.
    (b) The Alaska State plan received final approval on September 28, 
1984.
    (c) 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. Alaska's compliance staffing 
benchmarks are 4 safety and 5 health compliance officers.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/alaska.html.



Sec. 1952.13  Michigan.

    (a) The Michigan State plan received initial approval on October 3, 
1973.
    (b) OSHA entered into an operational status agreement with Michigan.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
https://www.osha.gov/dcsp/osp/stateprogs/michigan.html.



Sec. 1952.14  Vermont.

    (a) The Vermont State plan received initial approval on October 16, 
1973.
    (b) OSHA entered into an operational status agreement with Vermont.
    (c) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/vermont.html.



Sec. 1952.15  Nevada.

    (a) The Nevada State plan received initial approval on January 4, 
1974.
    (b) The Nevada State plan received final approval on April 18, 2000.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions

[[Page 44]]

and for additional details about the plan, please visit http://
www.osha.gov/dcsp/osp/stateprogs/nevada.html.



Sec. 1952.16  Hawaii.

    (a) The Hawaii State plan received initial approval on January 4, 
1974.
    (b) The Hawaii State plan received final approval on May 4, 1984.
    (c) On September 21, 2012 OSHA modified the State Plan's approval 
status from final approval to initial approval, and reinstated 
concurrent federal enforcement authority pending the necessary 
corrective action by the State Plan in order to once again meet the 
criteria for a final approval determination. OSHA and Hawaii entered 
into an operational status agreement to provide a workable division of 
enforcement responsibilities.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/hawaii.html.



Sec. 1952.17  Indiana.

    (a) The Indiana State plan received initial approval on March 6, 
1974.
    (b) The Indiana State plan received final approval on September 26, 
1986.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/indiana.html.



Sec. 1952.18  Wyoming.

    (a) The Wyoming State plan received initial approval on May 3, 1974.
    (b) The Wyoming State plan received final approval on June 27, 1985.
    (c) 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 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on June 27, 1985.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/wyoming.html.



Sec. 1952.19  Arizona.

    (a) The Arizona State plan received initial approval on November 5, 
1974.
    (b) The Arizona State plan received final approval on June 20, 1985.
    (c) 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.

[[Page 45]]

    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/arizona.html.



Sec. 1952.20  New Mexico.

    (a) The New Mexico State plan received initial approval on December 
10, 1975.
    (b) OSHA entered into an operational status agreement with New 
Mexico.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/new_mexico.html.



Sec. 1952.21  Virginia.

    (a) The Virginia State plan received initial approval on September 
28, 1976.
    (b) The Virginia State plan received final approval on November 30, 
1988.
    (c) 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.
    (d) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/virginia.html.



Sec. 1952.22  Puerto Rico.

    (a) The Puerto Rico State plan received initial approval on August 
30, 1977.
    (b) OSHA entered into an operational status agreement with Puerto 
Rico.
    (c) The plan covers all private-sector employers and employees, with 
several notable exceptions, as well as State and local government 
employers and employees, within the State. For current information on 
these exceptions and for additional details about the plan, please visit 
http://www.osha.gov/dcsp/osp/stateprogs/puerto_rico.html.



 Subpart B_List of Approved State Plans for State and Local Government 
                                Employees



Sec. 1952.23  Connecticut.

    (a) The Connecticut State plan for State and local government 
employees received initial approval from the Assistant Secretary on 
November 3, 1978.
    (b) 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.
    (c) The plan only covers State and local government employers and 
employees within the State. For additional details about the plan, 
please

[[Page 46]]

visit http://www.osha.gov/dcsp/osp/stateprogs/connecticut.html.



Sec. 1952.24  New York.

    (a) The New York State plan for State and local government employees 
received initial approval from the Assistant Secretary on June 1, 1984.
    (b) The plan, as revised on April 28, 2006, provides assurances of a 
fully trained, adequate staff, including 29 safety and 21 health 
compliance officers for enforcement inspections and 11 safety and 9 
health consultants to perform consultation services in the public 
sector. The State has also given satisfactory assurances of continued 
adequate funding to support the plan.
    (c) The plan only covers State and local government employers and 
employees within the State. For additional details about the plan, 
please visit http://www.osha.gov/dcsp/osp/stateprogs/new_york.html.



Sec. 1952.25  New Jersey.

    (a) The New Jersey State plan for State and local government 
employees received initial approval from the Assistant Secretary on 
January 11, 2001.
    (b) 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.
    (c) The plan only covers State and local government employers and 
employees within the State. For additional details about the plan, 
please visit http://www.osha.gov/dcsp/osp/stateprogs/new_jersey.html.



Sec. 1952.26  The Virgin Islands.

    (a) The Virgin Islands State plan for Public Employees Only was 
approved on July 23, 2003.
    (b) The plan only covers State and local government employers and 
employees within the State. For additional details about the plan, 
please visit http://www.osha.gov/dcsp/osp/stateprogs/
virgin_islands.html.



Sec. 1952.27  Illinois.

    (a) The Illinois State plan for state and local government employees 
received initial approval from the Assistant Secretary on September 1, 
2009.
    (b) The Plan further provides assurances of a fully trained, 
adequate staff within three years of plan approval, including 11 safety 
and 3 health compliance officers for enforcement inspections, and 3 
safety and 2 health consultants to perform consultation services in the 
public sector. 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.
    (c) The plan only covers State and local government employers and 
employees within the state. For additional details about the plan, 
please visit http://www.osha.gov/dcsp/osp/stateprogs/illinois.html.



Sec. 1952.28  Maine.

    (a) The Maine State Plan for State and local government employees 
received initial approval from the Assistant Secretary on August 5, 
2015.
    (b) The Plan further provides assurances of a fully trained, 
adequate staff within three years of plan approval, including 2 safety 
and 1 health compliance officers for enforcement inspections, and 3 
safety and 1 health consultants to perform consultation services in the 
public sector. 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.
    (c) The plan only covers State and local government employers and 
employees within the State. For additional details about the plan, 
please

[[Page 47]]

visit https://www.osha.gov/dcsp/osp/stateprogs/maine.html.

[81 FR 6178, Feb. 5, 2016]



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.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); Secretary of 
Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012).

    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 Secs. 1902.3 and 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.

[[Page 48]]

    (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 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. The underlying documentation for 
identical plan changes shall be maintained by the State. 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

[[Page 49]]

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

[67 FR 60125, Sept. 25, 2002, as amended at 80 FR 49908, Aug. 18, 2015]



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

[[Page 50]]

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 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

[[Page 51]]

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 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

[[Page 52]]

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.
    (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. 1-2012 (77 FR 3912, Jan. 25, 2012).

    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

[[Page 53]]

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.''
    (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

[[Page 54]]

determine whether or not the plan approval should be continued or 
withdrawn.
    (e) The State program performance monitoring system provides for, 
but is 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

[[Page 55]]

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 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. 1902.9 of this chapter.
    (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

[[Page 56]]

and reporting requirements of an approved State plan as provided in 
Sec. 1902.7 of this chapter.
    (2) [Reserved]
    (e) Discrimination complaints. State plan provisions on employee 
discrimination do not divest the Secretary of Labor of any authority 
under section 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; 80 FR 49908, Aug. 18, 2015]



     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 57]]



     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 58]]

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: Secs. 8 and 18, 84 Stat. 1608 (29 U.S.C. 657, 667); 
Secretary of Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012).

    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. 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 59]]

    (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; 
80 FR 49908, Aug. 18, 2015]



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 60]]

    (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 61]]

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 62]]

    (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 63]]

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 64]]

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 65]]

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

[[Page 66]]

part, but generally before the preliminary conference, if any, a party 
may 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 67]]

    (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 68]]

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 69]]

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]

    Authority: Section 18 (29 U.S.C. 667), 29 CFR parts 1902 and 1955, 
and Secretary of Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012).

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

[[Page 70]]



                            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 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

[[Page 71]]

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 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

[[Page 72]]

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, 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

[[Page 73]]

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 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

[[Page 74]]

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 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

[[Page 75]]

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.
    (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,

[[Page 76]]

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 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]

[[Page 77]]



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.
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  Federal agency certification of the injury and illness annual 
          summary (OSHA 300-A or equivalent).
1960.68  Prohibition against discrimination.
1960.69  Retention and updating of old forms.
1960.70  Reporting of serious accidents.
1960.71  Agency annual reports.
1960.72  Reporting Federal Agency Injury and Illness Information.
1960.73  Federal agency injury and illness recordkeeping forms.
1960.74  [Reserved]

 Subpart J_Evaluation 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.

[[Page 78]]



                            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 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

[[Page 79]]

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 of 
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 does not include 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 
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


[[Page 80]]


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) Injury or illness. An injury or illness is an abnormal condition 
or disorder. Injuries include cases such as, but not limited to, a cut, 
fracture, sprain, or amputation. Illness includes both acute and chronic 
illnesses, such as, but not limited to, a skin disease, respiratory 
disorder, or poisoning.
    (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; 69 FR 68804, Nov. 26, 
2004; 78 FR 47190, Aug. 5, 2013]



                        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

[[Page 81]]

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:
    (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 all relevant Office of Management and Budget regulations 
and 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.

[45 FR 69798, Oct. 21, 1980, as amended at 78 FR 47190, Aug. 5, 2013]



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.

[[Page 82]]

    (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 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

[[Page 83]]

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 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 
threshold 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

[[Page 84]]

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.



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.

[[Page 85]]

    (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.
    (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.

[[Page 86]]

    (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
    (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

[[Page 87]]

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 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

[[Page 88]]

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 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 three 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.

[45 FR 69798, Oct. 21, 1980, as amended at 69 FR 68804, Nov. 26, 2004]



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

[[Page 89]]

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.
    (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.
    (f) The procedures OSHA will use to verify Federal agency abatement 
are included in the private sector guidelines at 29 CFR 1903.19.

[45 FR 69798, Oct. 21, 1980, as amended at 78 FR 47190, Aug. 5, 2013]



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

[[Page 90]]

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
    (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

[[Page 91]]

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 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.

[[Page 92]]

    (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 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

[[Page 93]]

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 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

[[Page 94]]

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
    (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

[[Page 95]]

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 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.

[[Page 96]]



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.



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: 69 FR 68804, Nov. 26, 2004, unless otherwise noted.



Sec. 1960.66  Purpose, scope and general provisions.

    (a) The purpose of this subpart is to establish uniform requirements 
for collecting and compiling 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.
    (b) Except as modified by this subpart, Federal agency injury and 
illness recording and reporting requirements shall comply with the 
requirements under 29 CFR part 1904, subparts C, D, E, and G, except 
that the definition of ``establishment'' found in 29 CFR 1960.2(h) will 
remain applicable to Federal agencies.
    (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 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 recordkeeping and 
reporting forms provided by the Department of Labor. Because of the 
unique nature of the national recordkeeping program, Federal

[[Page 97]]

agencies must have recording and reporting requirements that are the 
same as 29 CFR part 1904 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 used by any 
Federal agency may be more stringent than, or supplemental to, the 
requirements of 29 CFR part 1904, but must not interfere with the 
agency's ability to provide the injury and illness information required 
by 29 CFR part 1904.
    (e) 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.

    Note to Sec. 1960.66: The recording or reporting of a work-related 
injury, illness or fatality does not constitute an admission that the 
Federal agency, or other individual was at fault or otherwise 
responsible for purposes of liability. Such recording or reporting does 
not constitute an admission of the existence of an employer/employee 
relationship between the individual recording the injury and the injured 
individual. The recording or reporting of any such injury, illness or 
fatality does not mean that an OSHA rule has been violated or that the 
individual in question is eligible for workers' compensation or any 
other benefits. The requirements of this part do not diminish or modify 
in any way a Federal agency's responsibilities to report or record 
injuries and illnesses as required by the Office of Workers' 
Compensation Programs under the Federal Employees' Compensation Act 
(FECA), 5 U.S.C. 8101 et seq.
    (f) Retention and access of employee exposure and medical records 
shall be in accordance with 29 CFR 1910.1020.

[69 FR 68804, Nov. 26, 2004, as amended at 78 FR 47190, Aug. 5, 2013]



Sec. 1960.67  Federal agency certification of the injury and illness
annual summary (OSHA 300-A or equivalent).

    As required by 29 CFR 1904.32, a company executive must certify that 
he or she has examined the OSHA 300 Log and that he or she believes, 
based on his or her knowledge of the process by which the information 
was recorded, that the annual summary is correct and complete. For 
Federal establishments, the person who performs the certification shall 
be one of the following:
    (a) The senior establishment management official,
    (b) The head of the Agency for which the senior establishment 
management official works, or
    (c) Any management official who is in the direct chain of command 
between the senior establishment management official and the head of the 
Agency.

    Note to Sec. 1960.67: The requirement for certification of Federal 
agency injury and illness records in this section is necessary because 
the private sector position titles contained in 29 CFR part 1904 do not 
fit the Federal agency position titles for agency executives. The 
Federal officials listed in this section are intended to be the 
equivalent of the private sector officials who are required to certify 
records under Sec. 1904.32(b)(4).



Sec. 1960.68  Prohibition against discrimination.

    Section 1904.36 of this chapter refers to Section 11(c) of the 
Occupational Safety and Health Act. For Federal agencies, the words 
``Section 11(c)'' shall be read as ``Executive Order 12196 Section 1-
201(f).''

    Note to Sec. 1960.68: Section 11(c) of the Occupational Safety and 
Health Act only applies to private sector employers and the U.S. Postal 
Service. The corresponding prohibitions against discrimination 
applicable to Federal employers are contained in Section 1-201(f) of 
Executive Order 12196, 45 FR 12769, 3 CFR, 1980 Comp. p. 145.



Sec. 1960.69  Retention and updating of old forms.

    Federal agencies must retain copies of the recordkeeping records 
utilized under the system in effect prior to January 1, 2005 for five 
years following the year to which they relate and continue to provide 
access to the data as though these forms were the OSHA Form 300 Log and 
Form 301 Incident Report. Agencies are not required to update the old 
forms.

[[Page 98]]



Sec. 1960.70  Reporting of serious accidents.

    Agencies must 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 named and location, and consequences, description of 
operation and the accident, causal factors, applicable standards and 
their effectiveness, and agency corrective/preventive actions.

    Note to Sec. 1960.70: The requirements of this section are in 
addition to the requirements for reporting fatalities and multiple 
hospitalization incidents to OSHA under 29 CFR 1904.39.



Sec. 1960.71  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 must submit to the Secretary by May 1 of each year a 
report describing the agency's occupational safety and health program of 
the previous calendar year and objectives for the current fiscal year. 
The report shall include a summary of the agency's self-evaluation 
finding as required by Sec. 1960.78(b).
    (2) The Secretary must provide the agencies with the guidelines and 
format for the reports at the time they are requested.
    (3) The agency reports will be used in preparing the Secretary's 
report to the President.
    (b) The Secretary will submit to the President by January 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.

[69 FR 68804, Nov. 26, 2004, as amended at 78 FR 47190, Aug. 5, 2013]



Sec. 1960.72  Reporting Federal Agency Injury and Illness Information.

    (a) Each agency must submit to the Secretary by May 1 of each year 
all information included on the agency's previous calendar year's 
occupational injury and illness recordkeeping forms. The information 
submitted must include all data entered on the OSHA Form 300, Log of 
Work-Related Injuries and Illnesses (or equivalent); OSHA Form 301, 
Injury and Illness Incident Report (or equivalent); and OSHA Form 300A, 
Summary of Work-Related Injuries and Illnesses (or equivalent).
    (b) The Secretary must provide each agency by January 15 of each 
year with the format and guidelines for electronically submitting the 
agency's occupational injury and illness recordkeeping information.
    (c) Each agency must submit to the Secretary by May 1, 2014, a list 
of all establishments. The list must include information about the 
department/agency affiliation, NAICS code, a street address, city, state 
and zip code. Federal agencies are also responsible for updating their 
list of establishments by May 1 of each year when they submit the annual 
report to the Secretary required by Sec. 1960.71(a)(1).

[78 FR 47190, Aug. 5, 2013]



Sec. 1960.73  Federal agency injury and illness recordkeeping forms.

    (a) When filling out the OSHA Form 300 or equivalent, each agency 
must enter the employee's OPM job series number and job title in Column 
(c).
    (b) When recording the injuries and illnesses of uncompensated 
volunteers, each agency must enter a ``V'' before the OPM job series 
number in Column (c) of the OSH Form 300 log or equivalent.
    (c) Each agency must calculate the total number of hours worked by 
uncompensated volunteers.

[78 FR 47191, Aug. 5, 2013]

[[Page 99]]



Secs. 1960.74  [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;
    (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

[[Page 100]]

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 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.

[[Page 101]]

    (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.
    (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

[[Page 102]]

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.



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 calendar 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

[[Page 103]]

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 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

[[Page 104]]

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 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

[[Page 105]]

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 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.

[[Page 106]]



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?
    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

[[Page 107]]

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.

                         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.

[[Page 108]]

    (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 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).

[[Page 109]]



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 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

[[Page 110]]

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.
    (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.

[[Page 111]]

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 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

[[Page 112]]

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 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.

[[Page 113]]



  PART 1978_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS 
  UNDER THE EMPLOYEE PROTECTION PROVISION OF THE SURFACE 
  TRANSPORTATION ASSISTANCE ACT OF 1982 (STAA), AS AMENDED--
  Table of Contents



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders

Sec.
1978.100  Purpose and scope.
1978.101  Definitions.
1978.102  Obligations and prohibited acts.
1978.103  Filing of retaliation complaints.
1978.104  Investigation.
1978.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1978.106  Objections to the findings and the preliminary order and 
          request for a hearing.
1978.107  Hearings.
1978.108  Role of Federal agencies.
1978.109  Decisions and orders of the administrative law judge.
1978.110  Decisions and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1978.111  Withdrawal of STAA complaints, findings, objections, and 
          petitions for review; settlement.
1978.112  Judicial review.
1978.113  Judicial enforcement.
1978.114  District court jurisdiction of retaliation complaints under 
          STAA.
1978.115  Special circumstances; waiver of rules.

    Authority: 49 U.S.C. 31101 and 31105; Secretary's Order 1-2012 (Jan. 
18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary's Order 1-2010 (Jan. 
15, 2010), 75 FR 3924 (Jan. 25, 2010).

    Source: 77 FR 44134, July 27, 2012, unless otherwise noted.



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders



Sec. 1978.100  Purpose and scope.

    (a) This part sets forth, the procedures for, and interpretations 
of, the employee protection (whistleblower) provision of the Surface 
Transportation Assistance Act of 1982 (STAA), 49 U.S.C. 31105, as 
amended, which protects employees from retaliation because the employee 
has engaged in, or is perceived to have engaged in, protected activity 
pertaining to commercial motor vehicle safety, health, or security 
matters.
    (b) This part establishes procedures under STAA for the expeditious 
handling of retaliation complaints filed 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, investigations, issuance of findings and preliminary orders, 
objections to findings and orders, litigation before administrative law 
judges (ALJs), post-hearing administrative review, and withdrawals and 
settlements. This part also sets forth interpretations of STAA.



Sec. 1978.101  Definitions.

    (a) Act means the Surface Transportation Assistance Act of 1982 
(STAA), as amended.
    (b) 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.
    (c) Business days means days other than Saturdays, Sundays, and 
Federal holidays.
    (d) Commercial motor carrier means any person engaged in a business 
affecting commerce between States or between a State and a place outside 
thereof who owns or leases a commercial motor vehicle in connection with 
that business, or assigns employees to operate such a vehicle.
    (e) Commercial motor vehicle means a vehicle as defined by 49 U.S.C. 
31101(1).
    (f) Complainant means the employee who filed a STAA complaint or on 
whose behalf a complaint was filed.
    (g) Complaint, for purposes of Sec. 1978.102(b)(1) and (e)(1), 
includes both written and oral complaints to employers, government 
agencies, and others.
    (h) Employee means a driver of a commercial motor vehicle (including 
an independent contractor when personally operating a commercial motor 
vehicle), a mechanic, a freight handler, or an individual not an 
employer, who:
    (1) Directly affects commercial motor vehicle safety or security in 
the

[[Page 114]]

course of employment by a commercial motor carrier; and
    (2) Is not an employee of the United States Government, a State, or 
a political subdivision of a State acting in the course of employment.
    (3) The term includes an individual formerly performing the work 
described above or an applicant for such work.
    (i) Employer means a person engaged in a business affecting commerce 
that owns or leases a commercial motor vehicle in connection with that 
business, or assigns an employee to operate the vehicle in commerce, but 
does not include the Government, a State, or a political subdivision of 
a State.
    (j) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (k) Person means one or more individuals, partnerships, 
associations, corporations, business trusts, legal representatives, or 
any other organized group of individuals.
    (l) Respondent means the person alleged to have violated 49 U.S.C. 
31105.
    (m) Secretary means the Secretary of Labor or persons to whom 
authority under the Act has been delegated.
    (n) State means a State of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, and the 
Northern Mariana Islands.
    (o) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1978.102  Obligations and prohibited acts.

    (a) No person may discharge or otherwise retaliate against any 
employee with respect to the employee's compensation, terms, conditions, 
or privileges of employment because the employee engaged in any of the 
activities specified in paragraphs (b) or (c) of this section. In 
addition, no person may discharge or otherwise retaliate against any 
employee with respect to the employee's compensation, terms, conditions, 
or privileges of employment because a person acting pursuant to the 
employee's request engaged in any of the activities specified in 
paragraph (b).
    (b) It is a violation for any person to intimidate, threaten, 
restrain, coerce, blacklist, discharge, discipline, harass, suspend, 
demote, or in any other manner retaliate against any employee because 
the employee or a person acting pursuant to the employee's request has:
    (1) Filed orally or in writing a complaint with an employer, 
government agency, or others or begun a proceeding related to a 
violation of a commercial motor vehicle safety or security regulation, 
standard, or order; or
    (2) Testified or will testify at any proceeding related to a 
violation of a commercial motor vehicle safety or security regulation, 
standard, or order.
    (c) It is a violation for any person to intimidate, threaten, 
restrain, coerce, blacklist, discharge, discipline, harass, suspend, 
demote, or in any other manner retaliate against any employee because 
the employee:
    (1) Refuses to operate a vehicle because:
    (i) The operation violates a regulation, standard, or order of the 
United States related to commercial motor vehicle safety, health, or 
security; or
    (ii) He or she has a reasonable apprehension of serious injury to 
himself or herself or the public because of the vehicle's hazardous 
safety or security condition;
    (2) Accurately reports hours on duty pursuant to Chapter 315 of 
Title 49 of the United States Code; or
    (3) Cooperates with a safety or security investigation by the 
Secretary of Transportation, the Secretary of Homeland Security, or the 
National Transportation Safety Board; or
    (4) Furnishes information to the Secretary of Transportation, the 
Secretary of Homeland Security, the National Transportation Safety 
Board, or any Federal, State, or local regulatory or law enforcement 
agency as to the facts relating to any accident or incident resulting in 
injury or death to an individual or damage to property occurring in 
connection with commercial motor vehicle transportation.
    (d) No person may discharge or otherwise retaliate against any 
employee

[[Page 115]]

with respect to the employee's compensation, terms, conditions, or 
privileges of employment because the person perceives that the employee 
has engaged in any of the activities specified in paragraph (e) of this 
section.
    (e) It is a violation for any person to intimidate, threaten, 
restrain, coerce, blacklist, discharge, discipline, harass, suspend, 
demote, or in any other manner retaliate against any employee because 
the employer perceives that:
    (1) The employee has filed orally or in writing or is about to file 
orally or in writing a complaint with an employer, government agency, or 
others or has begun or is about to begin a proceeding related to a 
violation of a commercial motor vehicle safety or security regulation, 
standard or order;
    (2) The employee is about to cooperate with a safety or security 
investigation by the Secretary of Transportation, the Secretary of 
Homeland Security, or the National Transportation Safety Board; or
    (3) The employee has furnished or is about to furnish information to 
the Secretary of Transportation, the Secretary of Homeland Security, the 
National Transportation Safety Board, or any Federal, State, or local 
regulatory or law enforcement agency as to the facts relating to any 
accident or incident resulting in injury or death to an individual or 
damage to property occurring in connection with commercial motor vehicle 
transportation.
    (f) For purposes of this section, an employee's apprehension of 
serious injury is reasonable only if a reasonable individual in the 
circumstances then confronting the employee would conclude that the 
hazardous safety or security condition establishes a real danger of 
accident, injury or serious impairment to health. To qualify for 
protection, the employee must have sought from the employer, and been 
unable to obtain, correction of the hazardous safety or security 
condition.



Sec. 1978.103  Filing of retaliation complaints.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against by an employer in violation of STAA may file, or have 
filed by any person on the employee's behalf, a complaint alleging such 
retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file a 
complaint in English, OSHA will accept the complaint in any other 
language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office 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 180 days after an alleged violation of 
STAA occurs, any employee who believes that he or she has been 
retaliated against in violation of STAA may file, or have filed by any 
person on the employee's behalf, a complaint alleging such retaliation. 
The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law.
    (e) Relationship to section 11(c) complaints. A complaint filed 
under STAA alleging facts that would also constitute a violation of 
section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. 
660(c), will be deemed to be a complaint under both STAA and section 
11(c). Similarly, a complaint filed under section 11(c) that alleges 
facts that would also constitute a violation of STAA will be deemed to 
be a complaint filed under both STAA and section 11(c). Normal 
procedures and timeliness requirements under the respective statutes and 
regulations will be followed.



Sec. 1978.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, the 
Assistant Secretary will notify the respondent of the filing of the 
complaint by providing

[[Page 116]]

the respondent with a copy of the complaint, redacted in accordance with 
the Privacy Act of 1974, 5 U.S.C. 552a and other applicable 
confidentiality laws. The Assistant Secretary will also notify the 
respondent of the respondent's rights under paragraphs (b) and (f) of 
this section. The Assistant Secretary will provide a copy of the 
unredacted complaint to the complainant (or complainant's legal counsel, 
if complainant is represented by counsel) and to the Federal Motor 
Carrier Safety Administration.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
may submit to the Assistant Secretary a written statement and any 
affidavits or documents substantiating its position. Within the same 20 
days, the respondent may request a meeting with the Assistant Secretary 
to present its position.
    (c) Throughout the investigation, the agency will provide to the 
complainant (or the complainant's legal counsel, if complainant is 
represented by counsel) a copy of all of respondent's submissions to the 
agency that are responsive to the complainant's whistleblower complaint. 
Before providing such materials to the complainant, the agency will 
redact them, if necessary, in accordance with the Privacy Act of 1974, 5 
U.S.C. 552a, and other applicable confidentiality laws. The agency will 
also provide the complainant with an opportunity to respond to such 
submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that protected activity was a contributing factor 
in the adverse action alleged in the complaint.
    (2) 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, either actual 
activity or activity about to be undertaken;
    (ii) The respondent knew or suspected, actually or constructively, 
that the employee engaged in the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complainant shows that the adverse action took place 
shortly after the protected activity, giving rise to the inference that 
it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel, if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) 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 or will be discontinued if the 
respondent demonstrates by clear and convincing evidence that it would 
have taken the same adverse action in the absence of the complainant's 
protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, the Assistant 
Secretary will proceed with the investigation. The investigation will 
proceed whenever it is necessary or appropriate to confirm or verify the 
information provided by the respondent.

[[Page 117]]

    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1978.105, if the Assistant Secretary has reasonable 
cause, on the basis of information gathered under the procedures of this 
part, to believe that the respondent has violated the Act and that 
preliminary reinstatement is warranted, the Assistant Secretary will 
again contact the respondent (or the respondent's legal counsel, if 
respondent is represented by counsel) 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 complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials to the complainant, the agency will redact them, if necessary, 
in accordance with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. The respondent 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 respondent 
must present this evidence within 10 business days of the Assistant 
Secretary's notification pursuant to this paragraph, or as soon 
thereafter as the Assistant Secretary and the respondent can agree, if 
the interests of justice so require.



Sec. 1978.105  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 
the filing of the complaint, written findings as to whether there is 
reasonable cause to believe that the respondent has retaliated against 
the complainant in violation of STAA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief. 
Such order will require, where appropriate: affirmative action to abate 
the violation; reinstatement of the complainant to his or her former 
position, with the same compensation, terms, conditions and privileges 
of the complainant's employment; and payment of compensatory damages 
(backpay with interest and compensation for any special damages 
sustained as a result of the retaliation, including any litigation 
costs, expert witness fees, and reasonable attorney fees which the 
complainant has incurred). Interest on backpay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The preliminary order may also 
require the respondent to pay punitive damages up to $250,000.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested, to all parties of 
record (and each party's legal counsel if the party is represented by 
counsel). The findings and, where appropriate, the preliminary order 
will inform the parties of the right to object to the findings and/or 
the order and to request a hearing. The findings and, where appropriate, 
the preliminary order also will give the address of the Chief 
Administrative Law Judge, U.S. Department of Labor. At the same time, 
the Assistant Secretary will file with the Chief Administrative Law 
Judge a copy of the original complaint and a copy of the findings and/or 
order.
    (c) The findings and the preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and request for a hearing have been timely filed as provided at 
Sec. 1978.106. However, the portion

[[Page 118]]

of any preliminary order requiring reinstatement will be effective 
immediately upon the respondent's receipt of the findings and the 
preliminary order, regardless of any objections to the findings and/or 
the order.



                          Subpart B_Litigation



Sec. 1978.106  Objections to the findings and the preliminary order
and request for a hearing.

    (a) Any party who desires review, including judicial review, 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. 1978.105(c). The objections and request for a hearing must be in 
writing and state whether the objections are to the findings and/or the 
preliminary order. The date of the postmark, facsimile transmittal, or 
electronic communication transmittal is considered 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, and copies of 
the objections must be mailed at the same time to the other parties of 
record and the OSHA official who issued the findings.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1978.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. Administrative law 
judges have broad discretion to limit discovery in order to expedite the 
hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1978.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding. In any case in which the respondent objects to the findings 
or the preliminary order the Assistant Secretary ordinarily will be the 
prosecuting party. In any other cases, at the Assistant Secretary's 
discretion, the Assistant Secretary may participate as a party or 
participate as amicus curiae at any stage of the proceeding. This right 
to participate includes, but is not limited to, the right to petition 
for review of a decision of an ALJ, including a decision approving or 
rejecting a settlement agreement between the complainant and the 
respondent.
    (2) If the Assistant Secretary assumes the role of prosecuting party 
in accordance with paragraph (a)(1) of this section, he or she may, upon 
written notice to the ALJ or the Administrative Review Board, as the 
case may

[[Page 119]]

be, and the other parties, withdraw as the prosecuting party in the 
exercise of prosecutorial discretion. If the Assistant Secretary 
withdraws, the complainant will become the prosecuting party and the ALJ 
or the Administrative Review Board, as the case may be, will issue 
appropriate orders to regulate the course of future proceedings.
    (3) Copies of documents in all cases shall be sent to the parties 
or, if they are represented by counsel, to the latter. In cases in which 
the Assistant Secretary is a party, copies of documents shall be sent to 
the Regional Solicitor's Office representing the Assistant Secretary.
    (b) The Federal Motor Carrier Safety Administration, if interested 
in a proceeding, may participate as amicus curiae at any time in the 
proceeding, at its discretion. At the request of the Federal Motor 
Carrier Safety Administration, copies of all documents in a case must be 
sent to that agency, whether or not that agency is participating in the 
proceeding.



Sec. 1978.109  Decisions and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant or the Assistant Secretary has satisfied the 
burden set forth in the prior paragraph, relief may not be ordered if 
the respondent demonstrates by clear and convincing evidence that it 
would have taken the same adverse action in the absence of any protected 
activity.
    (c) Neither the Assistant Secretary's determination to dismiss a 
complaint without completing an investigation pursuant to 
Sec. 1978.104(e) nor the Assistant Secretary's determination to proceed 
with an investigation is subject to review by the ALJ, 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 ALJ will 
hear the case on the merits or dispose of the matter without a hearing 
if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position with the same compensation, 
terms, conditions, and privileges of the complainant's employment; 
payment of compensatory damages (backpay with interest and compensation 
for any special damages sustained as a result of the retaliation, 
including any litigation costs, expert witness fees, and reasonable 
attorney fees which the complainant may have incurred); and payment of 
punitive damages up to $250,000. Interest on backpay will be calculated 
using the interest rate applicable to underpayment of taxes under 26 
U.S.C. 6621 and will be compounded daily.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of 
Occupational Safety and Health, U.S. Department of Labor. Any ALJ'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 respondent. For ALJ decisions issued on or after the 
effective date of the interim final rule, August 31, 2010, all other 
portions of the ALJ's order will be effective 14 days after the date of 
the decision unless a timely petition for review has been filed with the 
Administrative Review Board (ARB), U.S. Department of Labor. Any ALJ 
decision issued on or after the effective date of the interim final 
rule, August 31, 2010, will become the final order of the Secretary 
unless a petition for review is timely filed with the ARB and the ARB 
accepts the decision for review.

[[Page 120]]



Sec. 1978.110  Decisions and orders of the Administrative Review Board.

    (a) The Assistant Secretary or any other party desiring to seek 
review, including judicial review, of a decision of the ALJ must file a 
written petition for review with the ARB, which has been delegated the 
authority to act for the Secretary and issue final decisions under this 
part. The parties should identify in their petitions for review the 
legal conclusions or orders to which they object, or the objections may 
be deemed waived. A petition must be filed within 14 days of the date of 
the decision of the ALJ. The date of the postmark, facsimile 
transmittal, or electronic communication transmittal 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 ARB. Copies of 
the petition for review and all briefs must be served on the Assistant 
Secretary and, in cases in which the Assistant Secretary is a party, on 
the Associate Solicitor, Division of Occupational Safety and Health, 
U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration is ruled upon 
or 14 days after a new decision is issued. The ARB's final decision will 
be served upon all parties and the Chief Administrative Law Judge by 
mail. The final decision also will be served on the Assistant Secretary, 
and on the Associate Solicitor, Division of Occupational Safety and 
Health, U.S, Department of Labor, even if the Assistant Secretary is not 
a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position with the same compensation, terms, conditions, and 
privileges of the complainant's employment; payment of compensatory 
damages (backpay with interest and compensation for any special damages 
sustained as a result of the retaliation, including any litigation 
costs, expert witness fees, and reasonable attorney fees the complainant 
may have incurred); and payment of punitive damages up to $250,000. 
Interest on backpay will be calculated using the interest rate 
applicable to underpayment of taxes under 26 U.S.C. 6621 and will be 
compounded daily.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint.
    (f) Paragraphs (a) and (b) of this section apply to all cases in 
which the decision of the ALJ was issued on or after August 31, 2010.

[[Page 121]]



                   Subpart C_Miscellaneous Provisions



Sec. 1978.111  Withdrawal of STAA complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying the Assistant Secretary, 
orally or in writing, of his or her withdrawal. The Assistant Secretary 
then will confirm in writing the complainant's desire to withdraw and 
determine whether to approve the withdrawal. The Assistant Secretary 
will notify the parties (and each party's legal counsel if the party is 
represented by counsel) of the approval of any withdrawal. If the 
complaint is withdrawn because of settlement, the settlement must be 
submitted for approval in accordance with paragraph (d) of this section. 
A complainant may not withdraw his or her complaint after the filing of 
objections to the Assistant Secretary's findings and/or preliminary 
order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1978.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
preliminary order become final, a party may withdraw objections to the 
Assistant Secretary's findings and/or preliminary order by filing a 
written withdrawal with the ALJ. If a case is on review with the ARB, a 
party may withdraw a petition for review of an ALJ's decision at any 
time before that decision becomes final by filing a written withdrawal 
with the ARB. The ALJ or the ARB, as the case may be, will determine 
whether to approve the withdrawal of the objections or the petition for 
review. If the ALJ approves a request to withdraw objections to the 
Assistant Secretary's findings and/or order, and there are no other 
pending objections, the Assistant Secretary's findings and/or order will 
become the final order of the Secretary. If the ARB approves a request 
to withdraw a petition for review of an ALJ decision, and there are no 
other pending petitions for review of that decision, the ALJ's decision 
will become the final order of the Secretary. If objections or a 
petition for review are withdrawn because of settlement, the settlement 
must be submitted for approval in accordance with paragraph (d) of this 
section.
    (d)(1) Investigative settlements. At any time after the filing of a 
STAA 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 respondent agree to a 
settlement. The Assistant Secretary's approval of a settlement reached 
by the respondent and the complainant demonstrates the Assistant 
Secretary's consent and achieves the consent of all three parties.
    (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 ALJ if the case is before the ALJ or 
by the ARB, if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as the case may be.
    (e) Any settlement approved by the Assistant Secretary, the ALJ, or 
the ARB will constitute the final order of the Secretary and may be 
enforced in United States district court pursuant to 49 U.S.C. 31105(e).



Sec. 1978.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1978.109 and 1978.110, 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 person resided on the date of the 
violation.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the

[[Page 122]]

record of proceedings before the ALJ, will be transmitted by the ARB or 
the ALJ, as the case may be, to the appropriate court pursuant to the 
Federal Rules of Appellate Procedure and the local rules of such court.



Sec. 1978.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement or a final order, including one approving a settlement 
agreement issued under STAA, 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 have occurred.



Sec. 1978.114  District court jurisdiction of retaliation complaints
under STAA.

    (a) If there is no final order of the Secretary, 210 days have 
passed since 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. The action shall, at the request of either party to such 
action, be tried by the court with a jury.
    (b) Within seven days after filing a complaint in federal court, a 
complainant must file with the Assistant Secretary, the ALJ, or the ARB, 
depending on where the proceeding is pending, a copy of the file-stamped 
complaint. A copy of the complaint also must be served on the OSHA 
official who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Occupational Safety 
and Health, U.S. Department of Labor.



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 ALJ or the ARB on review may, upon 
application, after three days notice to all parties, waive any rule or 
issue such orders as justice or the administration of STAA 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.
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

[[Page 123]]

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 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,

[[Page 124]]

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.



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,

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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 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

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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 
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

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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 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

[[Page 128]]

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 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.

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                   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 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.

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PART 1980_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS UNDER
SECTION 806 OF THE SARBANES-OXLEY ACT OF 2002, AS AMENDED--
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 retaliation complaints.
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, findings, objections, and petitions 
          for review; settlement.
1980.112  Judicial review.
1980.113  Judicial enforcement.
1980.114  District court jurisdiction over retaliation complaints.
1980.115  Special circumstances; waiver of rules.

    Authority: 18 U.S.C. 1514A, as amended by the Dodd-Frank Wall Street 
Reform and Consumer Protection Act of 2010, Pub. L. 111-203 (July 21, 
2010); Secretary of Labor's Order No. 01-2012 (Jan. 18, 2012), 77 FR 
3912 (Jan. 25, 2012); Secretary of Labor's Order No. 2-2012 (Oct. 19, 
2012), 77 FR 69378 (Nov. 16, 2012).

    Source: 80 FR 11880, Mar. 5, 2015, 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, as amended by the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010, enacted into law July 21, 2010. 
Sarbanes-Oxley provides for employee protection from retaliation by 
companies, their subsidiaries and affiliates, officers, employees, 
contractors, subcontractors, and agents 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. Sarbanes-Oxley also provides for 
employee protection from retaliation by nationally recognized 
statistical rating organizations, their officers, employees, 
contractors, subcontractors or agents because the employee has engaged 
in protected activity.
    (b) This part establishes procedures pursuant to Sarbanes-Oxley for 
the expeditious handling of retaliation complaints made by employees, or 
by persons acting on their behalf and sets forth the Secretary's 
interpretations of the Act on certain statutory issues. These rules, 
together with those codified at 29 CFR part 18, set forth the 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, withdrawals, and settlements.



Sec. 1980.101  Definitions.

    As used in this part:
    (a) Act means section 806 of the Corporate and Criminal Fraud 
Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 
2002, Pub. L. 107-204, July 30, 2002, codified at 18 U.S.C. 1514A, as 
amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act 
of 2010, Pub. L. 111-203, July 21, 2010.
    (b) 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.
    (c) Business days means days other than Saturdays, Sundays, and 
Federal holidays.

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    (d) 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) 
or any company required to file reports under section 15(d) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) including any 
subsidiary or affiliate whose financial information is included in the 
consolidated financial statements of such company.
    (e) Complainant means the employee who filed a complaint under the 
Act or on whose behalf a complaint was filed.
    (f) Covered person means any company, including any subsidiary or 
affiliate whose financial information is included in the consolidated 
financial statements of such company, or any nationally recognized 
statistical rating organization, or any officer, employee, contractor, 
subcontractor, or agent of such company or nationally recognized 
statistical rating organization.
    (g) Employee means an individual presently or formerly working for a 
covered person, an individual applying to work for a covered person, or 
an individual whose employment could be affected by a covered person.
    (h) Nationally recognized statistical rating organization means a 
credit rating agency under 15 U.S.C. 78c(61) that:
    (1) Issues credit ratings certified by qualified institutional 
buyers, in accordance with 15 U.S.C. 78o-7(a)(1)(B)(ix), with respect 
to:
    (i) Financial institutions, brokers, or dealers;
    (ii) Insurance companies;
    (iii) Corporate issuers;
    (iv) Issuers of asset-backed securities (as that term is defined in 
section 1101(c) of part 229 of title 17, Code of Federal Regulations, as 
in effect on September 29, 2006);
    (v) Issuers of government securities, municipal securities, or 
securities issued by a foreign government; or
    (vi) A combination of one or more categories of obligors described 
in any of paragraphs (h)(1)(i) through (v) of this section; and
    (2) Is registered under 15 U.S.C. 78o-7.
    (i) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (j) Person means one or more individuals, partnerships, 
associations, companies, corporations, business trusts, legal 
representatives or any group of persons.
    (k) Respondent means the person named in the complaint who is 
alleged to have violated the Act.
    (l) Secretary means the Secretary of Labor or persons to whom 
authority under the Act has been delegated.
    (m) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1980.102  Obligations and prohibited acts.

    (a) No covered person may discharge, demote, suspend, threaten, 
harass or in any other manner retaliate against, including, but not 
limited to, intimidating, threatening, restraining, coercing, 
blacklisting or disciplining, 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, has engaged in any of the activities specified in paragraphs 
(b)(1) and (2) of this section.
    (b) An employee is protected against retaliation (as described in 
paragraph (a) of this section) by a covered person for 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

[[Page 132]]

    (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 retaliation complaints.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against by a covered person in violation of the Act may file, 
or have filed on the employee's behalf, a complaint alleging such 
retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office 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 180 days after an alleged violation of 
the Act occurs or after the date on which the employee became aware of 
the alleged violation of the Act, any employee who believes that he or 
she has been retaliated against in violation of the Act may file, or 
have filed on the employee's behalf, a complaint alleging such 
retaliation. The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law. For example, 
OSHA may consider the time for filing a complaint equitably tolled if a 
complainant mistakenly files a complaint with the another agency instead 
of OSHA within 180 days after becoming aware of the alleged violation.



Sec. 1980.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, in accordance with the Privacy Act of 1974, 5 U.S.C. 552a, et 
seq., and other applicable confidentiality laws. OSHA will also notify 
the respondent of its rights under paragraphs (b) and (f) of this 
section and Sec. 1980.110(e). OSHA will provide an unredacted copy of 
these same materials to the complainant (or complainant's legal counsel, 
if complainant is represented by counsel) and to the Securities and 
Exchange Commission.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
may submit to OSHA a written statement and any affidavits or documents 
substantiating its position. Within the same 20 days, the respondent may 
request a meeting with OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the other party (or the 
party's legal counsel if the party is represented by counsel) at a time 
permitting the other party an opportunity to respond. Before providing 
such materials to the other party, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. OSHA will also provide each party with 
an opportunity to respond to the other party's submissions.
    (d) Investigations will be conducted in a manner that protects the 
confidentiality of any person who provides information on a confidential 
basis,

[[Page 133]]

other than the complainant, in accordance with part 70 of this title.
    (e)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that a protected activity was a contributing 
factor in the adverse action alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse personnel action 
took place within a temporal proximity after the protected activity, or 
at the first opportunity available to respondent, giving rise to the 
inference that it was a contributing factor in the adverse action. If 
the required showing has not been made, the complainant (or the 
complainant's legal counsel, if complainant is represented by counsel) 
will be so notified and the investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, OSHA will proceed 
with the investigation. The investigation will proceed whenever it is 
necessary or appropriate to confirm or verify the information provided 
by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1980.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated the Act and that preliminary 
reinstatement is warranted, OSHA will contact the respondent (or the 
respondent's legal counsel, if respondent is represented by counsel) 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 complainant will also 
receive a copy of the materials that must be provided to the respondent 
under this paragraph. Before providing such materials to the 
complainant, OSHA will redact them, if necessary, in accordance with the 
Privacy Act of 1974, 5 U.S.C. 552a, and other applicable confidentiality 
laws. The respondent will be given the opportunity to submit a written 
response, to meet with the investigator, to present statements from 
witnesses in support of its position, and to present legal and factual 
arguments. The respondent will present this evidence within 10 business 
days of OSHA's notification pursuant to this paragraph, or as soon 
afterwards as OSHA and the respondent 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 shall

[[Page 134]]

issue, within 60 days of the filing of the complaint, written findings 
as to whether or not there is reasonable cause to believe that the 
respondent has retaliated 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, the Assistant Secretary 
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 reinstatement with the same 
seniority status that the complainant would have had but for the 
retaliation; back pay with interest; and compensation for any special 
damages sustained as a result of the retaliation, including litigation 
costs, expert witness fees, and reasonable attorney fees. Interest on 
back pay will be calculated using the interest rate applicable to 
underpayment of taxes under 26 U.S.C. 6621 and will be compounded daily. 
The preliminary order will also require the respondent to submit 
appropriate documentation to the Social Security Administration 
allocating any back pay award to the appropriate calendar quarters.
    (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 where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested (or other means that 
allow OSHA to confirm receipt), to all parties of record (and each 
party's legal counsel if the party is represented by counsel). The 
findings, and where appropriate, the preliminary order will inform the 
parties of the right to object to the findings and/or order and to 
request a hearing, and of the right of the respondent to request an 
award of attorney fees not exceeding $1,000 from the administrative law 
judge (ALJ) regardless of whether the respondent has filed objections, 
if the complaint was frivolous or brought in bad faith. The findings, 
and where appropriate, the preliminary order, also will give the address 
of the Chief Administrative Law Judge, U.S. Department of Labor. At the 
same time, the Assistant Secretary will file with the Chief 
Administrative Law Judge a copy of the original complaint and a copy of 
the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1980.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the 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 respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under the Act, 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 Sec. 1980.105(b). The objections and/
or request for a hearing must be in writing and state whether the 
objections are to the findings and/or the preliminary order, and/or 
whether there should be an award of attorney fees. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
is considered 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, 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, the Assistant Secretary, and the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will

[[Page 135]]

be stayed, except for the portion requiring preliminary reinstatement, 
which will not be automatically stayed. The portion of the preliminary 
order requiring reinstatement will be effective immediately upon the 
respondent's receipt of the findings and preliminary order, regardless 
of any objections to the order. The respondent may file a motion with 
the Office of Administrative Law Judges for a stay of the Assistant 
Secretary's preliminary order of reinstatement, which shall be granted 
only based on exceptional circumstances. If no timely objection is filed 
with respect to either the findings or the preliminary order, the 
findings and/or preliminary order 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 of part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo, on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1980.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.
    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and the Associate Solicitor is 
otherwise required by these rules.
    (b) The Securities and Exchange Commission, if interested in a 
proceeding, may participate as amicus curiae at any time in the 
proceeding, at the Commission's discretion. At the request of the 
Securities and Exchange Commission, copies of all documents in a case 
must be sent to the Commission, whether or not the Commission is 
participating in the proceeding.



Sec. 1980.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1980.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, and a complaint may not be remanded for the

[[Page 136]]

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 ALJ will hear the case on the merits or 
dispose of the matter without a hearing if the facts and circumstances 
warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the order will provide all relief necessary to make the employee 
whole, including, reinstatement with the same seniority status that the 
complainant would have had but for the retaliation; back pay with 
interest; and compensation for any special damages sustained as a result 
of the retaliation, including litigation costs, expert witness fees, and 
reasonable attorney fees. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The order will also require the 
respondent to submit appropriate documentation to the Social Security 
Administration allocating any back pay award to the appropriate calendar 
quarters.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the judge may award to the respondent 
reasonable attorney fees, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB). The 
decision of the ALJ will become the final order of the Secretary unless 
a petition for review is timely filed with the ARB, and the ARB accepts 
the petition for review.



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 ALJ, or a respondent alleging that the complaint was 
frivolous or brought in bad faith who seeks an award of attorney fees, 
must file a written petition for review with the ARB, which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The parties should identify in their 
petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A petition must be filed 
within 14 days of the date of the decision of the ALJ. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
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 ARB. 
Copies of the petition for review must be served on the Assistant 
Secretary and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay the order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the

[[Page 137]]

resulting final order is not subject to judicial review.
    (c) The final decision of the ARB shall be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration is ruled upon 
or 14 days after a new decision is issued. The ARB's final decision will 
be served upon all parties and the Chief Administrative Law Judge by 
mail. The final decision will also be served on the Assistant Secretary 
and on the Associate Solicitor, Division of Fair Labor Standards, even 
if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing all relief necessary to make 
the complainant whole, including reinstatement with the same seniority 
status that the complainant would have had but for the retaliation; back 
pay with interest; and compensation for any special damages sustained as 
a result of the retaliation, including litigation costs, expert witness 
fees, and reasonable attorney fees. Interest on back pay will be 
calculated using the interest rate applicable to underpayment of taxes 
under 26 U.S.C. 6621 and will be compounded daily. The order will also 
require the respondent to submit appropriate documentation to the Social 
Security Administration allocating any back pay award to the appropriate 
calendar quarters.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent reasonable 
attorney fees, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1980.111  Withdrawal of complaints, findings, objections, 
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying OSHA, orally or in writing, 
of his or her withdrawal. OSHA then will confirm in writing the 
complainant's desire to withdraw and determine whether to approve the 
withdrawal. OSHA will notify the parties (and each party's legal counsel 
if the party is represented by counsel) of the approval of any 
withdrawal. If the complaint is withdrawn because of settlement, the 
settlement must be submitted for approval in accordance with paragraph 
(d) of this section. A complainant may not withdraw his or her complaint 
after the filing of objections to the Assistant Secretary's findings 
and/or preliminary order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1980.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new preliminary 
order. The date of the receipt of the substituted findings and/or order 
will begin a new 30-day objection period.
    (c) At any time before the Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw a 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB

[[Page 138]]

approves a request to withdraw a petition for review of an ALJ decision, 
and there are no other pending petitions for review of that decision, 
the ALJ's decision will become the final order of the Secretary. If 
objections or a petition for review are withdrawn because of settlement, 
the settlement must be submitted for approval 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 
OSHA, the complainant and the respondent agree to a settlement. OSHA's 
approval of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as appropriate.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB, will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1980.113.



Sec. 1980.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1980.109 and 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1980.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under the Act, 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 have occurred. Whenever 
any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under the Act, a person on whose behalf the order was 
issued may file a civil action seeking enforcement of the order in the 
appropriate United States district court.



Sec. 1980.114  District court jurisdiction over retaliation complaints.

    (a) If the Secretary 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. A party to 
an action brought under this paragraph shall be entitled to trial by 
jury.
    (b) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1980.109. 
An employee prevailing in any action under paragraph (a) of this section 
shall be entitled to all relief necessary to make the employee whole, 
including:
    (1) Reinstatement with the same seniority status that the employee 
would have had, but for the retaliation;
    (2) The amount of back pay, with interest;
    (3) Compensation for any special damages sustained as a result of 
the retaliation; and
    (4) Litigation costs, expert witness fees, and reasonable attorney 
fees.

[[Page 139]]

    (c) Within seven days after filing a complaint in federal court, a 
complainant must file with OSHA, the ALJ, or the ARB, depending on where 
the proceeding is pending, a copy of the file-stamped complaint. A copy 
of the complaint also must be served on the OSHA official who issued the 
findings and/or preliminary order, the Assistant Secretary, and the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor.



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 ALJ or the ARB on review may, upon 
application, after three days notice to all parties, waive any rule or 
issue any orders that justice or the administration of the Act requires.



PART 1981_PROCEDURES FOR THE HANDLING OF DISCRIMINATION COMPLAINTS 
UNDER SECTION 6 OF THE PIPELINE SAFETY IMPROVEMENT ACT OF 2002--
Table of Contents



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders

Sec.
1981.100  Purpose and scope.
1981.101  Definitions.
1981.102  Obligations and prohibited acts.
1981.103  Filing of discrimination complaint.
1981.104  Investigation.
1981.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1981.106  Objections to the findings and the preliminary order and 
          request for a hearing.
1981.107  Hearings.
1981.108  Role of Federal agencies.
1981.109  Decision and orders of the administrative law judge.
1981.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1981.111  Withdrawal of complaints, objections, and findings; 
          settlement.
1981.112  Judicial review.
1981.113  Judicial enforcement.
1981.114  Special circumstances; waiver of rules.

    Authority: 49 U.S.C. 60129; Secretary of Labor's Order 5-2002, 67 FR 
65008 (October 22, 2002).

    Source: 69 FR 17591, Apr. 5, 2004, unless otherwise noted.



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders



Sec. 1981.100  Purpose and scope.

    (a) This part implements procedures under section 6 of the Pipeline 
Safety Improvement Act of 2002, 49 U.S.C. 60129 (``the Pipeline Safety 
Act''), which provides for employee protection from discrimination by a 
person owning or operating a pipeline facility or a contractor or 
subcontractor of such person because the employee has engaged in 
protected activity pertaining to a violation or alleged violation of any 
order, regulation, or standard under chapter 601, subtitle VIII of title 
49 of the United States Code or any other provision of Federal law 
relating to pipeline safety.
    (b) This part establishes procedures pursuant to the Pipeline Safety 
Act 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 the Pipeline Safety Act, 
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. 1981.101  Definitions.

    ``Act'' or ``Pipeline Safety Act'' means section 6 of the Pipeline 
Safety Improvement Act of 2002, Public Law No. 107-355, December 17, 
2002, 49 U.S.C. 60129.
    ``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.
    ``Employee'' means an individual presently or formerly working for a

[[Page 140]]

person owning or operating a pipeline facility or a contractor or 
subcontractor of such a person, an individual applying to work for a 
person owning or operating a pipeline facility or a contractor or 
subcontractor of such a person, or an individual whose employment could 
be affected by a person owning or operating a pipeline facility or a 
contractor or subcontractor of such a person.
    ``Employer'' means a person owning or operating a pipeline facility 
or a contractor or subcontractor of such a person.
    ``Gas pipeline facility'' includes a pipeline, a right of way, a 
facility, a building, or equipment used in transporting gas or treating 
gas during its transportation.
    ``Hazardous liquid pipeline facility'' includes a pipeline, a right 
of way, a facility, a building, or equipment used or intended to be used 
in transporting hazardous liquid.
    ``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 a corporation, company, association, firm, 
partnership, joint stock company, an individual, a State, a 
municipality, and a trustee, receiver, assignee, or personal 
representative of a person.
    ``Pipeline facility'' means a gas pipeline facility and a hazardous 
liquid pipeline facility.
    ``Secretary'' means the Secretary of Labor or persons to whom 
authority under the Act has been delegated.



Sec. 1981.102  Obligations and prohibited acts.

    (a) No employer 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 any of the 
activities specified in paragraphs (b)(1) through (5) of this section.
    (b) It is a violation of the Act for any employer 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 or cause 
to be provided to the employer or the Federal Government, information 
relating to any violation or alleged violation of any order, regulation, 
or standard under chapter 601, subtitle VIII of title 49 of the United 
States Code or any other Federal law relating to pipeline safety;
    (2) Refused to engage in any practice made unlawful by chapter 601, 
in subtitle VIII of title 49 of the United States Code or any other 
Federal law relating to pipeline safety, if the employee has identified 
the alleged illegality to the employer;
    (3) Provided, caused to be provided, or is about to provide or cause 
to be provided, testimony before Congress or at any Federal or State 
proceeding regarding any provision (or proposed provision) of chapter 
601, subtitle VIII of title 49 of the United States Code or any other 
Federal law relating to pipeline safety, or testimony in any proceeding 
under chapter 601, subtitle VIII of title 49 of the United States Code 
or any other Federal law relating to pipeline safety, or a proceeding 
for the administration or enforcement of any requirement imposed under 
chapter 601, subtitle VIII of title 49 of the United States Code or any 
other Federal law relating to pipeline safety;
    (4) Commenced, caused to be commenced, or is about to commence or 
cause to be commenced a proceeding under chapter 601, subtitle VIII of 
title 49 of the United States Code or any other Federal law relating to 
pipeline safety, or a proceeding for the administration or enforcement 
of any requirement imposed under chapter 601, subtitle VIII of title 49 
of the United States Code or any other Federal law relating to pipeline 
safety; or
    (5) Assisted or participated or is about to assist or participate in 
any manner in such a proceeding or in any other action to carry out the 
purposes of chapter 601, subtitle VIII of title 49 of the United States 
Code or any other Federal law relating to pipeline safety.
    (c) This part shall have no application to any employee of an 
employer

[[Page 141]]

who, acting without direction from the employer (or such employer's 
agent), deliberately causes a violation of any requirement relating to 
pipeline safety under chapter 601, subtitle VIII of title 49 of the 
United States Code or any other Federal law.



Sec. 1981.103  Filing of discrimination complaint.

    (a) Who may file. An employee who believes that he or she has been 
discriminated against by an employer 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 180 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 the Pipeline Safety Act 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), will be deemed to be a complaint filed under both the 
Pipeline Safety Act and section 11(c). Similarly, a complaint filed 
under section 11(c) that alleges facts that would constitute a violation 
of the Pipeline Safety Act will be deemed to be a complaint filed under 
both the Pipeline Safety Act and section 11(c). Normal procedures and 
timeliness requirements for investigations under the respective laws and 
regulations will be followed.



Sec. 1981.104  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. 1981.110. A copy 
of the notice to the named person will also be provided to the 
Department of Transportation.
    (b) A complaint of alleged violation shall 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

[[Page 142]]

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 shall 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 part 70 of title 29 of the Code of 
Federal Regulations.
    (e) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1981.105, 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 his or her position, and to present legal and 
factual arguments. The named person will present this evidence within 10 
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. 1981.105  Issuance of findings and preliminary orders.

    (a) After considering all the relevant information collected during 
the investigation, the Assistant Secretary shall 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 shall 
accompany the findings with a preliminary order providing relief to the 
complainant. The preliminary order shall 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

[[Page 143]]

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 will be effective 60 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. 1981.106. 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. 1981.106  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 60 days of receipt of the findings and preliminary 
order pursuant to paragraph (b) of Sec. 1981.105. 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 
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, which shall not be automatically stayed. 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. The 
named person may file a motion with the Office of Administrative Law 
Judges for stay of the Assistant Secretary's preliminary 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. 1981.107  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,

[[Page 144]]

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 de novo, on the record. 
Administrative law judges 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 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. 1981.108  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 as amicus curiae at any time at 
any stage of 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 approving or rejecting a 
settlement agreement between the complainant and the named person.
    (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 Secretary of Transportation may participate as amicus curiae 
at any time in the proceedings, at the Secretary of Transportation's 
discretion. At the request of the Secretary of Transportation, copies of 
all pleadings in a case must be sent to the Secretary of Transportation, 
whether or not the Secretary of Transportation is participating in the 
proceeding.



Sec. 1981.109  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. 1981.104(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 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 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.

[[Page 145]]

    (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 will not be stayed by the filing of a timely petition for review 
with the Administrative Review Board. All other portions of the judge's 
order will be effective 10 business days after the date of the decision 
unless a timely petition for review has been filed with the 
Administrative Review Board.



Sec. 1981.110  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 10 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 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, unless the Board grants a motion to stay the 
order. 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 90 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 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

[[Page 146]]

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 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 attorney's fee, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1981.111  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 to approve the 
withdrawal. 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 60-day 
objection period described in Sec. 1981.106, 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 60-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 to approve the withdrawal. 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. 1981.113.



Sec. 1981.112  Judicial review.

    (a) Within 60 days after the issuance of a final order by the Board 
(Secretary) under Sec. 1981.110, 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. 1981.113  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.

[[Page 147]]



Sec. 1981.114  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, 
waive any rule or issue any orders that justice or the administration of 
the Act requires.



PART 1982_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS UNDER
THE NATIONAL TRANSIT SYSTEMS SECURITY ACT AND THE FEDERAL RAILROAD 
SAFETY ACT--Table of Contents



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders

Sec.
1982.100  Purpose and scope.
1982.101  Definitions.
1982.102  Obligations and prohibited acts.
1982.103  Filing of retaliation complaints.
1982.104  Investigation.
1982.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1982.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1982.107  Hearings.
1982.108  Role of Federal agencies.
1982.109  Decision and orders of the administrative law judge.
1982.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1982.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1982.112  Judicial review.
1982.113  Judicial enforcement.
1982.114  District court jurisdiction of retaliation complaints.
1982.115  Special circumstances; waiver of rules.

    Authority: 6 U.S.C. 1142 and 49 U.S.C. 20109; Secretary of Labor's 
Order 01-2012 (Jan. 18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of 
Labor's Order No. 2-2012 (Oct. 19, 2012), 77 FR 69378 (Nov. 16, 2012).

    Source: 80 FR 69132, Nov. 9, 2015, unless otherwise noted.



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders



Sec. 1982.100  Purpose and scope.

    (a) This part implements procedures of the National Transit Systems 
Security Act (NTSSA), 6 U.S.C. 1142, and the Federal Railroad Safety Act 
(FRSA), 49 U.S.C. 20109, as amended. NTSSA provides for employee 
protection from retaliation because the employee has engaged in 
protected activity pertaining to public transportation safety or 
security (or, in circumstances covered by the statute, the employee is 
perceived to have engaged or to be about to engage in protected 
activity). FRSA provides for employee protection from retaliation 
because the employee has engaged in protected activity pertaining to 
railroad safety or security (or, in circumstances covered by the 
statute, the employee is perceived to have engaged or to be about to 
engage in protected activity), has requested medical or first aid 
treatment, or has followed orders or a treatment plan of a treating 
physician. It also protects an employee against delay, denial or 
interference with first aid or medical treatment for a workplace injury.
    (b) This part establishes procedures under NTSSA and FRSA for the 
expeditious handling of retaliation complaints filed by employees, or by 
persons acting on their behalf, and sets forth the Secretary's 
interpretations of NTSSA and FRSA on certain statutory issues. These 
rules, together with those codified at 29 CFR part 18, set forth the 
procedures under NTSSA or FRSA for submission of complaints, 
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. 1982.101  Definitions.

    As used in this part:
    (a) 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 NTSSA or FRSA.

[[Page 148]]

    (b) Business days means days other than Saturdays, Sundays, and 
Federal holidays.
    (c) Complainant means the employee who filed a NTSSA or FRSA 
complaint or on whose behalf a complaint was filed.
    (d) Employee means an individual presently or formerly working for, 
an individual applying to work for, or an individual whose employment 
could be affected by a public transportation agency or a railroad 
carrier, or a contractor or subcontractor of a public transportation 
agency or a railroad carrier.
    (e) FRSA means Section 1521 of the Implementing Recommendations of 
the 9/11 Commission Act of 2007, Public Law 110-053, August 3, 2007, as 
further amended by Public Law 110-432, October, 16, 2008, codified at 49 
U.S.C. 20109.
    (f) NTSSA means Section 1413 of the Implementing Recommendations of 
the 9/11 Commission Act of 2007, Public Law 110-053, August 3, 2007, 
codified at 6 U.S.C. 1142.
    (g) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (h) Public transportation means regular, continuing shared-ride 
surface transportation services that are open to the general public or 
open to a segment of the general public defined by age, disability, or 
low income; and does not include: Intercity passenger rail 
transportation provided by the entity described in chapter 243 (or a 
successor to such entity); intercity bus service; charter bus service; 
school bus service; sightseeing service; courtesy shuttle service for 
patrons of one or more specific establishments; or intra-terminal or 
intra-facility shuttle services.
    (i) Public transportation agency means a publicly owned operator of 
public transportation eligible to receive federal assistance under 49 
U.S.C. chapter 53.
    (j) Railroad means any form of nonhighway ground transportation that 
runs on rails or electromagnetic guideways, including commuter or other 
short-haul railroad passenger service in a metropolitan or suburban area 
and commuter railroad service that was operated by the Consolidated Rail 
Corporation on January 1, 1979; and high speed ground transportation 
systems that connect metropolitan areas, without regard to whether those 
systems use new technologies not associated with traditional railroads; 
but does not include rapid transit operations in an urban area that are 
not connected to the general railroad system of transportation.
    (k) Railroad carrier means a person providing railroad 
transportation, except that, upon petition by a group of commonly 
controlled railroad carriers that the Secretary of Transportation 
determines is operating within the United States as a single, integrated 
rail system, the Secretary of Transportation may by order treat the 
group of railroad carriers as a single railroad carrier for purposes of 
one or more provisions of part A, subtitle V of title 49 and 
implementing regulations and order, subject to any appropriate 
conditions that the Secretary of Transportation may impose.
    (l) Respondent means the person alleged to have violated NTSSA or 
FRSA.
    (m) Secretary means the Secretary of Labor or person to whom 
authority under NTSSA or FRSA has been delegated.
    (n) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1982.102  Obligations and prohibited acts.

    (a) National Transit Systems Security Act. (1) A public 
transportation agency, contractor, or subcontractor of such agency, or 
officer or employee of such agency, shall not discharge, demote, 
suspend, reprimand, or in any other way retaliate against, including but 
not limited to intimidating, threatening, restraining, coercing, 
blacklisting, or disciplining, an employee if such retaliation is due, 
in whole or in part, to the employee's lawful, good faith act done, or 
perceived by the employer to have been done or about to be done--
    (i) To provide information, directly cause information to be 
provided, or

[[Page 149]]

otherwise directly assist in any investigation regarding any conduct 
which the employee reasonably believes constitutes a violation of any 
Federal law, rule, or regulation relating to public transportation 
safety or security, or fraud, waste, or abuse of Federal grants or other 
public funds intended to be used for public transportation safety or 
security, if the information or assistance is provided to or an 
investigation stemming from the provided information is conducted by--
    (A) A Federal, State or local regulatory or law enforcement agency 
(including an office of the Inspector General under the Inspector 
General Act of 1978 (5 U.S.C. App.; Pub. L. 95-452));
    (B) Any Member of Congress, any Committee of Congress, or the 
Government Accountability Office; or
    (C) A person with supervisory authority over the employee or such 
other person who has the authority to investigate, discover, or 
terminate the misconduct;
    (ii) To refuse to violate or assist in the violation of any Federal 
law, rule, or regulation relating to public transportation safety or 
security;
    (iii) To file a complaint or directly cause to be brought a 
proceeding related to the enforcement of this section or to testify in 
that proceeding;
    (iv) To cooperate with a safety or security investigation by the 
Secretary of Transportation, the Secretary of Homeland Security, or the 
National Transportation Safety Board; or
    (v) To furnish information to the Secretary of Transportation, the 
Secretary of Homeland Security, the National Transportation Safety 
Board, or any Federal, State, or local regulatory or law enforcement 
agency as to the facts relating to any accident or incident resulting in 
injury or death to an individual or damage to property occurring in 
connection with public transportation.
    (2)(i) A public transportation agency, contractor, or subcontractor 
of such agency, or officer or employee of such agency, shall not 
discharge, demote, suspend, reprimand, or in any other way retaliate 
against, including but not limited to intimidating, threatening, 
restraining, coercing, blacklisting, or disciplining, an employee for--
    (A) Reporting a hazardous safety or security condition;
    (B) Refusing to work when confronted by a hazardous safety or 
security condition related to the performance of the employee's duties, 
if the conditions described in paragraph (a)(2)(ii) of this section 
exist; or
    (C) Refusing to authorize the use of any safety- or security-related 
equipment, track, or structures, if the employee is responsible for the 
inspection or repair of the equipment, track, or structures, when the 
employee believes that the equipment, track, or structures are in a 
hazardous safety or security condition, if the conditions described in 
paragraph (a)(2)(ii) of this section exist.
    (ii) A refusal is protected under paragraph (a)(2)(i)(B) and (C) of 
this section if--
    (A) The refusal is made in good faith and no reasonable alternative 
to the refusal is available to the employee;
    (B) A reasonable individual in the circumstances then confronting 
the employee would conclude that--
    (1) The hazardous condition presents an imminent danger of death or 
serious injury; and
    (2) The urgency of the situation does not allow sufficient time to 
eliminate the danger without such refusal; and
    (C) The employee, where possible, has notified the public 
transportation agency of the existence of the hazardous condition and 
the intention not to perform further work, or not to authorize the use 
of the hazardous equipment, track, or structures, unless the condition 
is corrected immediately or the equipment, track, or structures are 
repaired properly or replaced.
    (iii) In this paragraph (a)(2), only paragraph (a)(2)(i)(A) shall 
apply to security personnel, including transit police, employed or 
utilized by a public transportation agency to protect riders, equipment, 
assets, or facilities.
    (b) Federal Railroad Safety Act. (1) A railroad carrier engaged in 
interstate or foreign commerce, a contractor or a subcontractor of such 
a railroad carrier, or an officer or employee of such a railroad 
carrier, may not discharge, demote, suspend, reprimand, or in any

[[Page 150]]

other way retaliate against, including but not limited to intimidating, 
threatening, restraining, coercing, blacklisting, or disciplining, an 
employee if such retaliation is due, in whole or in part, to the 
employee's lawful, good faith act done, or perceived by the employer to 
have been done or about to be done--
    (i) To provide information, directly cause information to be 
provided, or otherwise directly assist in any investigation regarding 
any conduct which the employee reasonably believes constitutes a 
violation of any Federal law, rule, or regulation relating to railroad 
safety or security, or gross fraud, waste, or abuse of Federal grants or 
other public funds intended to be used for railroad safety or security, 
if the information or assistance is provided to or an investigation 
stemming from the provided information is conducted by--
    (A) A Federal, State, or local regulatory or law enforcement agency 
(including an office of the Inspector General under the Inspector 
General Act of 1978 (5 U.S.C. App.; Public Law 95-452));
    (B) Any Member of Congress, any committee of Congress, or the 
Government Accountability Office; or
    (C) A person with supervisory authority over the employee or such 
other person who has the authority to investigate, discover, or 
terminate the misconduct;
    (ii) To refuse to violate or assist in the violation of any Federal 
law, rule, or regulation relating to railroad safety or security;
    (iii) To file a complaint, or directly cause to be brought a 
proceeding related to the enforcement of 49 U.S.C. part A of subtitle V 
or, as applicable to railroad safety or security, 49 U.S.C. chapter 51 
or 57, or to testify in that proceeding;
    (iv) To notify, or attempt to notify, the railroad carrier or the 
Secretary of Transportation of a work-related personal injury or work-
related illness of an employee;
    (v) To cooperate with a safety or security investigation by the 
Secretary of Transportation, the Secretary of Homeland Security, or the 
National Transportation Safety Board;
    (vi) To furnish information to the Secretary of Transportation, the 
Secretary of Homeland Security, the National Transportation Safety 
Board, or any Federal, State, or local regulatory or law enforcement 
agency as to the facts relating to any accident or incident resulting in 
injury or death to an individual or damage to property occurring in 
connection with railroad transportation; or
    (vii) To accurately report hours on duty pursuant to 49 U.S.C. 
chapter 211.
    (2)(i) A railroad carrier engaged in interstate or foreign commerce, 
or an officer or employee of such a railroad carrier, shall not 
discharge, demote, suspend, reprimand, or in any other way retaliate 
against, including but not limited to intimidating, threatening, 
restraining, coercing, blacklisting, or disciplining, an employee for--
    (A) Reporting, in good faith, a hazardous safety or security 
condition;
    (B) Refusing to work when confronted by a hazardous safety or 
security condition related to the performance of the employee's duties, 
if the conditions described in paragraph (b)(2)(ii) of this section 
exist; or
    (C) Refusing to authorize the use of any safety-related equipment, 
track, or structures, if the employee is responsible for the inspection 
or repair of the equipment, track, or structures, when the employee 
believes that the equipment, track, or structures are in a hazardous 
safety or security condition, if the conditions described in paragraph 
(b)(2)(ii) of this section exist.
    (ii) A refusal is protected under paragraph (b)(2)(i)(B) and (C) of 
this section if--
    (A) The refusal is made in good faith and no reasonable alternative 
to the refusal is available to the employee;
    (B) A reasonable individual in the circumstances then confronting 
the employee would conclude that--
    (1) The hazardous condition presents an imminent danger of death or 
serious injury; and
    (2) The urgency of the situation does not allow sufficient time to 
eliminate the danger without such refusal; and
    (C) The employee, where possible, has notified the railroad carrier 
of the existence of the hazardous condition and

[[Page 151]]

the intention not to perform further work, or not to authorize the use 
of the hazardous equipment, track, or structures, unless the condition 
is corrected immediately or the equipment, track, or structures are 
repaired properly or replaced.
    (iii) In this paragraph (b)(2), only paragraph (b)(2)(i)(A) shall 
apply to security personnel employed by a railroad carrier to protect 
individuals and property transported by railroad.
    (3) A railroad carrier or person covered under this section may not:
    (i) Deny, delay, or interfere with the medical or first aid 
treatment of an employee who is injured during the course of employment. 
If transportation to a hospital is requested by an employee injured 
during the course of employment, the railroad shall promptly arrange to 
have the injured employee transported to the nearest hospital where the 
employee can receive safe and appropriate medical care.
    (ii) Discipline, or threaten discipline to, an employee for 
requesting medical or first aid treatment, or for following orders or a 
treatment plan of a treating physician, except that--
    (A) A railroad carrier's refusal to permit an employee to return to 
work following medical treatment shall not be considered a violation of 
FRSA if the refusal is pursuant to Federal Railroad Administration 
medical standards for fitness of duty or, if there are no pertinent 
Federal Railroad Administration standards, a carrier's medical standards 
for fitness for duty.
    (B) For purposes of this paragraph, the term ``discipline'' means to 
bring charges against a person in a disciplinary proceeding, suspend, 
terminate, place on probation, or make note of reprimand on an 
employee's record.



Sec. 1982.103  Filing of retaliation complaints.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against in violation of NTSSA or FRSA may file, or have filed 
by any person on the employee's behalf, a complaint alleging such 
retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office 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 180 days after an alleged violation of 
NTSSA or FRSA occurs, any employee who believes that he or she has been 
retaliated against in violation of NTSSA or FRSA may file, or have filed 
by any person on the employee's behalf, a complaint alleging such 
retaliation. The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law. For example, 
OSHA may consider the time for filing a complaint equitably tolled if a 
complainant mistakenly files a complaint with another agency instead of 
OSHA within 180 days after becoming aware of the alleged violation.



Sec. 1982.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and 
other applicable confidentiality laws. OSHA will also notify the 
respondent of its rights under paragraphs (b) and (f) of this section 
and Sec. 1982.110(e). OSHA will provide an unredacted copy of these same 
materials to the complainant (or the complainant's legal counsel if 
complainant is represented by counsel), and to the Federal Railroad 
Administration, the

[[Page 152]]

Federal Transit Administration, or the Transportation Security 
Administration as appropriate.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
may submit to OSHA a written statement and any affidavits or documents 
substantiating its position. Within the same 20 days, the respondent may 
request a meeting with OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the other party (or the 
party's legal counsel if the party is represented by counsel) at a time 
permitting the other party an opportunity to respond. Before providing 
such materials to the other party, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. OSHA will also provide each party with 
an opportunity to respond to the other party's submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that protected activity was a contributing factor 
in the adverse action alleged in the complaint.
    (2) 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, in 
circumstances covered by NTSSA and FRSA, was perceived to have engaged 
or to be about to engage in protected activity);
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity (or, in circumstances covered by NTSSA and FRSA, 
perceived the employee to have engaged or to be about to engage in 
protected activity);
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity (or perception thereof) was a contributing factor 
in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity (or, in circumstances covered by NTSSA and 
FRSA, perceived the employee to have engaged or to be about to engage in 
protected activity), and that the protected activity (or perception 
thereof) was a contributing factor in the adverse action. The burden may 
be satisfied, for example, if the complaint shows that the adverse 
action took place shortly after the protected activity, or at the first 
opportunity available to the respondent, giving rise to the inference 
that it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, OSHA will proceed 
with the investigation. The investigation will proceed whenever it is 
necessary or appropriate to confirm or verify the information provided 
by the respondent.

[[Page 153]]

    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1982.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated NTSSA or FRSA and that 
preliminary reinstatement is warranted, OSHA will contact the respondent 
(or the respondent's legal counsel if respondent is represented by 
counsel) 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 
complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials, OSHA will redact them, if necessary, consistent with the 
Privacy Act of 1974, 5 U.S.C. 552a, and other applicable confidentiality 
laws. The respondent 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 respondent must present this evidence within 10 business 
days of OSHA's notification pursuant to this paragraph, or as soon 
afterwards as OSHA and the respondent can agree, if the interests of 
justice so require.



Sec. 1982.105  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 respondent has retaliated against 
the complainant in violation of NTSSA or FRSA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will include, where appropriate: 
Affirmative action to abate the violation; reinstatement with the same 
seniority status that the employee would have had, but for the 
retaliation; any back pay with interest; and payment of compensatory 
damages, including compensation for any special damages sustained as a 
result of the retaliation, including litigation costs, expert witness 
fees, and reasonable attorney fees. Interest on back pay will be 
calculated using the interest rate applicable to underpayment of taxes 
under 26 U.S.C. 6621 and will be compounded daily. The preliminary order 
will also require the respondent to submit documentation to the Social 
Security Administration or the Railroad Retirement Board, as 
appropriate, allocating any back pay award to the appropriate months or 
calendar quarters. The preliminary order may also require the respondent 
to pay punitive damages up to $250,000.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested, to all parties of 
record (and each party's legal counsel if the party is represented by 
counsel). The findings and, where appropriate, the preliminary order 
will inform the parties of the right to object to the findings and/or 
order and to request a hearing, and of the right of the respondent under 
NTSSA to request award of attorney fees not exceeding $1,000 from the 
administrative law judge (ALJ) regardless of whether the respondent has 
filed objections, if the respondent alleges that the complaint was 
frivolous or brought in bad faith. The findings and, where appropriate, 
the preliminary order also will give the address of the Chief 
Administrative Law Judge, U.S. Department of Labor. At the same time, 
the Assistant Secretary will file with the Chief Administrative Law 
Judge a copy of the original complaint and a copy of the findings and/or 
order.

[[Page 154]]

    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for a hearing has been timely filed as provided at 
Sec. 1982.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and of the preliminary order, regardless of any 
objections to the findings and/or the order.



                          Subpart B_Litigation



Sec. 1982.106  Objections to the findings and the preliminary order
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under NTSSA, 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 Sec. 1982.105. The objections, request for 
a hearing, and/or request for attorney fees must be in writing and state 
whether the objections are to the findings, the preliminary order, and/
or whether there should be an award of attorney fees. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
is considered 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, 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, the Assistant Secretary, and the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings and/or the preliminary order, the findings or preliminary 
order will become the final decision of the Secretary, not subject to 
judicial review.



Sec. 1982.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. Administrative Law 
Judges have broad discretion to limit discovery in order to expedite the 
hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1982.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies

[[Page 155]]

of all documents in the case. At the Assistant Secretary's discretion, 
the Assistant Secretary may participate as a party or as amicus curiae 
at any time at any stage of the proceeding. This right to participate 
includes, but is not limited to, the right to petition for review of a 
decision of an ALJ, including a decision approving or rejecting a 
settlement agreement between the complainant and the respondent.
    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and the Associate Solicitor is 
otherwise required by these rules.
    (b) The Department of Homeland Security or the Department of 
Transportation, if interested in a proceeding, may participate as amicus 
curiae at any time in the proceeding, at those agencies' discretion. At 
the request of the interested federal agency, copies of all documents in 
a case must be sent to the federal agency, whether or not the agency is 
participating in the proceeding.



Sec. 1982.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1982.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, 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 ALJ will hear the case on the merits or dispose of 
the matter without a hearing if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will include, where appropriate: 
Affirmative action to abate the violation; reinstatement with the same 
seniority status that the employee would have had, but for the 
retaliation; any back pay with interest; and payment of compensatory 
damages, including compensation for any special damages sustained as a 
result of the retaliation, including litigation costs, expert witness 
fees, and reasonable attorney fees. Interest on back pay will be 
calculated using the interest rate applicable to underpayment of taxes 
under 26 U.S.C. 6621 and will be compounded daily. The order will also 
require the respondent to submit documentation to the Social Security 
Administration or the Railroad Retirement Board, as appropriate, 
allocating any back pay award to the appropriate months or calendar 
quarters. The order may also require the respondent to pay punitive 
damages up to $250,000.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint filed under NTSSA 
was frivolous or was brought in bad faith, the ALJ may award to the 
respondent a reasonable attorney fee, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition

[[Page 156]]

for review has been filed with the Administrative Review Board (ARB), 
U.S. Department of Labor. The decision of the ALJ will become the final 
order of the Secretary unless a petition for review is timely filed with 
the ARB and the ARB accepts the petition for review.



Sec. 1982.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent alleging that the complaint under 
NTSSA was frivolous or brought in bad faith who seeks an award of 
attorney fees, must file a written petition for review with the ARB, 
which has been delegated the authority to act for the Secretary and 
issue final decisions under this part. The parties should identify in 
their petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A petition must be filed 
within 14 days of the date of the decision of the ALJ. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
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 ARB. 
Copies of the petition for review must be served on the Assistant 
Secretary, and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration is denied or 
14 days after a new decision is issued. The ARB's final decision will be 
served upon all parties and the Chief Administrative Law Judge by mail. 
The final decision also will be served on the Assistant Secretary, and 
on the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, even if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will include, where appropriate: Affirmative action to 
abate the violation; reinstatement with the same seniority status that 
the employee would have had, but for the retaliation; any back pay with 
interest; and payment of compensatory damages, including compensation 
for any special damages sustained as a result of the retaliation, 
including litigation costs, expert witness fees, and reasonable attorney 
fees. Interest on back pay will be calculated using the interest rate 
applicable to underpayment of taxes under 26 U.S.C. 6621 and will be 
compounded daily. The order will also require the respondent to submit 
documentation to the Social Security Administration or the Railroad 
Retirement Board, as appropriate, allocating any back pay award to the 
appropriate months or calendar quarters. The order may also require the 
respondent to pay punitive damages up to $250,000.

[[Page 157]]

    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint under NTSSA was 
frivolous or was brought in bad faith, the ARB may award to the 
respondent reasonable attorney fees, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1982.111  Withdrawal of complaints, findings, objections, 
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying OSHA, orally or in writing, 
of his or her withdrawal. OSHA then will confirm in writing the 
complainant's desire to withdraw and determine whether to approve the 
withdrawal. OSHA will notify the parties (or each party's legal counsel 
if the party is represented by counsel) of the approval of any 
withdrawal. If the complaint is withdrawn because of settlement, the 
settlement must be submitted for approval in accordance with paragraph 
(d) of this section. A complainant may not withdraw his or her complaint 
after the filing of objections to the Assistant Secretary's findings 
and/or preliminary order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1982.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
order become final, a party may withdraw its objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw its 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB approves a request to withdraw a petition 
for review of an ALJ decision, and there are no other pending petitions 
for review of that decision, the ALJ's decision will become the final 
order of the Secretary. If objections or a petition for review are 
withdrawn because of settlement, the settlement must be submitted for 
approval 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 
OSHA, the complainant, and the respondent agree to a settlement. OSHA's 
approval of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as the case may be.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1982.113.



Sec. 1982.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1982.109 and 1982.110, 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.

[[Page 158]]

    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1982.113  Judicial enforcement.

    (a) Whenever any person has failed to comply with a preliminary 
order of reinstatement, or a final order, including one approving a 
settlement agreement, issued under NTSSA, 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 have 
occurred. Whenever any person has failed to comply with a preliminary 
order of reinstatement, or a final order, including one approving a 
settlement agreement, issued under NTSSA, a person on whose behalf the 
order was issued may file a civil action seeking enforcement of the 
order in the appropriate United States district court.
    (b) Whenever a person has failed to comply with a preliminary order 
of reinstatement, or a final order, including one approving a settlement 
agreement, issued under FRSA, 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 have occurred.



Sec. 1982.114  District court jurisdiction of retaliation complaints.

    (a) If there is no final order of the Secretary, 210 days have 
passed since 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. At the request of either party, the action shall be tried 
by the court with a jury.
    (b) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1982.109. 
An employee prevailing in a proceeding under paragraph (a) shall be 
entitled to 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 retaliation; any back pay with 
interest; and payment of compensatory damages, including compensation 
for any special damages sustained as a result of the retaliation, 
including litigation costs, expert witness fees, and reasonable attorney 
fees. The court may also order punitive damages in an amount not to 
exceed $250,000.
    (c) Within 7 days after filing a complaint in federal court, a 
complainant must file with the Assistant Secretary, the ALJ, or the ARB, 
depending upon where the proceeding is pending, a copy of the file-
stamped complaint. In all cases, a copy of the complaint must also be 
served on the OSHA official who issued the findings and/or preliminary 
order, the Assistant Secretary, and the Associate Solicitor, Division of 
Fair Labor Standards, U.S. Department of Labor.



Sec. 1982.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules, or for good cause shown, the ALJ or the ARB on review may, upon 
application, after three-days notice to all parties, waive any rule or 
issue such orders that justice or the administration of NTSSA or FRSA 
requires.



PART 1983_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS UNDER
SECTION 219 OF THE CONSUMER PRODUCT SAFETY IMPROVEMENT ACT OF 2008--
Table of Contents



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders

Sec.
1983.100  Purpose and scope.
1983.101  Definitions.
1983.102  Obligations and prohibited acts.
1983.103  Filing of retaliation complaint.
1983.104  Investigation.
1983.105  Issuance of findings and preliminary orders.

[[Page 159]]

                          Subpart B_Litigation

1983.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1983.107  Hearings.
1983.108  Role of Federal agencies.
1983.109  Decision and orders of the administrative law judge.
1983.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1983.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1983.112  Judicial review.
1983.113  Judicial enforcement.
1983.114  District court jurisdiction of retaliation complaints.
1983.115  Special circumstances; waiver of rules.

    Authority: 15 U.S.C. 2087; Secretary's Order 1-2012 (Jan. 18, 2012), 
77 FR 3912 (Jan. 25, 2012); Secretary's Order 1-2010 (Jan. 15, 2010), 75 
FR 3924 (Jan. 25, 2010).

    Source: 77 FR 40503, July 10, 2012, unless otherwise noted.



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders



Sec. 1983.100  Purpose and scope.

    (a) This part implements procedures of the employee protection 
provisions of the Consumer Product Safety Improvement Act (CPSIA), 15 
U.S.C. 2087. CPSIA provides for employee protection from retaliation 
because the employee has engaged in protected activity pertaining to 
consumer product safety.
    (b) This part establishes procedures under CPSIA for the expeditious 
handling of retaliation complaints filed by employees, or by persons 
acting on their behalf. These rules, together with those codified at 29 
CFR part 18, set forth the procedures under CPSIA for submission of 
complaints, investigations, issuance of findings and preliminary orders, 
objections to findings and orders, litigation before administrative law 
judges (ALJs), post-hearing administrative review, and withdrawals and 
settlements.



Sec. 1983.101  Definitions.

    As used in this part:
    (a) 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 CPSIA.
    (b) Business days means days other than Saturdays, Sundays, and 
Federal holidays.
    (c) Commission means the Consumer Product Safety Commission.
    (d) Complainant means the employee who filed a CPSIA complaint or on 
whose behalf a complaint was filed.
    (e)(1) Consumer product means any article, or component part 
thereof, produced or distributed:
    (i) For sale to a consumer for use in or around a permanent or 
temporary household or residence, a school, in recreation, or otherwise; 
or
    (ii) For the personal use, consumption or enjoyment of a consumer in 
or around a permanent or temporary household or residence, a school, in 
recreation, or otherwise.
    (iii) The term ``consumer product'' includes any mechanical device 
which carries or conveys passengers along, around, or over a fixed or 
restricted route or course or within a defined area for the purpose of 
giving its passengers amusement, which is customarily controlled or 
directed by an individual who is employed for that purpose and who is 
not a consumer with respect to such device, and which is not permanently 
fixed to a site, but does not include such a device that is permanently 
fixed to a site.
    (2) The term consumer product does not include:
    (i) Any article which is not customarily produced or distributed for 
sale to, or use or consumption by, or enjoyment of, a consumer;
    (ii) Tobacco and tobacco products;
    (iii) Motor vehicles or motor vehicle equipment (as defined by 49 
U.S.C. 30102(a)(6) and (7));
    (iv) Pesticides (as defined by the Federal Insecticide, Fungicide, 
and Rodenticide Act (7 U.S.C. 136 et seq.));
    (v) Any article or any component of any such article which, if sold 
by the manufacturer, producer, or importer, would be subject to the tax 
imposed by 26 U.S.C. 4181;

[[Page 160]]

    (vi) Aircraft, aircraft engines, propellers, or appliances (as 
defined in 49 U.S.C. 40102(a));
    (vii) Boats which could be subjected to safety regulation under 46 
U.S.C. chapter 43; vessels, and appurtenances to vessels (other than 
such boats), which could be subjected to safety regulation under title 
52 of the Revised Statutes or other marine safety statutes administered 
by the department in which the Coast Guard is operating; and equipment 
(including associated equipment, as defined in 46 U.S.C. 2101(1)), to 
the extent that a risk of injury associated with the use of such 
equipment on boats or vessels could be eliminated or reduced by actions 
taken under any statute referred to in this definitional section;
    (viii) Drugs, devices, or cosmetics (as such terms are defined in 21 
U.S.C. 321(g), (h), and (i)); or
    (ix) Food (the term ``food'' means all ``food,'' as defined in 21 
U.S.C. 321(f), including poultry and poultry products (as defined in 21 
U.S.C. 453(e) and (f)), meat, meat food products (as defined in 21 
U.S.C. 601(j)), and eggs and egg products (as defined in 21 U.S.C. 
1033)).
    (f) CPSIA means Section 219 of the Consumer Product Safety 
Improvement Act of 2008, Public Law 110-314, 122 Stat. 3016 (Aug. 14, 
2008) (codified at 15 U.S.C. 2087).
    (g) Distributor means a person to whom a consumer product is 
delivered or sold for purposes of distribution in commerce, except that 
such term does not include a manufacturer or retailer of such product.
    (h) Employee means an individual presently or formerly working for, 
an individual applying to work for, or an individual whose employment 
could be affected by a manufacturer, private labeler, distributor, or 
retailer.
    (i) Manufacturer means any person who manufactures or imports a 
consumer product. A product is manufactured if it is manufactured, 
produced, or assembled.
    (j) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (k) Private labeler means an owner of a brand or trademark on the 
label of a consumer product which bears a private label. A consumer 
product bears a private label if:
    (1) The product (or its container) is labeled with the brand or 
trademark of a person other than a manufacturer of the product,
    (2) The person with whose brand or trademark the product (or 
container) is labeled has authorized or caused the product to be so 
labeled, and
    (3) The brand or trademark of a manufacturer of such product does 
not appear on such label.
    (l) Retailer means a person to whom a consumer product is delivered 
or sold for purposes of sale or distribution by such person to a 
consumer.
    (m) Respondent means the employer named in the complaint who is 
alleged to have violated CPSIA.
    (n) Secretary means the Secretary of Labor or person to whom 
authority under CPSIA has been delegated.
    (o) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1983.102  Obligations and prohibited acts.

    (a) No manufacturer, private labeler, distributor, or retailer may 
discharge or otherwise retaliate against, including, but not limited to, 
intimidating, threatening, restraining, coercing, blacklisting or 
disciplining, any employee with respect to the employee's compensation, 
terms, conditions, or privileges of employment because the employee, 
whether at the employee's initiative or in the ordinary course of the 
employee's duties (or any person acting pursuant to a request of the 
employee), engaged in any of the activities specified in paragraphs 
(b)(1) through (4) of this section.
    (b) An employee is protected against retaliation (as described in 
paragraph (a) of this section) by a manufacturer, private labeler, 
distributor, or retailer because the employee (or any person acting 
pursuant to a request of the employee):
    (1) Provided, caused to be provided, or is about to provide or cause 
to be provided to the employer, the Federal Government, or the attorney 
general of a State information relating to any violation of, or any act 
or omission the

[[Page 161]]

employee reasonably believes to be a violation of any provision of the 
Consumer Product Safety Act, as amended by CPSIA, or any other Act 
enforced by the Commission, or any order, rule, regulation, standard, or 
ban under any such Acts;
    (2) Testified or is about to testify in a proceeding concerning such 
violation;
    (3) Assisted or participated or is about to assist or participate in 
such a proceeding; or
    (4) Objected to, or refused to participate in, any activity, policy, 
practice, or assigned task that the employee (or other such person) 
reasonably believed to be in violation of any provision of the Consumer 
Product Safety Act, as amended by CPSIA, or any other Act enforced by 
the Commission, or any order, rule, regulation, standard, or ban under 
any such Acts.
    (c) This part shall have no application with respect to an employee 
of a manufacturer, private labeler, distributor, or retailer who, acting 
without direction from such manufacturer, private labeler, distributor, 
or retailer (or such person's agent), deliberately causes a violation of 
any requirement relating to any violation or alleged violation of any 
order, regulation, or consumer product safety standard under the 
Consumer Product Safety Act, as amended by CPSIA, or any other law 
enforced by the Commission.



Sec. 1983.103  Filing of retaliation complaint.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against by a manufacturer, private labeler, distributor, or 
retailer in violation of CPSIA may file, or have filed by any person on 
the employee's behalf, a complaint alleging such retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office 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 180 days after an alleged violation of 
CPSIA occurs, any employee who believes that he or she has been 
retaliated against in violation of CPSIA may file, or have filed by any 
person on the employee's behalf, a complaint alleging such retaliation. 
The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law.



Sec. 1983.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, the 
Assistant Secretary will notify the respondent of the filing of the 
complaint, of the allegations contained in the complaint, and of the 
substance of the evidence supporting the complaint. Such materials will 
be redacted, if necessary, in accordance with the Privacy Act of 1974, 5 
U.S.C. 552a, and other applicable confidentiality laws. The Assistant 
Secretary will also notify the respondent of its rights under paragraphs 
(b) and (f) of this section and Sec. 1983.110(e). The Assistant 
Secretary will provide an unredacted copy of these same materials to the 
complainant (or the complainant's legal counsel if complainant is 
represented by counsel), and to the Consumer Product Safety Commission.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
and the complainant each may submit to the Assistant Secretary a written 
statement and any affidavits or documents substantiating its position. 
Within the same 20 days, the respondent and the complainant each may 
request a meeting with the Assistant Secretary to present its position.

[[Page 162]]

    (c) Throughout the investigation, the agency will provide to the 
complainant (or the complainant's legal counsel if complainant is 
represented by counsel) a copy of all of respondent's submissions to the 
agency that are responsive to the complainant's whistleblower complaint. 
Before providing such materials to the complainant, the agency will 
redact them, if necessary, in accordance with the Privacy Act of 1974, 5 
U.S.C. 552a, and other applicable confidentiality laws. The agency will 
also provide the complainant with an opportunity to respond to such 
submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that protected activity was a contributing factor 
in the adverse action alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse action took place 
shortly after the protected activity, giving rise to the inference that 
it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) 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 or will be discontinued if the 
respondent demonstrates by clear and convincing evidence that it would 
have taken the same adverse action in the absence of the complainant's 
protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, the Assistant 
Secretary will proceed with the investigation. The investigation will 
proceed whenever it is necessary or appropriate to confirm or verify the 
information provided by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1983.105, if the Assistant Secretary has reasonable 
cause, on the basis of information gathered under the procedures of this 
part, to believe that the respondent has violated CPSIA and that 
preliminary reinstatement is warranted, the Assistant Secretary will 
again contact the respondent (or the respondent's legal counsel if 
respondent is represented by counsel) 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 complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials to the complainant, the agency will redact them, if necessary, 
in accordance with

[[Page 163]]

the Privacy Act of 1974, 5 U.S.C. 552a, and other applicable 
confidentiality laws. The respondent 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 respondent must present this evidence 
within 10 business days of the Assistant Secretary's notification 
pursuant to this paragraph, or as soon thereafter as the Assistant 
Secretary and the respondent can agree, if the interests of justice so 
require.



Sec. 1983.105  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 
the filing of the complaint, written findings as to whether or not there 
is reasonable cause to believe that the respondent has retaliated 
against the complainant in violation of CPSIA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will require, where appropriate: 
affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney's and expert 
witness fees) reasonably incurred. Interest on back pay will be 
calculated using the interest rate applicable to underpayment of taxes 
under 26 U.S.C. 6621 and will be compounded daily.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested, to all parties of 
record (and each party's legal counsel if the party is represented by 
counsel). The findings and, where appropriate, the preliminary order 
will inform the parties of the right to object to the findings and/or 
order and to request a hearing, and of the right of the respondent to 
request an award of attorney's fees not exceeding $1,000 from the ALJ, 
regardless of whether the respondent has filed objections, if the 
respondent alleges that the complaint was frivolous or brought in bad 
faith. The findings and, where appropriate, the preliminary order also 
will give the address of the Chief Administrative Law Judge, U.S. 
Department of Labor. At the same time, the Assistant Secretary will file 
with the Chief Administrative Law Judge a copy of the original complaint 
and a copy of the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1983.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the order.



                          Subpart B_Litigation



Sec. 1983.106  Objections to the findings and the preliminary order
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and/or preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney's fees under CPSIA, 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 Sec. 1983.105. The objections, request 
for a hearing, and/or request for attorney's fees must be in writing and 
state whether the objections are to the findings, the preliminary order, 
and/or whether there should be an award of

[[Page 164]]

attorney's fees. The date of the postmark, facsimile transmittal, or 
electronic communication transmittal is considered 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, 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, the 
Assistant Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1983.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1983.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.
    (2) Copies of documents must be sent to the Assistant Secretary and 
to the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, only upon request of the Assistant Secretary, or 
where the Assistant Secretary is participating in the proceeding, or 
where service on the Assistant Secretary and the Associate Solicitor is 
otherwise required by these rules.
    (b) The Consumer Product Safety Commission, if interested in a 
proceeding, may participate as amicus curiae at any time in the 
proceeding, at the Commission's discretion. At the request of the 
Commission, copies of all documents in a case must be sent to the 
Commission, whether or not it is participating in the proceeding.



Sec. 1983.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may

[[Page 165]]

be made only if the complainant has demonstrated by a preponderance of 
the evidence that protected activity was a contributing factor in the 
adverse action alleged in the complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither the Assistant Secretary's determination to dismiss a 
complaint without completing an investigation pursuant to 
Sec. 1983.104(e) nor the Assistant Secretary's determination to proceed 
with an investigation is subject to review by the ALJ, 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 ALJ will 
hear the case on the merits or dispose of the matter without a hearing 
if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions, and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney's and expert 
witness fees) reasonably incurred. Interest on back pay will be 
calculated using the interest rate applicable to underpayment of taxes 
under 26 U.S.C. 6621 and will be compounded daily.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the ALJ may award to the respondent a 
reasonable attorney's fee, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB), U.S. 
Department of Labor. The decision of the ALJ will become the final order 
of the Secretary unless a petition for review is timely filed with the 
ARB and the ARB accepts the petition for review.



Sec. 1983.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent 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 ARB, which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The parties should identify in their 
petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A petition must be filed 
within 14 days of the date of the decision of the ALJ. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
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 ARB. 
Copies of the petition for review must be served on the Assistant 
Secretary and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, within 30 days of the filing of the 
petition, issues an order

[[Page 166]]

notifying the parties that the case has been accepted for review. If a 
case is accepted for review, the decision of the ALJ will be inoperative 
unless and until the ARB issues an order adopting the decision, except 
that any order of reinstatement will be effective while review is 
conducted by the ARB, unless the ARB grants a motion by the respondent 
to stay that order based on exceptional circumstances. The ARB will 
specify the terms under which any briefs are to be filed. The ARB will 
review the factual determinations of the ALJ under the substantial 
evidence standard. If no timely petition for review is filed, or the ARB 
denies review, the decision of the ALJ will become the final order of 
the Secretary. If no timely petition for review is filed, the resulting 
final order is not subject to judicial review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration is ruled upon 
or 14 days after a new decision is issued. The ARB's final decision will 
be served upon all parties and the Chief Administrative Law Judge by 
mail. The final decision will also be served on the Assistant Secretary 
and on the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, even if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position, together with the compensation (including back pay and 
interest), terms, conditions, and privileges of the complainant's 
employment; and payment of compensatory damages, including, at the 
request of the complainant, the aggregate amount of all costs and 
expenses (including attorney's and expert witness fees) reasonably 
incurred. Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent a 
reasonable attorney's fee, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1983.111  Withdrawal of complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying the Assistant Secretary, 
orally or in writing, of his or her withdrawal. The Assistant Secretary 
then will confirm in writing the complainant's desire to withdraw and 
determine whether to approve the withdrawal. The Assistant Secretary 
will notify the parties (and each party's legal counsel if the party is 
represented by counsel) of the approval of any withdrawal. If the 
complaint is withdrawn because of settlement, the settlement must be 
submitted for approval in accordance with paragraph (d) of this section. 
A complainant may not withdraw his or her complaint after the filing of 
objections to the Assistant Secretary's findings and/or preliminary 
order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1983.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party

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may withdraw a petition for review of an ALJ's decision at any time 
before that decision becomes final by filing a written withdrawal with 
the ARB. The ALJ or the ARB, as the case may be, will determine whether 
to approve the withdrawal of the objections or the petition for review. 
If the ALJ approves a request to withdraw objections to the Assistant 
Secretary's findings and/or order, and there are no other pending 
objections, the Assistant Secretary's findings and/or order will become 
the final order of the Secretary. If the ARB approves a request to 
withdraw a petition for review of an ALJ decision, and there are no 
other pending petitions for review of that decision, the ALJ's decision 
will become the final order of the Secretary. If objections or a 
petition for review are withdrawn because of settlement, the settlement 
must be submitted for approval 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 respondent agree to a 
settlement. The Assistant Secretary's approval of a settlement reached 
by the respondent and the complainant demonstrates the Assistant 
Secretary's consent and achieves the consent of all three parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as the case may be.
    (e) Any settlement approved by the Assistant Secretary, the ALJ, or 
the ARB will constitute the final order of the Secretary and may be 
enforced in United States district court pursuant to Sec. 1983.113.



Sec. 1983.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1983.109 and 1983.110, 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1983.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under CPSIA, 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. The Secretary also may file a 
civil action seeking enforcement of the order in the United States 
district court for the District of Columbia. In civil actions under this 
section, the district court will have jurisdiction to grant all 
appropriate relief, including, but not limited to, injunctive relief and 
compensatory damages, including:
    (a) Reinstatement with the same seniority status that the employee 
would have had, but for the discharge or retaliation;
    (b) The amount of back pay, with interest; and
    (c) Compensation for any special damages sustained as a result of 
the discharge or retaliation, including litigation costs, expert witness 
fees, and reasonable attorney's fees.



Sec. 1983.114  District court jurisdiction of retaliation complaints.

    (a) The complainant may bring an action at law or equity for de novo 
review in the appropriate district court of the

[[Page 168]]

United States, which will have jurisdiction over such an action without 
regard to the amount in controversy, either:
    (1) Within 90 days after receiving a written determination under 
Sec. 1983.105(a) provided that there has been no final decision of the 
Secretary; or
    (2) If there has been no final decision of the Secretary within 210 
days of the filing of the complaint.
    (3) At the request of either party, the action shall be tried by the 
court with a jury.
    (b) Within seven days after filing a complaint in federal court, a 
complainant must file with the Assistant Secretary, the ALJ, or the ARB, 
depending on where the proceeding is pending, a copy of the file-stamped 
complaint. A copy of the complaint also must be served on the OSHA 
official who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.



Sec. 1983.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules, or for good cause shown, the ALJ or the ARB on review may, upon 
application, after three days notice to all parties, waive any rule or 
issue such orders that justice or the administration of CPSIA requires.



PART 1984_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS UNDER
SECTION 1558 OF THE AFFORDABLE CARE ACT--Table of Contents



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders

Sec.
1984.100  Purpose and scope.
1984.101  Definitions.
1984.102  Obligations and prohibited acts.
1984.103  Filing of retaliation complaint.
1984.104  Investigation.
1984.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1984.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1984.107  Hearings.
1984.108  Role of Federal agencies.
1984.109  Decision and orders of the administrative law judge.
1984.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1984.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1984.112  Judicial review.
1984.113  Judicial enforcement.
1984.114  District court jurisdiction of retaliation complaints.
1984.115  Special circumstances; waiver of rules.

    Authority: 29 U.S.C. 218C; Secretary of Labor's Order 1-2012 (Jan. 
18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of Labor's Order No. 2-
2012 (Oct. 19, 2012), 77 FR 69378 (Nov. 16, 2012).

    Source: 81 FR 70620, Oct. 13, 2016, unless otherwise noted.



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders



Sec. 1984.100  Purpose and scope.

    (a) This part implements procedures under section 1558 of the 
Patient Protection and Affordable Care Act, Public Law 111-148, 124 
Stat. 119, which was signed into law on March 23, 2010 and was amended 
by the Health Care and Education Reconciliation Act of 2010, Public Law 
111-152, 124 Stat. 1029, signed into law on March 30, 2010. The terms 
``Affordable Care Act'' or ``the Act'' are used in this part to refer to 
the final, amended version of the law. Section 1558 of the Act amended 
the Fair Labor Standards Act, 29 U.S.C. 201 et seq. (FLSA) by adding new 
section 18C. 29 U.S.C. 218C. Section 18C of the FLSA provides protection 
for an employee from retaliation because the employee has received a 
credit under section 36B of the Internal Revenue Code of 1986, 26 U.S.C. 
36B, or a cost-sharing reduction (referred to as a

[[Page 169]]

``subsidy'' in section 18C) under the Affordable Care Act, or because 
the employee has engaged in protected activity pertaining to title I of 
the Affordable Care Act or any amendment made by title I of the 
Affordable Care Act.
    (b) This part establishes procedures under section 18C of the FLSA 
for the expeditious handling of retaliation complaints filed by 
employees, or by persons acting on their behalf and sets forth the 
Secretary's interpretations of section 18C on certain statutory issues. 
These rules, together with those codified at 29 CFR part 18, set forth 
the procedures under section 18C of the FLSA for submission of 
complaints, investigations, issuance of findings and preliminary orders, 
objections to findings and orders, litigation before administrative law 
judges (ALJs), post-hearing administrative review, and withdrawals and 
settlements.



Sec. 1984.101  Definitions.

    As used in this part:
    (a) Advance payments of the premium tax credit or ``APTC'' means 
advance payments of the premium tax credit as defined in 45 CFR 155.20.
    (b) Affordable Care Act or ``the Act'' means the Patient Protection 
and Affordable Care Act, Public Law 111-148, 124 Stat. 119 (Mar. 23, 
2010), as amended.
    (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 section 18C of the FLSA.
    (d) Business days means days other than Saturdays, Sundays, and 
federal holidays.
    (e) Complainant means the employee who filed an FLSA section 18C 
complaint or on whose behalf a complaint was filed.
    (f) Employee means:
    (1) Any individual employed by an employer. In the case of an 
individual employed by a public agency, the term employee means any 
individual employed by the Government of the United States: As a 
civilian in the military departments (as defined in 5 U.S.C. 102), in 
any executive agency (as defined in 5 U.S.C. 105), in any unit of the 
judicial branch of the Government which has positions in the competitive 
service, in a nonappropriated fund instrumentality under the 
jurisdiction of the Armed Forces, in the Library of Congress, or in the 
Government Printing Office. The term employee also means any individual 
employed by the United States Postal Service or the Postal Regulatory 
Commission; and any individual employed by a State, political 
subdivision of a State, or an interstate governmental agency, other than 
an individual who is not subject to the civil service laws of the State, 
political subdivision, or agency which employs him; and who holds a 
public elective office of that State, political subdivision, or agency, 
is selected by the holder of such an office to be a member of his 
personal staff, is appointed by such an officeholder to serve on a 
policymaking level, is an immediate adviser to such an officeholder with 
respect to the constitutional or legal powers of his office, or is an 
employee in the legislative branch or legislative body of that State, 
political subdivision, or agency and is not employed by the legislative 
library of such State, political subdivision, or agency.
    (2) The term employee does not include:
    (i) Any individual who volunteers to perform services for a public 
agency which is a State, a political subdivision of a State, or an 
interstate governmental agency, if the individual receives no 
compensation or is paid expenses, reasonable benefits, or a nominal fee 
to perform the services for which the individual volunteered--and such 
services are not the same type of services which the individual is 
employed to perform for such public agency;
    (ii) Any employee of a public agency which is a State, political 
subdivision of a State, or an interstate governmental agency that 
volunteers to perform services for any other State, political 
subdivision, or interstate governmental agency, including a State, 
political subdivision or agency with which the employing State, 
political subdivision, or agency has a mutual aid agreement; or
    (iii) Any individual who volunteers their services solely for 
humanitarian purposes to private non-profit food

[[Page 170]]

banks and who receive groceries from the food banks.
    (3) The term employee includes former employees and applicants for 
employment.
    (g) Employer includes any person acting directly or indirectly in 
the interest of an employer in relation to an employee and includes a 
public agency, but does not include any labor organization (other than 
when acting as an employer) or anyone acting in the capacity of officer 
or agent of such labor organization.
    (h) Exchange means an Exchange as defined in 45 CFR 155.20.
    (i) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (j) Person means an individual, partnership, association, 
corporation, business trust, legal representative, or any organized 
group of persons.
    (k) Respondent means the employer named in the complaint who is 
alleged to have violated section 18C of the FLSA.
    (l) Secretary means the Secretary of Labor or person to whom 
authority under section 18C of the FLSA has been delegated.
    (m) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.
    (n) Any future regulatory revisions that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1984.102  Obligations and prohibited acts.

    (a) No employer may discharge or otherwise retaliate against, 
including, but not limited to, intimidating, threatening, restraining, 
coercing, blacklisting or disciplining, any employee with respect to the 
employee's compensation, terms, conditions, or privileges of employment 
because the employee (or an individual acting at the request of the 
employee), has engaged in any of the activities specified in paragraphs 
(b)(1) through (5) of this section.
    (b) An employee is protected against retaliation because the 
employee (or an individual acting at the request of the employee) has:
    (1) Received a credit under section 36B of the Internal Revenue Code 
of 1986, 26 U.S.C. 36B, or a cost-sharing reduction under the Affordable 
Care Act, or been determined by an Exchange to be eligible for advance 
payments of the premium tax credit (APTC) or for a cost-sharing 
reduction;
    (2) Provided, caused to be provided, or is about to provide or cause 
to be provided to the employer, the Federal Government, or the attorney 
general of a State information relating to any violation of, or any act 
or omission the employee reasonably believes to be a violation of, any 
provision of title I of the Affordable Care Act (or an amendment made by 
title I of the Affordable Care Act);
    (3) Testified or is about to testify in a proceeding concerning such 
violation;
    (4) Assisted or participated, or is about to assist or participate, 
in such a proceeding; or
    (5) Objected to, or refused to participate in, any activity, policy, 
practice, or assigned task that the employee (or other such person) 
reasonably believed to be in violation of any provision of title I of 
the Affordable Care Act (or amendment), or any order, rule, regulation, 
standard, or ban under title I of the Affordable Care Act (or 
amendment).



Sec. 1984.103  Filing of retaliation complaint.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against in violation of section 18C of the FLSA may file, or 
have filed by any person on the employee's behalf, a complaint alleging 
such retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office responsible for enforcement activities in the geographical area 
where the employee resides or was employed, but

[[Page 171]]

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 180 days after an alleged violation of 
section 18C of the FLSA occurs, any employee who believes that he or she 
has been retaliated against in violation of that section may file, or 
have filed by any person on the employee's behalf, a complaint alleging 
such retaliation. The date of the postmark, facsimile transmittal, 
electronic communication transmittal, telephone call, hand-delivery, 
delivery to a third-party commercial carrier, or in-person filing at an 
OSHA office will be considered the date of filing. The time for filing a 
complaint may be tolled for reasons warranted by applicable case law. 
For example, OSHA may consider the time for filing a complaint equitably 
tolled if a complainant mistakenly files a complaint with another agency 
instead of OSHA within 180 days after becoming aware of the alleged 
violation.



Sec. 1984.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 552a, et 
seq., and other applicable confidentiality laws. OSHA will also notify 
the respondent of its rights under paragraphs (b) and (f) of this 
section and Sec. 1984.110(e). OSHA will provide an unredacted copy of 
these same materials to the complainant (or complainant's legal counsel 
if complainant is represented by counsel) and to the appropriate office 
of the federal agency charged with the administration of the general 
provisions of the Affordable Care Act under which the complaint is 
filed: Either the Internal Revenue Service of the United States 
Department of the Treasury (IRS), the United States Department of Health 
and Human Services (HHS), or the Employee Benefits Security 
Administration of the United States Department of Labor (EBSA).
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
and the complainant each may submit to OSHA a written statement and any 
affidavits or documents substantiating its position. Within the same 20 
days, the respondent and the complainant each may request a meeting with 
OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the other party (or the 
party's legal counsel if the party is represented by counsel) at a time 
permitting the other party an opportunity to respond. Before providing 
such materials to the other party, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. OSHA will also provide each party with 
an opportunity to respond to the other party's submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that a protected activity was a contributing 
factor in the adverse action alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and

[[Page 172]]

    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse action took place 
shortly after the protected activity, or at the first opportunity 
available to respondent, giving rise to the inference that it was a 
contributing factor in the adverse action. If the required showing has 
not been made, the complainant (or the complainant's legal counsel, if 
complainant is represented by counsel) will be so notified and the 
investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, OSHA will proceed 
with the investigation. The investigation will proceed whenever it is 
necessary or appropriate to confirm or verify the information provided 
by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1984.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated section 18C of the FLSA and 
that preliminary reinstatement is warranted, OSHA will contact the 
respondent (or the respondent's legal counsel if respondent is 
represented by counsel) 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 complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials to the complainant, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. The respondent will be given the 
opportunity to submit a written response, to meet with the investigator, 
to present statements from witnesses in support of its position, and to 
present legal and factual arguments. The respondent must present this 
evidence within 10 business days of OSHA's notification pursuant to this 
paragraph, or as soon afterwards as OSHA and the respondent can agree, 
if the interests of justice so require.



Sec. 1984.105  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 
the filing of the complaint, written findings as to whether or not there 
is reasonable cause to believe that the respondent has retaliated 
against the complainant in violation of section 18C of the FLSA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions and 
privileges of the complainant's employment; and payment of compensatory

[[Page 173]]

damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The preliminary order will also 
require the respondent to submit appropriate documentation to the Social 
Security Administration allocating any back pay award to the appropriate 
period.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested (or other means that 
allow OSHA to confirm receipt), to all parties of record (and each 
party's legal counsel if the party is represented by counsel). The 
findings and, where appropriate, the preliminary order will inform the 
parties of the right to object to the findings and/or order and to 
request a hearing, and of the right of the respondent to request an 
award of attorney fees not exceeding $1,000 from the administrative law 
judge (ALJ), regardless of whether the respondent has filed objections, 
if respondent alleges that the complaint was frivolous or brought in bad 
faith. The findings, and where appropriate, the preliminary order, also 
will give the address of the Chief Administrative Law Judge, U.S. 
Department of Labor. At the same time, the Assistant Secretary will file 
with the Chief Administrative Law Judge a copy of the original complaint 
and a copy of the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1984.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the order.



                          Subpart B_Litigation



Sec. 1984.106  Objections to the findings and the preliminary order
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and/or preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under section 18C of the FLSA, 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 Sec. 1984.105(b). The 
objections, request for a hearing, and/or request for attorney fees must 
be in writing and state whether the objections are to the findings and/
or the preliminary order, and/or whether there should be an award of 
attorney fees. The date of the postmark, facsimile transmittal, or 
electronic communication transmittal is considered 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, 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, the 
Assistant Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either

[[Page 174]]

the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1984.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1984.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.
    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and the Associate Solicitor is 
otherwise required by these rules.
    (b) The IRS, HHS, and EBSA, if interested in a proceeding, may 
participate as amicus curiae at any time in the proceeding, at those 
agencies' discretion. At the request of the interested federal agency, 
copies of all documents in a case must be sent to the federal agency, 
whether or not the agency is participating in the proceeding.



Sec. 1984.109  Decision and orders of the administrative law judge.

    (a) The decision of the administrative law judge (ALJ) will contain 
appropriate findings, conclusions, and an order pertaining to the 
remedies provided in paragraph (d) of this section, as appropriate. A 
determination that a violation has occurred may be made only if the 
complainant has demonstrated by a preponderance of the evidence that 
protected activity was a contributing factor in the adverse action 
alleged in the complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1984.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, 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 ALJ will hear the case on the merits or dispose of 
the matter without a hearing if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and

[[Page 175]]

interest), terms, conditions, and privileges of the complainant's 
employment; and payment of compensatory damages, including, at the 
request of the complainant, the aggregate amount of all costs and 
expenses (including attorney and expert witness fees) reasonably 
incurred. Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily. The order will also require the respondent to 
submit appropriate documentation to the Social Security Administration 
allocating any back pay award to the appropriate period.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the ALJ may award to the respondent reasonable 
attorney fees, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB), U.S. 
Department of Labor. The decision of the ALJ will become the final order 
of the Secretary unless a petition for review is timely filed with the 
ARB and the ARB accepts the petition for review.



Sec. 1984.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent alleging that the complaint was 
frivolous or brought in bad faith who seeks an award of attorney fees, 
must file a written petition for review with the Administrative Review 
Board (ARB), which has been delegated the authority to act for the 
Secretary and issue final decisions under this part. The parties should 
identify in their petitions for review the legal conclusions or orders 
to which they object, or the objections may be deemed waived. A petition 
must be filed within 14 days of the date of the decision of the ALJ. The 
date of the postmark, facsimile transmittal, or electronic communication 
transmittal 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 ARB. Copies of the petition for review must be served on 
the Assistant Secretary, and on the Associate Solicitor, Division of 
Fair Labor Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration

[[Page 176]]

is ruled upon or 14 days after a new decision is issued. The ARB's final 
decision will be served upon all parties and the Chief Administrative 
Law Judge by mail. The final decision will also be served on the 
Assistant Secretary, and on the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor, even if the Assistant 
Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: Affirmative action to 
abate the violation; reinstatement of the complainant to the 
complainant's former position, together with the compensation (including 
back pay and interest), terms, conditions, and privileges of the 
complainant's employment; and payment of compensatory damages, 
including, at the request of the complainant, the aggregate amount of 
all costs and expenses (including attorney and expert witness fees) 
reasonably incurred. Interest on back pay will be calculated using the 
interest rate applicable to underpayment of taxes under 26 U.S.C. 6621 
and will be compounded daily. The order will also require the respondent 
to submit appropriate documentation to the Social Security 
Administration allocating any back pay award to the appropriate period.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent reasonable 
attorney fees, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1984.111  Withdrawal of complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying the Assistant Secretary, 
orally or in writing, of his or her withdrawal. The Assistant Secretary 
then will confirm in writing the complainant's desire to withdraw and 
determine whether to approve the withdrawal. The Assistant Secretary 
will notify the parties (and each party's legal counsel if the party is 
represented by counsel) of the approval of any withdrawal. If the 
complaint is withdrawn because of settlement, the settlement must be 
submitted for approval in accordance with paragraph (d) of this section. 
A complainant may not withdraw his or her complaint after the filing of 
objections to the Assistant Secretary's findings and/or preliminary 
order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1984.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw a 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB approves a request to withdraw a petition 
for review of an ALJ decision, and there are no other pending petitions 
for review of that decision, the ALJ's decision will become the final 
order of the Secretary. If objections or a petition for review are 
withdrawn because of settlement, the settlement must be submitted for 
approval in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint,

[[Page 177]]

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 OSHA, the 
complainant, and the respondent agree to a settlement. OSHA's approval 
of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as appropriate.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1984.113.



Sec. 1984.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1984.109 and 1984.110, 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1984.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under section 18C of the FLSA, 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 have 
occurred or in the United States district court for the District of 
Columbia. Whenever any person has failed to comply with a preliminary 
order of reinstatement, or a final order, including one approving a 
settlement agreement, issued under section 18C of the FLSA, a person on 
whose behalf the order was issued may file a civil action seeking 
enforcement of the order in the appropriate United States district 
court.



Sec. 1984.114  District court jurisdiction of retaliation complaints.

    (a) 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, either:
    (1) Within 90 days after receiving a written determination under 
Sec. 1984.105(a) provided that there has been no final decision of the 
Secretary; or
    (2) If there has been no final decision of the Secretary within 210 
days of the filing of the complaint.
    (3) At the request of either party, the action shall be tried by the 
court with a jury.
    (b) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1984.109. 
The court shall have jurisdiction to grant all relief necessary to make 
the employee whole, including injunctive relief and compensatory 
damages, including:
    (1) Reinstatement with the same seniority status that the employee 
would have had, but for the discharge or retaliation;
    (2) The amount of back pay, with interest; and
    (3) Compensation for any special damages sustained as a result of 
the discharge or retaliation, including litigation costs, expert witness 
fees, and reasonable attorney fees.
    (c) Within seven days after filing a complaint in federal court, a 
complainant must file with the Assistant Secretary, the ALJ, or the ARB, 
depending on where the proceeding is pending, a copy of the file-stamped 
complaint. In

[[Page 178]]

all cases, a copy of the complaint also must be served on the OSHA 
official who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.



Sec. 1984.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of this 
part, or for good cause shown, the ALJ or the ARB on review may, upon 
application, after three-days notice to all parties, waive any rule or 
issue such orders that justice or the administration of section 18C of 
the FLSA requires.



PART 1985_PROCEDURES FOR HANDLING RETALIATION COMPLAINTS UNDER 
THE EMPLOYEE PROTECTION PROVISION OF THE CONSUMER FINANCIAL 
PROTECTION ACT OF 2010--Table of Contents



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders

Sec.
1985.100  Purpose and scope.
1985.101  Definitions.
1985.102  Obligations and prohibited acts.
1985.103  Filing of retaliation complaint.
1985.104  Investigation.
1985.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1985.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1985.107  Hearings.
1985.108  Role of Federal agencies.
1985.109  Decision and orders of the administrative law judge.
1985.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1985.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1985.112  Judicial review.
1985.113  Judicial enforcement.
1985.114  District court jurisdiction of retaliation complaints.
1985.115  Special circumstances; waiver of rules.

    Authority: 12 U.S.C. 5567; Secretary of Labor's Order No. 1-2012 
(Jan. 18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of Labor's Order 
No. 2-2012, 77 FR 69378 (Nov. 16, 2012).

    Source: 81 FR 14383, Mar. 17, 2016, unless otherwise noted.



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders



Sec. 1985.100  Purpose and scope.

    (a) This Part sets forth procedures for, and interpretations of, the 
employee protection provision of the Consumer Financial Protection Act 
of 2010, Section 1057 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act of 2010 (CFPA or the Act), Pub. L. 111-203, 124 Stat. 
1376, 1955 (July 21, 2010) (codified at 12 U.S.C. 5567). CFPA provides 
for employee protection from retaliation because the employee has 
engaged in protected activity pertaining to the offering or provision of 
consumer financial products or services.
    (b) This part establishes procedures under CFPA for the expeditious 
handling of retaliation complaints filed by employees, or by persons 
acting on their behalf. These rules, together with those codified at 29 
CFR part 18, set forth the procedures under CFPA for submission of 
complaints, investigations, issuance of findings and preliminary orders, 
objections to findings and orders, litigation before administrative law 
judges (ALJs), post-hearing administrative review, and withdrawals and 
settlements. In addition, these rules provide the Secretary's 
interpretations on certain statutory issues.



Sec. 1985.101  Definitions.

    As used in this part:
    (a) Affiliate means any person that controls, is controlled by, or 
is under common control with another person.
    (b) 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 CFPA.
    (c) Bureau means the Consumer Financial Protection Bureau.
    (d) Business days means days other than Saturdays, Sundays, and 
Federal holidays.

[[Page 179]]

    (e) CFPA means Section 1057 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act of 2010, Pub. L. 111-203, 124 Stat. 1376, 1955 
(July 21, 2010) (codified at 12 U.S.C. 5567).
    (f) Complainant means the person who filed a CFPA complaint or on 
whose behalf a complaint was filed.
    (g) Consumer means an individual or an agent, trustee, or 
representative acting on behalf of an individual.
    (h) Consumer financial product or service means any financial 
product or service that is:
    (1) Described in one or more categories in 12 U.S.C. 5481(15) and is 
offered or provided for use by consumers primarily for personal, family, 
or household purposes; or
    (2) Described in clause (i), (iii), (ix), or (x) of 12 U.S.C. 
5481(15)(A), and is delivered, offered, or provided in connection with a 
consumer financial product or service referred to in subparagraph (1).
    (i) Covered employee means any individual performing tasks related 
to the offering or provision of a consumer financial product or service. 
The term ``covered employee'' includes an individual presently or 
formerly working for, an individual applying to work for, or an 
individual whose employment could be affected by a covered person or 
service provider where such individual was performing tasks related to 
the offering or provision of a consumer financial product or service at 
the time that the individual engaged in protected activity under CFPA.
    (j) Covered person means --
    (1) Any person that engages in offering or providing a consumer 
financial product or service, or
    (2) Any affiliate of such a person if such affiliate acts as a 
service provider to such person, or
    (k) Federal consumer financial law means any law described in 12 
U.S.C. 5481(14).
    (l) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (m) Person means an individual, partnership, company, corporation, 
association (incorporated or unincorporated), trust, estate, cooperative 
organization, or other entity.
    (n) Respondent means the person named in the complaint who is 
alleged to have violated the Act.
    (o) Secretary means the Secretary of Labor or person to whom 
authority under CFPA has been delegated.
    (p) Service provider means any person that provides a material 
service to a covered person in connection with the offering or provision 
by such covered person of a consumer financial product or service, 
including a person that--
    (1) Participates in designing, operating, or maintaining the 
consumer financial product or service; or
    (2) Processes transactions relating to the consumer financial 
product or service (other than unknowingly or incidentally transmitting 
or processing financial data in a manner that such data is 
undifferentiated from other types of data of the same form as the person 
transmits or processes);
    (3) The term ``service provider'' does not include a person solely 
by virtue of such person offering or providing to a covered person:
    (i) A support service of a type provided to businesses generally or 
a similar ministerial service; or
    (ii) Time or space for an advertisement for a consumer financial 
product or service through print, newspaper, or electronic media.
    (4) A person that is a service provider shall be deemed to be a 
covered person to the extent that such person engages in the offering or 
provision of its own consumer financial product or service.
    (q) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1985.102  Obligations and prohibited acts.

    (a) No covered person or service provider may terminate or in any 
other way retaliate against, or cause to be terminated or retaliated 
against, including, but not limited to, intimidating, threatening, 
restraining, coercing, blacklisting or disciplining, any covered 
employee or any authorized representative of covered employees because 
such employee or representative, whether at the employee's initiative or 
in the ordinary course of the employee's duties (or any person acting

[[Page 180]]

pursuant to a request of the employee), engaged in any of the activities 
specified in paragraphs (b)(1) through (4) of this section. (b) A 
covered employee or authorized representative is protected against 
retaliation (as described in paragraph (a) of this section) by a covered 
person or service provider because he or she:
    (1) Provided, caused to be provided, or is about to provide or cause 
to be provided to the employer, the Bureau, or any other State, local, 
or Federal, government authority or law enforcement agency, information 
relating to any violation of, or any act or omission that the employee 
reasonably believes to be a violation of, any provision of Title X of 
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, 
Pub. L. 111-203, 124 Stat. 1376, 1955 (July 21, 2010), or any other 
provision of law that is subject to the jurisdiction of the Bureau, or 
any rule, order, standard, or prohibition prescribed by the Bureau;
    (2) Testified or will testify in any proceeding resulting from the 
administration or enforcement of any provision of Title X of the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010, Pub. L. 
111-203, 124 Stat. 1376, 1955 (July 21, 2010), or any other provision of 
law that is subject to the jurisdiction of the Bureau, or any rule, 
order, standard, or prohibition prescribed by the Bureau;
    (3) Filed, instituted, or caused to be filed or instituted any 
proceeding under any Federal consumer financial law; or
    (4) Objected to, or refused to participate in, any activity, policy, 
practice, or assigned task that the employee (or other such person) 
reasonably believed to be in violation of any law, rule, order, 
standard, or prohibition subject to the jurisdiction of, or enforceable 
by, the Bureau.



Sec. 1985.103  Filing of retaliation complaint.

    (a) Who may file. A person who believes that he or she has been 
discharged or otherwise retaliated against by any person in violation of 
CFPA may file, or have filed by any person on his or her behalf, a 
complaint alleging such retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office responsible for enforcement activities in the geographical area 
where the complainant 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 180 days after an alleged violation of 
CFPA occurs, any person who believes that he or she has been retaliated 
against in violation of the Act may file, or have filed by any person on 
his or her behalf, a complaint alleging such retaliation. The date of 
the postmark, facsimile transmittal, electronic communication 
transmittal, telephone call, hand-delivery, delivery to a third-party 
commercial carrier, or in-person filing at an OSHA office will be 
considered the date of filing. The time for filing a complaint may be 
tolled for reasons warranted by applicable case law. For example, OSHA 
may consider the time for filing a complaint equitably tolled if a 
complainant mistakenly files a complaint with an agency other than OSHA 
within 180 days after an alleged adverse action.



Sec. 1985.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and 
other applicable confidentiality laws. OSHA will also notify the 
respondent of its rights under paragraphs (b) and (f) of this section 
and paragraph (e) of Sec. 1985.110. OSHA will provide an unredacted copy 
of these same materials to the complainant (or the complainant's legal

[[Page 181]]

counsel if complainant is represented by counsel) and to the Bureau.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
and the complainant each may submit to OSHA a written statement and any 
affidavits or documents substantiating its position. Within the same 20 
days, the respondent and the complainant each may request a meeting with 
OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the other party (or the 
party's legal counsel if the party is represented by counsel) at a time 
permitting the other party an opportunity to respond. Before providing 
such materials to the other party, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. OSHA will also provide each party with 
an opportunity to respond to the other party's submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that protected activity was a contributing factor 
in the adverse action alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse action took place 
within a temporal proximity of the protected activity, or at the first 
opportunity available to the respondent, giving rise to the inference 
that it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, OSHA will proceed 
with the investigation. The investigation will proceed whenever it is 
necessary or appropriate to confirm or verify the information provided 
by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1985.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated CFPA and that preliminary 
reinstatement is warranted, OSHA will

[[Page 182]]

contact the respondent (or the respondent's legal counsel if respondent 
is represented by counsel) 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 complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials, OSHA will redact them, if necessary, consistent with the 
Privacy Act of 1974, 5 U.S.C. 552a, and other applicable confidentiality 
laws. The respondent 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 respondent must present this evidence within 10 business 
days of OSHA's notification pursuant to this paragraph, or as soon 
thereafter as OSHA and the respondent can agree, if the interests of 
justice so require.



Sec. 1985.105  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 
the filing of the complaint, written findings as to whether or not there 
is reasonable cause to believe that the respondent has retaliated 
against the complainant in violation of CFPA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will require, where appropriate: 
affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The preliminary order will also 
require the respondent to submit appropriate documentation to the Social 
Security Administration allocating any back pay award to the appropriate 
calendar quarters.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested (or other means that 
allow OSHA to confirm receipt), to all parties of record (and each 
party's legal counsel if the party is represented by counsel). The 
findings and, where appropriate, the preliminary order will inform the 
parties of the right to object to the findings and/or order and to 
request a hearing, and of the right of the respondent to request an 
award of attorney fees not exceeding $1,000 from the ALJ, regardless of 
whether the respondent has filed objections, if the respondent alleges 
that the complaint was frivolous or brought in bad faith. The findings 
and, where appropriate, the preliminary order also will give the address 
of the Chief Administrative Law Judge, U.S. Department of Labor. At the 
same time, the Assistant Secretary will file with the Chief 
Administrative Law Judge a copy of the original complaint and a copy of 
the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1985.106. However, the portion

[[Page 183]]

of any preliminary order requiring reinstatement will be effective 
immediately upon the respondent's receipt of the findings and the 
preliminary order, regardless of any objections to the findings and/or 
the order.



                          Subpart B_Litigation



Sec. 1985.106  Objections to the findings and the preliminary order
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and/or preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under CFPA, 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 Sec. 1985.105. The objections, request for 
a hearing, and/or request for attorney fees must be in writing and state 
whether the objections are to the findings, the preliminary order, and/
or whether there should be an award of attorney fees. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
is considered 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, 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, the Assistant Secretary, and the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1985.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1985.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.

[[Page 184]]

    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and the Associate Solicitor is 
otherwise required by these rules.
    (b) The Bureau, if interested in a proceeding, may participate as 
amicus curiae at any time in the proceeding, at the Bureau's discretion. 
At the request of the Bureau, copies of all documents in a case must be 
sent to the Bureau, whether or not it is participating in the 
proceeding.



Sec. 1985.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1985.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, 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 ALJ will hear the case on the merits or dispose of 
the matter without a hearing if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions, and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The order will also require the 
respondent to submit appropriate documentation to the Social Security 
Administration allocating any back pay award to the appropriate calendar 
quarters.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the ALJ may award to the respondent reasonable 
attorney fees, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB), U.S. 
Department of Labor. The decision of the ALJ will become the final order 
of the Secretary unless a petition for review is timely filed with the 
ARB and the ARB accepts the petition for review.



Sec. 1985.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent alleging that the complaint was 
frivolous or brought in bad faith who seeks an award of attorney fees, 
must file a written petition for review with the

[[Page 185]]

ARB, which has been delegated the authority to act for the Secretary and 
issue final decisions under this part. The parties should identify in 
their petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A petition must be filed 
within 14 days of the date of the decision of the ALJ. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
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 ARB. 
Copies of the petition for review must be served on the Assistant 
Secretary and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the decision of the ALJ, unless a motion for reconsideration has been 
filed with the ALJ in the interim. In such case, the conclusion of the 
hearing is the date the motion for reconsideration is ruled upon or 14 
days after a new decision is issued. The ARB's final decision will be 
served upon all parties and the Chief Administrative Law Judge by mail. 
The final decision will also be served on the Assistant Secretary and on 
the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, even if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: Affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position, together with the compensation (including back pay and 
interest), terms, conditions, and privileges of the complainant's 
employment; and payment of compensatory damages, including, at the 
request of the complainant, the aggregate amount of all costs and 
expenses (including attorney and expert witness fees) reasonably 
incurred. Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily. The order will also require the respondent to 
submit appropriate documentation to the Social Security Administration 
allocating any back pay award to the appropriate calendar quarters.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent a 
reasonable attorney fee, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1985.111  Withdrawal of complaints, findings, objections, 
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying OSHA, orally

[[Page 186]]

or in writing, of his or her withdrawal. OSHA then will confirm in 
writing the complainant's desire to withdraw and determine whether to 
approve the withdrawal. OSHA will notify the parties (and each party's 
legal counsel if the party is represented by counsel) of the approval of 
any withdrawal. If the complaint is withdrawn because of settlement, the 
settlement must be submitted for approval in accordance with paragraph 
(d) of this section. A complainant may not withdraw his or her complaint 
after the filing of objections to the Assistant Secretary's findings 
and/or preliminary order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1985.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw a 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB approves a request to withdraw a petition 
for review of an ALJ decision, and there are no other pending petitions 
for review of that decision, the ALJ's decision will become the final 
order of the Secretary. If objections or a petition for review are 
withdrawn because of settlement, the settlement must be submitted for 
approval in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint, but before the findings and/or order are objected to or 
become a final order by operation of law, the case may be settled if 
OSHA, the complainant, and the respondent agree to a settlement. OSHA's 
approval of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as appropriate.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1985.113.



Sec. 1985.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1985.109 and 1985.110, 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1985.113  Judicial enforcement.

    Whenever any person has failed to comply with a final order, 
including one approving a settlement agreement, issued under CFPA, 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 have occurred or

[[Page 187]]

in the United States district court for the District of Columbia. 
Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under CFPA, the person on whose behalf the order was 
issued may file a civil action seeking enforcement of the order in the 
appropriate United States district court.



Sec. 1985.114  District court jurisdiction of retaliation complaints.

    (a) 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, either:
    (1) Within 90 days after receiving a written determination under 
Sec. 1985.105(a) provided that there has been no final decision of the 
Secretary; or
    (2) If there has been no final decision of the Secretary within 210 
days of the filing of the complaint.
    (b) At the request of either party, the action shall be tried by the 
court with a jury.
    (c) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1985.109. 
The court shall have jurisdiction to grant all relief necessary to make 
the employee whole, including injunctive relief and compensatory 
damages, including:
    (1) Reinstatement with the same seniority status that the employee 
would have had, but for the discharge or discrimination;
    (2) The amount of back pay, with interest;
    (3) Compensation for any special damages sustained as a result of 
the discharge or discrimination; and
    (4) Litigation costs, expert witness fees, and reasonable attorney 
fees.
    (d) Within seven days after filing a complaint in federal court, a 
complainant must file with OSHA, the ALJ, or the ARB, depending on where 
the proceeding is pending, a copy of the file-stamped complaint. In all 
cases, a copy of the complaint also must be served on the OSHA official 
who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.



Sec. 1985.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules, or for good cause shown, the ALJ or the ARB on review may, upon 
application, after three days' notice to all parties, waive any rule or 
issue such orders that justice or the administration of CFPA requires.



PART 1986_PROCEDURES FOR THE HANDLING OF RETALIATION COMPLAINTS UNDER
THE EMPLOYEE PROTECTION PROVISION OF THE SEAMAN'S PROTECTION ACT 
(SPA), AS AMENDED--Table of Contents



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders

Sec.
1986.100  Purpose and scope.
1986.101  Definitions.
1986.102  Obligations and prohibited acts.
1986.103  Filing of retaliation complaints.
1986.104  Investigation.
1986.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1986.106  Objections to the findings and the preliminary order and 
          request for a hearing.
1986.107  Hearings.
1986.108  Role of Federal agencies.
1986.109  Decisions and orders of the administrative law judge.
1986.110  Decisions and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1986.111  Withdrawal of SPA complaints, findings, objections, and 
          petitions for review; settlement.
1986.112  Judicial review.
1986.113  Judicial enforcement.
1986.114  District court jurisdiction of retaliation complaints under 
          SPA.
1986.115  Special circumstances; waiver of rules.

    Authority: 46 U.S.C. 2114; 49 U.S.C. 31105; Secretary's Order 1-2012 
(Jan. 18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of Labor's Order 
No. 2-2012 (Oct. 19, 2012), 77 FR 69378 (Nov. 16, 2012).

[[Page 188]]


    Source: 81 FR 63409, Sept. 15, 2016, unless otherwise noted.



 Subpart A_Complaints, Investigations, Findings, and Preliminary Orders



Sec. 1986.100  Purpose and scope.

    (a) This part sets forth the procedures for, and interpretations of, 
the Seaman's Protection Act (SPA), 46 U.S.C. 2114, as amended, which 
protects a seaman from retaliation because the seaman has engaged in 
protected activity pertaining to compliance with maritime safety laws 
and accompanying regulations. SPA incorporates the procedures, 
requirements, and rights described in the whistleblower provision of the 
Surface Transportation Assistance Act (STAA), 49 U.S.C. 31105.
    (b) This part establishes procedures pursuant to the statutory 
provisions set forth above for the expeditious handling of retaliation 
complaints filed by seamen or 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, investigations, issuance of 
findings and preliminary orders, objections to findings, litigation 
before administrative law judges (ALJs), post-hearing administrative 
review, withdrawals and settlements, and judicial review and 
enforcement. In addition, the rules in this part provide the Secretary's 
interpretations on certain statutory issues.



Sec. 1986.101  Definitions.

    As used in this part:
    (a) Act means the Seaman's Protection Act (SPA), 46 U.S.C. 2114, as 
amended.
    (b) 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.
    (c) Business days means days other than Saturdays, Sundays, and 
Federal holidays.
    (d) Citizen of the United States means an individual who is a 
national of the United States as defined in section 101(a)(22) of the 
Immigration and Nationality Act (8 U.S.C. 1101 (a)(22)); a corporation 
incorporated under the laws of the United States or a State; a 
corporation, partnership, association, or other business entity if the 
controlling interest is owned by citizens of the United States or whose 
principal place of business or base of operations is in a State; or a 
governmental entity of the Federal Government of the United States, of a 
State, or of a political subdivision of a State. The controlling 
interest in a corporation is owned by citizens of the United States if a 
majority of the stockholders are citizens of the United States.
    (e) Complainant means the seaman who filed a SPA whistleblower 
complaint or on whose behalf a complaint was filed.
    (f) Cooperated means any assistance or participation with an 
investigation, at any stage of the investigation, and regardless of the 
outcome of the investigation.
    (g) Maritime safety law or regulation includes any statute or 
regulation regarding health or safety that applies to any person or 
equipment on a vessel.
    (h) Notify or notified includes any oral or written communications.
    (i) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (j) Person means one or more individuals or other entities, 
including but not limited to corporations, companies, associations, 
firms, partnerships, societies, and joint stock companies.
    (k) Report or reported means any oral or written communications.
    (l) Respondent means the person alleged to have violated 46 U.S.C. 
2114.
    (m) Seaman means any individual engaged or employed in any capacity 
on board a U.S.-flag vessel or any other vessel owned by a citizen of 
the United States, except members of the Armed Forces. The term includes 
an individual formerly performing the work described above or an 
applicant for such work.
    (n) Secretary means the Secretary of Labor or persons to whom 
authority under the Act has been delegated.
    (o) State means a State of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam, and the 
Northern Mariana Islands.

[[Page 189]]

    (p) Vessel means every description of watercraft or other artificial 
contrivance used, or capable of being used, as a means of transportation 
on water.
    (q) Vessel owner includes all of the agents of the owner, including 
the vessel's master.
    (r) Any future amendments to SPA that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1986.102  Obligations and prohibited acts.

    (a) A person may not retaliate against any seaman because the 
seaman:
    (1) In good faith reported or was about to report to the Coast Guard 
or other appropriate Federal agency or department that the seaman 
believed that a violation of a maritime safety law or regulation 
prescribed under that law or regulation has occurred;
    (2) Refused to perform duties ordered by the seaman's employer 
because the seaman had a reasonable apprehension or expectation that 
performing such duties would result in serious injury to the seaman, 
other seamen, or the public;
    (3) Testified in a proceeding brought to enforce a maritime safety 
law or regulation prescribed under that law;
    (4) Notified, or attempted to notify, the vessel owner or the 
Secretary of the department in which the Coast Guard was operating of a 
work-related personal injury or work-related illness of a seaman;
    (5) Cooperated with a safety investigation by the Secretary of the 
department in which the Coast Guard was operating or the National 
Transportation Safety Board;
    (6) Furnished information to the Secretary of the department in 
which the Coast Guard was operating, the National Transportation Safety 
Board, or any other public official as to the facts relating to any 
marine casualty resulting in injury or death to an individual or damage 
to property occurring in connection with vessel transportation; or
    (7) Accurately reported hours of duty under part A of subtitle II of 
title 46 of the United States Code.
    (b) Retaliation means any discrimination against a seaman including, 
but not limited to, discharging, demoting, suspending, harassing, 
intimidating, threatening, restraining, coercing, blacklisting, or 
disciplining a seaman.
    (c) For purposes of paragraph (a)(2) of this section, the 
circumstances causing a seaman's apprehension of serious injury must be 
of such a nature that a reasonable person, under similar circumstances, 
would conclude that there was a real danger of an injury or serious 
impairment of health resulting from the performance of duties as ordered 
by the seaman's employer. To qualify for protection based on activity 
described in paragraph (a)(2) of this section, the seaman must have 
sought from the employer, and been unable to obtain, correction of the 
unsafe condition. Any seaman who requested such a correction shall be 
protected against retaliation because of the request.



Sec. 1986.103  Filing of retaliation complaints.

    (a) Who may file. A seaman who believes that he or she has been 
retaliated against by a person in violation of SPA may file, or have 
filed by any person on the seaman's behalf, a complaint alleging such 
retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If a seaman is unable to file a complaint in 
English, OSHA will accept the complaint in any other language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office responsible for enforcement activities in the geographical area 
where the seaman 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. Not later than 180 days after an alleged 
violation occurs, a seaman who believes that he or she has been 
retaliated against in violation of SPA may file, or have filed by any 
person on his or her behalf, a complaint alleging such retaliation. The

[[Page 190]]

date of the postmark, facsimile transmittal, electronic communication 
transmittal, telephone call, hand-delivery, delivery to a third-party 
commercial carrier, or in-person filing at an OSHA office will be 
considered the date of filing. The time for filing a complaint may be 
tolled for reasons warranted by applicable case law.
    (e) Relationship to section 11(c) complaints. A complaint filed 
under SPA alleging facts that would also constitute a violation of 
section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. 
660(c), will be deemed to be a complaint under both SPA and section 
11(c). Similarly, a complaint filed under section 11(c) that alleges 
facts that would also constitute a violation of SPA will be deemed to be 
a complaint filed under both SPA and section 11(c). Normal procedures 
and timeliness requirements under the respective statutes and 
regulations will be followed.



Sec. 1986.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, the 
Assistant Secretary will notify the respondent of the filing of the 
complaint by providing the respondent with a copy of the complaint, 
redacted in accordance with the Privacy Act of 1974, 5 U.S.C. 552a, and 
other applicable confidentiality laws. The Assistant Secretary will also 
notify the respondent of the respondent's rights under paragraphs (b) 
and (f) of this section. The Assistant Secretary will provide a copy of 
the unredacted complaint to the complainant (or complainant's legal 
counsel, if complainant is represented by counsel) and to the U.S. Coast 
Guard.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
may submit to the Assistant Secretary a written statement and any 
affidavits or documents substantiating its position. Within the same 20 
days, the respondent may request a meeting with the Assistant Secretary 
to present its position.
    (c) Throughout the investigation, the Agency will provide to the 
complainant (or the complainant's legal counsel if complainant is 
represented by counsel) a copy of all of respondent's submissions to the 
Agency that are responsive to the complainant's whistleblower complaint. 
Before providing such materials to the complainant, the Agency will 
redact them, if necessary, in accordance with the Privacy Act of 1974, 5 
U.S.C. 552a, and other applicable confidentiality laws. The Agency will 
also provide the complainant with an opportunity to respond to such 
submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that protected activity was a contributing factor 
in the adverse action alleged in the complaint.
    (2) 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 seaman engaged in a protected activity;
    (ii) The respondent knew or suspected that the seaman engaged in the 
protected activity;
    (iii) The seaman suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the seaman 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complainant shows that the adverse action took place 
shortly after the protected activity, giving rise to the inference that 
it was a contributing factor in the adverse action. If

[[Page 191]]

the required showing has not been made, the complainant (or the 
complainant's legal counsel if complainant is represented by counsel) 
will be so notified and the investigation will not commence.
    (4) 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 or will be discontinued if the 
respondent demonstrates by clear and convincing evidence that it would 
have taken the same adverse action in the absence of the complainant's 
protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in paragraph (e)(4) of this section, the 
Assistant Secretary will proceed with the investigation. The 
investigation will proceed whenever it is necessary or appropriate to 
confirm or verify the information provided by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1986.105, if the Assistant Secretary has reasonable 
cause, on the basis of information gathered under the procedures of this 
part, to believe that the respondent has violated the Act and that 
preliminary reinstatement is warranted, the Assistant Secretary will 
again contact the respondent (or the respondent's legal counsel, if 
respondent is represented by counsel) 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 complainant will also receive a copy of the materials that must be 
provided to the respondent under this paragraph. Before providing such 
materials to the complainant, the Agency will redact them, if necessary, 
in accordance with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. The respondent 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 respondent 
must present this evidence within 10 business days of the Assistant 
Secretary's notification pursuant to this paragraph, or as soon 
thereafter as the Assistant Secretary and the respondent can agree, if 
the interests of justice so require.



Sec. 1986.105  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 
the filing of the complaint, written findings as to whether there is 
reasonable cause to believe that the respondent retaliated against the 
complainant in violation of SPA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief. 
Such order will require, where appropriate: Affirmative action to abate 
the violation; reinstatement of the complainant to his or her former 
position, with the same compensation, terms, conditions and privileges 
of the complainant's employment; payment of compensatory damages (back 
pay with interest and compensation for any special damages sustained as 
a result of the retaliation, including any litigation costs, expert 
witness fees, and reasonable attorney fees which the complainant has 
incurred). Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily. The preliminary order may also require the 
respondent to pay punitive damages of up to $250,000.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested, to all parties of 
record (and each party's legal counsel if the party is represented by 
counsel). The findings

[[Page 192]]

and, where appropriate, the preliminary order will inform the parties of 
the right to object to the findings and/or the order and to request a 
hearing. The findings and, where appropriate, the preliminary order also 
will give the address of the Chief Administrative Law Judge, U.S. 
Department of Labor. At the same time, the Assistant Secretary will file 
with the Chief Administrative Law Judge a copy of the original complaint 
and a copy of the findings and/or order.
    (c) The findings and the preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and request for a hearing have been timely filed as provided at 
Sec. 1986.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the order.



                          Subpart B_Litigation



Sec. 1986.106  Objections to the findings and the preliminary order
and request for a hearing.

    (a) Any party who desires review, including judicial review, 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. 1986.105(c). The objections and request for a hearing must be in 
writing and state whether the objections are to the findings and/or the 
preliminary order. The date of the postmark, facsimile transmittal, or 
electronic communication transmittal is considered 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, and copies of 
the objections must be mailed at the same time to the other parties of 
record, and the OSHA official who issued the findings.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only on the basis of exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or preliminary 
order will become the final decision of the Secretary, not subject to 
judicial review.



Sec. 1986.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.

[[Page 193]]



Sec. 1986.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding. In any case in which the respondent objects to the findings 
or the preliminary order, the Assistant Secretary ordinarily will be the 
prosecuting party. In any other cases, at the Assistant Secretary's 
discretion, the Assistant Secretary may participate as a party or 
participate as amicus curiae at any stage of the proceeding. This right 
to participate includes, but is not limited to, the right to petition 
for review of a decision of an ALJ, including a decision approving or 
rejecting a settlement agreement between the complainant and the 
respondent.
    (2) If the Assistant Secretary assumes the role of prosecuting party 
in accordance with paragraph (a)(1) of this section, he or she may, upon 
written notice to the ALJ or the Administrative Review Board (ARB), as 
the case may be, and the other parties, withdraw as the prosecuting 
party in the exercise of prosecutorial discretion. If the Assistant 
Secretary withdraws, the complainant will become the prosecuting party 
and the ALJ or the ARB, as the case may be, will issue appropriate 
orders to regulate the course of future proceedings.
    (3) Copies of documents in all cases shall be sent to all parties, 
or if they are represented by counsel, to the latter. In cases in which 
the Assistant Secretary is a party, copies of the documents shall be 
sent to the Regional Solicitor's Office representing the Assistant 
Secretary.
    (b) The U.S. Coast Guard, if interested in a proceeding, may 
participate as amicus curiae at any time in the proceeding, at its 
discretion. At the request of the U.S. Coast Guard, copies of all 
documents in a case must be sent to that agency, whether or not that 
agency is participating in the proceeding.



Sec. 1986.109  Decisions and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant or the Assistant Secretary has satisfied the 
burden set forth in the prior paragraph, relief may not be ordered if 
the respondent demonstrates by clear and convincing evidence that it 
would have taken the same adverse action in the absence of any protected 
activity.
    (c) Neither the Assistant Secretary's determination to dismiss a 
complaint without completing an investigation pursuant to 
Sec. 1986.104(e) nor the Assistant Secretary's determination to proceed 
with an investigation is subject to review by the ALJ, 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 ALJ will 
hear the case on the merits or dispose of the matter without a hearing 
if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
affirmative action to abate the violation, reinstatement of the 
complainant to his or her former position, with the same compensation, 
terms, conditions, and privileges of the complainant's employment; 
payment of compensatory damages (back pay with interest and compensation 
for any special damages sustained as a result of the retaliation, 
including any litigation costs, expert witness fees, and reasonable 
attorney fees which the complainant may have incurred); and payment of 
punitive damages up to $250,000. Interest on back pay will be calculated 
using the interest rate applicable to underpayment of taxes under 26 
U.S.C. 6621 and will be compounded daily.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of 
Occupational

[[Page 194]]

Safety and Health, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will 
be effective 14 days after the date of the decision unless a timely 
petition for review has been filed with the ARB, U.S. Department of 
Labor. The ALJ decision will become the final order of the Secretary 
unless a petition for review is timely filed with the ARB and the ARB 
accepts the decision for review.



Sec. 1986.110  Decisions and orders of the Administrative Review Board.

    (a) The Assistant Secretary or any other party desiring to seek 
review, including judicial review, of a decision of the ALJ must file a 
written petition for review with the ARB, which has been delegated the 
authority to act for the Secretary and issue final decisions under this 
part. The parties should identify in their petitions for review the 
legal conclusions or orders to which they object, or the objections may 
be deemed waived. A petition must be filed within 14 days of the date of 
the decision of the ALJ. The date of the postmark, facsimile 
transmittal, or electronic communication transmittal 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 ARB. Copies of 
the petition for review and all briefs must be served on the Assistant 
Secretary and, in cases in which the Assistant Secretary is a party, on 
the Associate Solicitor, Division of Occupational Safety and Health, 
U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case, the conclusion 
of the hearing is the date the motion for reconsideration is ruled upon 
or 14 days after a new decision is issued. The ARB's final decision will 
be served upon all parties and the Chief Administrative Law Judge by 
mail. The final decision also will be served on the Assistant Secretary 
and on the Associate Solicitor, Division of Occupational Safety and 
Health, U.S. Department of Labor, even if the Assistant Secretary is not 
a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: Affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position, with the same compensation, terms, conditions, and 
privileges of the complainant's employment; payment of compensatory 
damages (back pay with interest and compensation for any special damages 
sustained as a result of the retaliation, including any litigation 
costs, expert witness fees, and reasonable attorney fees the complainant 
may have incurred); and payment of punitive damages up to $250,000. 
Interest on back pay will be calculated using the interest rate 
applicable to underpayment of

[[Page 195]]

taxes under 26 U.S.C. 6621 and will be compounded daily.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint.



                   Subpart C_Miscellaneous Provisions



Sec. 1986.111  Withdrawal of SPA complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying the Assistant Secretary, 
orally or in writing, of his or her withdrawal. The Assistant Secretary 
then will confirm in writing the complainant's desire to withdraw and 
determine whether to approve the withdrawal. The Assistant Secretary 
will notify the parties (and each party's legal counsel if the party is 
represented by counsel) of the approval of any withdrawal. If the 
complaint is withdrawn because of settlement, the settlement must be 
submitted for approval in accordance with paragraph (d) of this section. 
A complainant may not withdraw his or her complaint after the filing of 
objections to the Assistant Secretary's findings and/or preliminary 
order.
    (b) The Assistant Secretary may withdraw the findings and/or a 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1986.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
preliminary order become final, a party may withdraw objections to the 
Assistant Secretary's findings and/or preliminary order by filing a 
written withdrawal with the ALJ. If a case is on review with the ARB, a 
party may withdraw a petition for review of an ALJ's decision at any 
time before that decision becomes final by filing a written withdrawal 
with the ARB. The ALJ or the ARB, as the case may be, will determine 
whether to approve the withdrawal of the objections or the petition for 
review. If the ALJ approves a request to withdraw objections to the 
Assistant Secretary's findings and/or order, and there are no other 
pending objections, the Assistant Secretary's findings and/or order will 
become the final order of the Secretary. If the ARB approves a request 
to withdraw a petition for review of an ALJ decision, and there are no 
other pending petitions for review of that decision, the ALJ's decision 
will become the final order of the Secretary. If objections or a 
petition for review are withdrawn because of settlement, the settlement 
must be submitted for approval in accordance with paragraph (d) of this 
section.
    (d)(1) Investigative settlements. At any time after the filing of a 
SPA 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 respondent agree to a 
settlement. The Assistant Secretary's approval of a settlement reached 
by the respondent and the complainant demonstrates the Assistant 
Secretary's consent and achieves the consent of all three parties.
    (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 ALJ if the case is before the ALJ or 
by the ARB, if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB as the case may be.
    (e) Any settlement approved by the Assistant Secretary, the ALJ, or 
the ARB will constitute the final order of the Secretary and may be 
enforced in a United States district court pursuant to 49 U.S.C. 
31105(e), as incorporated by 46 U.S.C. 2114(b).



Sec. 1986.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1986.109 and 1986.110, any person adversely affected or aggrieved 
by the order may file a petition for review of the order in the court of 
appeals of the United States for the circuit in which the violation

[[Page 196]]

allegedly occurred or the circuit in which the complainant resided on 
the date of the violation.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB, or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1986.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement or a final order, including one approving a settlement 
agreement issued under SPA, 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 have occurred.



Sec. 1986.114  District court jurisdiction of retaliation complaints
under SPA.

    (a) If there is no final order of the Secretary, 210 days have 
passed since 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. The action shall, at the request of either party to such 
action, be tried by the court with a jury.
    (b) Within seven days after filing a complaint in federal court, a 
complainant must file with the Assistant Secretary, the ALJ, or the ARB, 
depending on where the proceeding is pending, a copy of the file-stamped 
complaint. A copy of the complaint also must be served on the OSHA 
official who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Occupational Safety 
and Health, U.S. Department of Labor.



 Sec. 1986.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of the 
rules in this part, or for good cause shown, the ALJ or the ARB on 
review may, upon application, after three days notice to all parties, 
waive any rule or issue such orders as justice or the administration of 
SPA requires.



PART 1987_PROCEDURES FOR HANDLING RETALIATION COMPLAINTS UNDER SECTION
402 OF THE FDA FOOD SAFETY MODERNIZATION ACT--Table of Contents



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders

Sec.
1987.100  Purpose and scope.
1987.101  Definitions.
1987.102  Obligations and prohibited acts.
1987.103  Filing of retaliation complaint.
1987.104  Investigation.
1987.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1987.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1987.107  Hearings.
1987.108  Role of Federal agencies.
1987.109  Decision and orders of the administrative law judge.
1987.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1987.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1987.112  Judicial review.
1987.113  Judicial enforcement.
1987.114  District court jurisdiction of retaliation complaints.
1987.115  Special circumstances; waiver of rules.

    Authority: 21 U.S.C. 399d; Secretary of Labor's Order No. 1-2012 
(Jan. 18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of Labor's Order 
No. 2-2012 (Oct. 19, 2012), 77 FR 69378 (Nov. 16, 2012).

    Source: 81 FR 22539, Apr. 18, 2016, unless otherwise noted.

[[Page 197]]



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders



Sec. 1987.100  Purpose and scope.

    (a) This part sets forth the procedures for, and interpretations of, 
section 402 of the FDA Food Safety Modernization Act (FSMA), Public Law 
111-353, 124 Stat. 3885, which was signed into law on January 4, 2011. 
Section 402 of the FDA Food Safety Modernization Act amended the Federal 
Food, Drug, and Cosmetic Act (FD&C), 21 U.S.C. 301 et seq., by adding 
new section 1012. See 21 U.S.C. 399d. Section 1012 of the FD&C provides 
protection for an employee from retaliation because the employee has 
engaged in protected activity pertaining to a violation or alleged 
violation of the FD&C, or any order, rule, regulation, standard, or ban 
under the FD&C.
    (b) This part establishes procedures under section 1012 of the FD&C 
for the expeditious handling of retaliation complaints filed by 
employees, or by persons acting on their behalf. The rules in this part, 
together with those codified at 29 CFR part 18, set forth the procedures 
under section 1012 of the FD&C for submission of complaints, 
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. In 
addition, the rules in this part provide the Secretary's interpretations 
on certain statutory issues.



Sec. 1987.101  Definitions.

    As used in this part:
    (a) 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 FSMA.
    (b) Business days means days other than Saturdays, Sundays, and 
Federal holidays.
    (c) Complainant means the employee who filed a complaint under FSMA 
or on whose behalf a complaint was filed.
    (d) Covered entity means an entity engaged in the manufacture, 
processing, packing, transporting, distribution, reception, holding, or 
importation of food.
    (e) Employee means an individual presently or formerly working for a 
covered entity, an individual applying to work for a covered entity, or 
an individual whose employment could be affected by a covered entity.
    (f) FD&C means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 
301 et seq., which is chapter 9 of title 21.
    (g) FDA means the Food and Drug Administration of the United States 
Department of Health and Human Services.
    (h) Food means articles used for food or drink for man or other 
animals, chewing gum, and articles used for components of any such 
article.
    (i) FSMA means section 402 of the FDA Food Safety Modernization Act, 
Public Law 111-353, 124 Stat. 3885 (Jan. 4, 2011) (codified at 21 U.S.C. 
399d).
    (j) OSHA means the Occupational Safety and Health Administration of 
the United States Department of Labor.
    (k) Person includes an individual, partnership, corporation, and 
association.
    (l) Respondent means the employer named in the complaint who is 
alleged to have violated the FSMA.
    (m) Secretary means the Secretary of Labor or person to whom 
authority under the FSMA has been delegated.
    (n) Any future statutory amendments that affect the definition of a 
term or terms listed in this section will apply in lieu of the 
definition stated herein.



Sec. 1987.102  Obligations and prohibited acts.

    (a) No covered entity may discharge or otherwise retaliate against, 
including, but not limited to, intimidating, threatening, restraining, 
coercing, blacklisting or disciplining, any employee with respect to the 
employee's compensation, terms, conditions, or privileges of employment 
because the employee, whether at the employee's initiative or in the 
ordinary course of the employee's duties (or any person acting pursuant 
to a request of the employee), has engaged in any of the activities 
specified in paragraphs (b)(1) through (4) of this section.

[[Page 198]]

    (b) An employee is protected against retaliation because the 
employee (or any person acting pursuant to a request of the employee) 
has:
    (1) Provided, caused to be provided, or is about to provide or cause 
to be provided to the employer, the Federal Government, or the attorney 
general of a State information relating to any violation of, or any act 
or omission the employee reasonably believes to be a violation of any 
provision of the FD&C or any order, rule, regulation, standard, or ban 
under the FD&C
    (2) Testified or is about to testify in a proceeding concerning such 
violation;
    (3) Assisted or participated or is about to assist or participate in 
such a proceeding; or
    (4) Objected to, or refused to participate in, any activity, policy, 
practice, or assigned task that the employee (or other such person) 
reasonably believed to be in violation of any provision of the FD&C, or 
any order, rule, regulation, standard, or ban under the FD&C.



Sec. 1987.103  Filing of retaliation complaint.

    (a) Who may file. An employee who believes that he or she has been 
retaliated against in violation of FSMA may file, or have filed by any 
person on the employee's behalf, a complaint alleging such retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office 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 180 days after an alleged violation of 
FSMA occurs, any employee who believes that he or she has been 
retaliated against in violation of that section may file, or have filed 
by any person on the employee's behalf, a complaint alleging such 
retaliation. The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law. For example, 
OSHA may consider the time for filing a complaint to be tolled if a 
complainant mistakenly files a complaint with an agency other than OSHA 
within 180 days after an alleged adverse action.



Sec. 1987.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and 
other applicable confidentiality laws. OSHA will also notify the 
respondent of its rights under paragraphs (b) and (f) of this section 
and Sec. 1987.110(e). OSHA will provide an unredacted copy of these same 
materials to the complainant (or the complainant's legal counsel if 
complainant is represented by counsel) and to the FDA.
    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
and the complainant each may submit to OSHA a written statement and any 
affidavits or documents substantiating its position. Within the same 20 
days, the respondent and the complainant each may request a meeting with 
OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the

[[Page 199]]

other party (or the party's legal counsel if the party is represented by 
counsel) at a time permitting the other party an opportunity to respond. 
Before providing such materials to the other party, OSHA will redact 
them, if necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 
552a, and other applicable confidentiality laws. OSHA will also provide 
each party with an opportunity to respond to the other party's 
submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing (i.e., a non-frivolous allegation) that a 
protected activity was a contributing factor in the adverse action 
alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse action took place 
within a temporal proximity of the protected activity, or at the first 
opportunity available to the respondent, giving rise to the inference 
that it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in paragraph (e)(4) of this section, OSHA 
will proceed with the investigation. The investigation will proceed 
whenever it is necessary or appropriate to confirm or verify the 
information provided by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1987.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated FSMA and that preliminary 
reinstatement is warranted, OSHA will contact the respondent (or the 
respondent's legal counsel if respondent is represented by counsel) 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 complainant will also 
receive a copy of the materials that must be provided to the respondent 
under this paragraph. Before providing such materials, OSHA will redact 
them, if necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 
552a, and other applicable confidentiality laws. The respondent will be

[[Page 200]]

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 respondent 
must present this evidence within 10 business days of OSHA's 
notification pursuant to this paragraph, or as soon thereafter as OSHA 
and the respondent can agree, if the interests of justice so require.



Sec. 1987.105  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 
the filing of the complaint, written findings as to whether or not there 
is reasonable cause to believe that the respondent has retaliated 
against the complainant in violation of FSMA.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The preliminary order will also 
require the respondent to submit appropriate documentation to the Social 
Security Administration allocating any back pay award to the appropriate 
calendar quarters.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested (or other means that 
allow OSHA to confirm receipt), to all parties of record (and each 
party's legal counsel if the party is represented by counsel). The 
findings and, where appropriate, the preliminary order will inform the 
parties of the right to object to the findings and/or order and to 
request a hearing, and of the right of the respondent to request an 
award of attorney fees not exceeding $1,000 from the administrative law 
judge (ALJ), regardless of whether the respondent has filed objections, 
if the respondent alleges that the complaint was frivolous or brought in 
bad faith. The findings and, where appropriate, the preliminary order 
also will give the address of the Chief Administrative Law Judge, U.S. 
Department of Labor. At the same time, the Assistant Secretary will file 
with the Chief Administrative Law Judge a copy of the original complaint 
and a copy of the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1987.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the order.



                          Subpart B_Litigation



Sec. 1987.106  Objections to the findings and the preliminary order
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and/or preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under FSMA, 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 Sec. 1987.105. The objections, request for 
a hearing, and/or request for attorney

[[Page 201]]

fees must be in writing and state whether the objections are to the 
findings, the preliminary order, and/or whether there should be an award 
of attorney fees. The date of the postmark, facsimile transmittal, or 
electronic communication transmittal is considered 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, 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, the 
Assistant Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1987.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1987.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.
    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and the Associate Solicitor is 
otherwise required by the rules in this part.
    (b) The FDA, if interested in a proceeding, may participate as 
amicus curiae at any time in the proceeding, at the FDA's discretion. At 
the request of the FDA, copies of all documents in a case must be sent 
to the FDA, whether or not the FDA is participating in the proceeding.



Sec. 1987.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this

[[Page 202]]

section, as appropriate. A determination that a violation has occurred 
may be made only if the complainant has demonstrated by a preponderance 
of the evidence that protected activity was a contributing factor in the 
adverse action alleged in the complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1987.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, 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 ALJ will hear the case on the merits or dispose of 
the matter without a hearing if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions, and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The order will also require the 
respondent to submit appropriate documentation to the Social Security 
Administration allocating any back pay award to the appropriate calendar 
quarters.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the ALJ may award to the respondent a 
reasonable attorney fee, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB), U.S. 
Department of Labor. The decision of the ALJ will become the final order 
of the Secretary unless a petition for review is timely filed with the 
ARB and the ARB accepts the petition for review.



Sec. 1987.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent alleging that the complaint was 
frivolous or brought in bad faith who seeks an award of attorney fees, 
must file a written petition for review with the ARB, which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The parties should identify in their 
petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A petition must be filed 
within 14 days of the date of the decision of the ALJ. The date of the 
postmark, facsimile transmittal, or electronic communication transmittal 
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 ARB. 
Copies of the petition for review must be served on the Assistant 
Secretary and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.

[[Page 203]]

    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the date of the decision of the ALJ, unless a motion for reconsideration 
has been filed with the ALJ in the interim. In such case the conclusion 
of the hearing is the date the motion for reconsideration is denied or 
14 days after a new decision is issued. The ARB's final decision will be 
served upon all parties and the Chief Administrative Law Judge by mail. 
The final decision will also be served on the Assistant Secretary and on 
the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, even if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: Affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position, together with the compensation (including back pay and 
interest), terms, conditions, and privileges of the complainant's 
employment; and payment of compensatory damages, including, at the 
request of the complainant, the aggregate amount of all costs and 
expenses (including attorney and expert witness fees) reasonably 
incurred. Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily. The order will also require the respondent to 
submit appropriate documentation to the Social Security Administration 
allocating any back pay award to the appropriate calendar quarters.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent a 
reasonable attorney fee, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1987.111  Withdrawal of complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying OSHA, orally or in writing, 
of his or her withdrawal. OSHA then will confirm in writing the 
complainant's desire to withdraw and determine whether to approve the 
withdrawal. OSHA will notify the parties (and each party's legal counsel 
if the party is represented by counsel) of the approval of any 
withdrawal. If the complaint is withdrawn because of settlement, the 
settlement must be submitted for approval in accordance with paragraph 
(d) of this section. A complainant may not withdraw his or her complaint 
after the filing of objections to the Assistant Secretary's findings 
and/or preliminary order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1987.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new preliminary 
order. The date of the receipt

[[Page 204]]

of the substituted findings or order will begin a new 30-day objection 
period.
    (c) At any time before the Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw a 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB approves a request to withdraw a petition 
for review of an ALJ decision, and there are no other pending petitions 
for review of that decision, the ALJ's decision will become the final 
order of the Secretary. If objections or a petition for review are 
withdrawn because of settlement, the settlement must be submitted for 
approval in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint, but before the findings and/or order are objected to or 
become a final order by operation of law, the case may be settled if 
OSHA, the complainant, and the respondent agree to a settlement. OSHA's 
approval of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as appropriate.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1987.113.



Sec. 1987.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1987.109 and 1987.110, 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1987.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under FSMA, 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 have occurred or in the 
United States district court for the District of Columbia. Whenever any 
person has failed to comply with a preliminary order of reinstatement, 
or a final order, including one approving a settlement agreement, issued 
under FSMA, a person on whose behalf the order was issued may file a 
civil action seeking enforcement of the order in the appropriate United 
States district court.



Sec. 1987.114  District court jurisdiction of retaliation complaints.

    (a) 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, either:
    (1) Within 90 days after receiving a written determination under

[[Page 205]]

Sec. 1987.105(a) provided that there has been no final decision of the 
Secretary; or
    (2) If there has been no final decision of the Secretary within 210 
days of the filing of the complaint.
    (b) At the request of either party, the action shall be tried by the 
court with a jury.
    (c) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1987.109. 
The court shall have jurisdiction to grant all relief necessary to make 
the employee whole, including injunctive relief and compensatory 
damages, including:
    (1) Reinstatement with the same seniority status that the employee 
would have had, but for the discharge or discrimination;
    (2) The amount of back pay, with interest;
    (3) Compensation for any special damages sustained as a result of 
the discharge or discrimination; and
    (4) Litigation costs, expert witness fees, and reasonable attorney 
fees.
    (d) Within seven days after filing a complaint in federal court, a 
complainant must file with OSHA, the ALJ, or the ARB, depending on where 
the proceeding is pending, a copy of the file-stamped complaint. In all 
cases, a copy of the complaint also must be served on the OSHA official 
who issued the findings and/or preliminary order, the Assistant 
Secretary, and the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor.



Sec. 1987.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of the 
rules in this part, or for good cause shown, the ALJ or the ARB on 
review may, upon application, after three days notice to all parties, 
waive any rule or issue such orders that justice or the administration 
of FSMA requires.



PART 1988_PROCEDURES FOR HANDLING RETALIATION COMPLAINTS UNDER SECTION
31307 OF THE MOVING AHEAD FOR PROGRESS IN THE 21ST CENTURY ACT (MAP 21)
--Table of Contents



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders

Sec.
1988.100  Purpose and scope.
1988.101  Definitions.
1988.102  Obligations and prohibited acts.
1988.103  Filing of retaliation complaint.
1988.104  Investigation.
1988.105  Issuance of findings and preliminary orders.

                          Subpart B_Litigation

1988.106  Objections to the findings and the preliminary order and 
          requests for a hearing.
1988.107  Hearings.
1988.108  Role of Federal agencies.
1988.109  Decision and orders of the administrative law judge.
1988.110  Decision and orders of the Administrative Review Board.

                   Subpart C_Miscellaneous Provisions

1988.111  Withdrawal of complaints, findings, objections, and petitions 
          for review; settlement.
1988.112  Judicial review.
1988.113  Judicial enforcement.
1988.114  District court jurisdiction of retaliation complaints.
1988.115  Special circumstances; waiver of rules.

    Authority: 49 U.S.C. 30171; Secretary of Labor's Order No. 1-2012 
(Jan. 18, 2012), 77 FR 3912 (Jan. 25, 2012); Secretary of Labor's Order 
No. 2-2012 (Oct. 19, 2012), 77 FR 69378 (Nov. 16, 2012).

    Source: 81 FR 13984, Mar. 16, 2016, unless otherwise noted.



  Subpart A_Complaints, Investigations, Findings and Preliminary Orders



Sec. 1988.100  Purpose and scope.

    (a) This part sets forth procedures for, and interpretations of, 
section 31307 of the Moving Ahead for Progress in the 21st Century Act 
(MAP-21), Public Law 112-141, 126 Stat. 405, 765 (July 6, 2012) 
(codified at 49 U.S.C. 30171).

[[Page 206]]

MAP-21 provides for employee protection from retaliation because the 
employee has engaged in protected activity pertaining to the manufacture 
or sale of motor vehicles and motor vehicle equipment.
    (b) This part establishes procedures under MAP-21 for the 
expeditious handling of retaliation complaints filed by employees, or by 
persons acting on their behalf. These rules, together with those 
codified at 29 CFR part 18, set forth the procedures under MAP-21 for 
submission of complaints, investigations, issuance of findings and 
preliminary orders, objections to findings and orders, litigation before 
administrative law judges (ALJs), post-hearing administrative review, 
and withdrawals and settlements. In addition, these rules provide the 
Secretary's interpretations on certain statutory issues.



Sec. 1988.101  Definitions.

    As used in this part:
    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 MAP-21.
    Business days means days other than Saturdays, Sundays, and Federal 
holidays.
    Complainant means the person who filed a MAP-21 complaint or on 
whose behalf a complaint was filed.
    Dealer or Dealership means a person selling and distributing new 
motor vehicles or motor vehicle equipment primarily to purchasers that 
in good faith purchase the vehicles or equipment other than for resale.
    Defect includes any defect in performance, construction, a 
component, or material of a motor vehicle or motor vehicle equipment.
    Employee means an individual presently or formerly working for, an 
individual applying to work for, or an individual whose employment could 
be affected by a motor vehicle manufacturer, dealer, part supplier, or 
dealership.
    Manufacturer means a person:
    (1) Manufacturing or assembling motor vehicles or motor vehicle 
equipment; or
    (2) Importing motor vehicles or motor vehicles equipment for resale.
    MAP-21 means Section 31307 of the Moving Ahead for Progress in the 
21st Century Act of 2012, Pub. L. 112-141, 126 Stat. 405, 765 (July 6, 
2012) (codified at 49 U.S.C. 30171).
    Motor vehicle means a vehicle driven or drawn by mechanical power 
and manufactured primarily for use on public streets, roads, and 
highways, but does not include a vehicle operated only on a rail line.
    Motor vehicle equipment means--
    (1) Any system, part, or component of a motor vehicle as originally 
manufactured;
    (2) Any similar part or component manufactured or sold for 
replacement or improvement of a system, part, or component, or as an 
accessory or addition to a motor vehicle; or
    (3) Any device or an article or apparel, including a motorcycle 
helmet and excluding medicine or eyeglasses prescribed by a licensed 
practitioner, that--
    (i) Is not a system, part or component of a motor vehicle; and
    (ii) Is manufactured, sold, delivered, or offered to be sold for use 
on public streets, roads, and highways with the apparent purpose of 
safeguarding users of motor vehicles against risk of accident, injury, 
or death.
    NHTSA means the National Highway Traffic Safety Administration of 
the United States Department of Transportation.
    OSHA means the Occupational Safety and Health Administration of the 
United States Department of Labor.
    Person means an individual, partnership, company, corporation, 
association (incorporated or unincorporated), trust, estate, cooperative 
organization, or other entity.
    Respondent means the person named in the complaint who is alleged to 
have violated MAP-21.
    Secretary means the Secretary of Labor.



Sec. 1988.102  Obligations and prohibited acts.

    (a) No motor vehicle manufacturer, part supplier, or dealership may 
discharge or otherwise retaliate against,

[[Page 207]]

including, but not limited to, intimidating, threatening, restraining, 
coercing, blacklisting or disciplining, an 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, has engaged in any of the activities specified in paragraphs 
(b)(1) through (5) of this section.
    (b) An employee is protected against retaliation (as described in 
paragraph (a) of this section) by a motor vehicle manufacturer, part 
supplier, or dealership because he or she:
    (1) Provided, caused to be provided, or is about to provide (with 
any knowledge of the employer) or cause to be provided to the employer 
or the Secretary of Transportation, information relating to any motor 
vehicle defect, noncompliance, or any violation or alleged violation of 
any notification or reporting requirement of Chapter 301 of Title 49 of 
the United States Code;
    (2) Filed, or 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 motor vehicle defect, noncompliance, or any violation or alleged 
violation of any notification or reporting requirement of Chapter 301 of 
Title 49 of the United States Code;
    (3) Testified or is about to testify in such a proceeding;
    (4) Assisted or participated or is about to assist or participate in 
such a proceeding; or
    (5) Objected to, or refused to participate in, any activity that the 
employee reasonably believed to be in violation of any provision of 
Chapter 301 of Title 49 of the United States Code, or any order, rule, 
regulation, standard, or ban under such provision.



Sec. 1988.103  Filing of retaliation complaint.

    (a) Who may file. A person who believes that he or she has been 
discharged or otherwise retaliated against by any person in violation of 
MAP-21 may file, or have filed by any person on his or her behalf, a 
complaint alleging such retaliation.
    (b) Nature of filing. No particular form of complaint is required. A 
complaint may be filed orally or in writing. Oral complaints will be 
reduced to writing by OSHA. If the complainant is unable to file the 
complaint in English, OSHA will accept the complaint in any language.
    (c) Place of filing. The complaint should be filed with the OSHA 
office responsible for enforcement activities in the geographical area 
where the complainant 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 180 days after an alleged violation of 
MAP-21 occurs, any person who believes that he or she has been 
retaliated against in violation of the MAP-21 may file, or have filed by 
any person on his or her behalf, a complaint alleging such retaliation. 
The date of the postmark, facsimile transmittal, electronic 
communication transmittal, telephone call, hand-delivery, delivery to a 
third-party commercial carrier, or in-person filing at an OSHA office 
will be considered the date of filing. The time for filing a complaint 
may be tolled for reasons warranted by applicable case law. For example, 
OSHA may consider the time for filing a complaint to be tolled if a 
complainant mistakenly files a complaint with an agency other than OSHA 
within 180 days after an alleged adverse action.



Sec. 1988.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, OSHA 
will notify the respondent of the filing of the complaint, of the 
allegations contained in the complaint, and of the substance of the 
evidence supporting the complaint. Such materials will be redacted, if 
necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and 
other applicable confidentiality laws. OSHA will also notify the 
respondent of its rights under paragraphs (b) and (f) of this section 
and paragraph (e) of Sec. 1988.110. OSHA will provide an unredacted copy 
of these same materials to the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) and to the NHTSA.

[[Page 208]]

    (b) Within 20 days of receipt of the notice of the filing of the 
complaint provided under paragraph (a) of this section, the respondent 
may submit to OSHA a written statement and any affidavits or documents 
substantiating its position. Within the same 20 days, the respondent may 
request a meeting with OSHA to present its position.
    (c) During the investigation, OSHA will request that each party 
provide the other parties to the whistleblower complaint with a copy of 
submissions to OSHA that are pertinent to the whistleblower complaint. 
Alternatively, if a party does not provide its submissions to OSHA to 
the other party, OSHA will provide them to the other party (or the 
party's legal counsel if the party is represented by counsel) at a time 
permitting the other party an opportunity to respond. Before providing 
such materials to the other party, OSHA will redact them, if necessary, 
consistent with the Privacy Act of 1974, 5 U.S.C. 552a, and other 
applicable confidentiality laws. OSHA will also provide each party with 
an opportunity to respond to the other party's submissions.
    (d) 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)(1) A complaint will be dismissed unless the complainant has made 
a prima facie showing that a protected activity was a contributing 
factor in the adverse action alleged in the complaint.
    (2) 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;
    (ii) The respondent knew or suspected that the employee engaged in 
the protected activity;
    (iii) The employee suffered an adverse action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the adverse action.
    (3) 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 respondent knew or suspected that the employee 
engaged in protected activity and that the protected activity was a 
contributing factor in the adverse action. The burden may be satisfied, 
for example, if the complaint shows that the adverse action took place 
within a temporal proximity of the protected activity, or at the first 
opportunity available to the respondent, giving rise to the inference 
that it was a contributing factor in the adverse action. If the required 
showing has not been made, the complainant (or the complainant's legal 
counsel if complainant is represented by counsel) will be so notified 
and the investigation will not commence.
    (4) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, further investigation of the 
complaint will not be conducted if the respondent demonstrates by clear 
and convincing evidence that it would have taken the same adverse action 
in the absence of the complainant's protected activity.
    (5) If the respondent fails to make a timely response or fails to 
satisfy the burden set forth in the prior paragraph, OSHA will proceed 
with the investigation. The investigation will proceed whenever it is 
necessary or appropriate to confirm or verify the information provided 
by the respondent.
    (f) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1988.105, if OSHA has reasonable cause, on the 
basis of information gathered under the procedures of this part, to 
believe that the respondent has violated MAP-21 and that preliminary 
reinstatement is warranted, OSHA will contact the respondent (or the 
respondent's legal counsel if respondent is represented by counsel) to 
give notice of the substance of the relevant evidence supporting the 
complainant's allegations as developed during the course of

[[Page 209]]

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 complainant will also 
receive a copy of the materials that must be provided to the respondent 
under this paragraph. Before providing such materials, OSHA will redact 
them, if necessary, consistent with the Privacy Act of 1974, 5 U.S.C. 
552a, and other applicable confidentiality laws. The respondent will be 
given the opportunity to submit a written response, to meet with the 
investigator, to present statements from witnesses in support of its 
position, and to present legal and factual arguments. The respondent 
must present this evidence within 10 business days of OSHA's 
notification pursuant to this paragraph, or as soon thereafter as OSHA 
and the respondent can agree, if the interests of justice so require.



Sec. 1988.105  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 
the filing of the complaint, written findings as to whether or not there 
is reasonable cause to believe that the respondent has retaliated 
against the complainant in violation of MAP-21.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, the Assistant Secretary 
will accompany the findings with a preliminary order providing relief to 
the complainant. The preliminary order will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The preliminary order will also 
require the respondent to submit appropriate documentation to the Social 
Security Administration allocating any back pay award to the appropriate 
calendar quarters.
    (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, where appropriate, the preliminary order will 
be sent by certified mail, return receipt requested (or other means that 
allow OSHA to confirm receipt), to all parties of record (and each 
party's legal counsel if the party is represented by counsel). The 
findings and, where appropriate, the preliminary order will inform the 
parties of the right to object to the findings and/or order and to 
request a hearing, and of the right of the respondent to request an 
award of attorney fees not exceeding $1,000 from the ALJ, regardless of 
whether the respondent has filed objections, if the respondent alleges 
that the complaint was frivolous or brought in bad faith. The findings 
and, where appropriate, the preliminary order also will give the address 
of the Chief Administrative Law Judge, U.S. Department of Labor. At the 
same time, the Assistant Secretary will file with the Chief 
Administrative Law Judge a copy of the original complaint and a copy of 
the findings and/or order.
    (c) The findings and any preliminary order will be effective 30 days 
after receipt by the respondent (or the respondent's legal counsel if 
the respondent is represented by counsel), or on the compliance date set 
forth in the preliminary order, whichever is later, unless an objection 
and/or a request for hearing has been timely filed as provided at 
Sec. 1988.106. However, the portion of any preliminary order requiring 
reinstatement will be effective immediately upon the respondent's 
receipt of the findings and the preliminary order, regardless of any 
objections to the findings and/or the order.

[[Page 210]]



                          Subpart B_Litigation



Sec. 1988.106  Objections to the findings and the preliminary order 
and requests for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and/or preliminary order, or a respondent alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney fees under MAP-21, 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 Sec. 1988.105. The objections, request 
for a hearing, and/or request for attorney fees must be in writing and 
state whether the objections are to the findings, the preliminary order, 
and/or whether there should be an award of attorney fees. The date of 
the postmark, facsimile transmittal, or electronic communication 
transmittal is considered 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, 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, the Assistant Secretary, and 
the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor.
    (b) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement, which will not be automatically stayed. The 
portion of the preliminary order requiring reinstatement will be 
effective immediately upon the respondent's receipt of the findings and 
preliminary order, regardless of any objections to the order. The 
respondent may file a motion with the Office of Administrative Law 
Judges for a stay of the Assistant Secretary's preliminary order of 
reinstatement, which shall be granted only based on exceptional 
circumstances. If no timely objection is filed with respect to either 
the findings or the preliminary order, the findings and/or the 
preliminary order will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1988.107  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 part 18 of this title.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to an ALJ 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 de novo on the record. ALJs have broad 
discretion to limit discovery in order to expedite the hearing.
    (c) If both the complainant and the respondent 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 ALJ may exclude evidence that is immaterial, irrelevant, or 
unduly repetitious.



Sec. 1988.108  Role of Federal agencies.

    (a)(1) The complainant and the respondent will be parties in every 
proceeding and must be served with copies of all documents in the case. 
At the Assistant Secretary's discretion, the Assistant Secretary may 
participate as a party or as amicus curiae at any time at any stage of 
the proceeding. This right to participate includes, but is not limited 
to, the right to petition for review of a decision of an ALJ, including 
a decision approving or rejecting a settlement agreement between the 
complainant and the respondent.
    (2) Parties must send copies of documents to OSHA and to the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, only upon request of OSHA, or when OSHA is participating in 
the proceeding, or when service on OSHA and

[[Page 211]]

the Associate Solicitor is otherwise required by these rules.
    (b) The NHTSA, if interested in a proceeding, may participate as 
amicus curiae at any time in the proceeding, at NHTSA's discretion. At 
the request of NHTSA, copies of all documents in a case must be sent to 
NHTSA, whether or not it is participating in the proceeding.



Sec. 1988.109  Decision and orders of the administrative law judge.

    (a) The decision of the ALJ will contain appropriate findings, 
conclusions, and an order pertaining to the remedies provided in 
paragraph (d) of this section, as appropriate. A determination that a 
violation has occurred may be made only if the complainant has 
demonstrated by a preponderance of the evidence that protected activity 
was a contributing factor in the adverse action alleged in the 
complaint.
    (b) If the complainant has satisfied the burden set forth in the 
prior paragraph, relief may not be ordered if the respondent 
demonstrates by clear and convincing evidence that it would have taken 
the same adverse action in the absence of any protected activity.
    (c) Neither OSHA's determination to dismiss a complaint without 
completing an investigation pursuant to Sec. 1988.104(e) nor OSHA's 
determination to proceed with an investigation is subject to review by 
the ALJ, 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 ALJ will hear the case on the merits or dispose of 
the matter without a hearing if the facts and circumstances warrant.
    (d)(1) If the ALJ concludes that the respondent has violated the 
law, the ALJ will issue an order that will require, where appropriate: 
Affirmative action to abate the violation; reinstatement of the 
complainant to his or her former position, together with the 
compensation (including back pay and interest), terms, conditions, and 
privileges of the complainant's employment; and payment of compensatory 
damages, including, at the request of the complainant, the aggregate 
amount of all costs and expenses (including attorney and expert witness 
fees) reasonably incurred. Interest on back pay will be calculated using 
the interest rate applicable to underpayment of taxes under 26 U.S.C. 
6621 and will be compounded daily. The order will also require the 
respondent to submit appropriate documentation to the Social Security 
Administration allocating any back pay award to the appropriate calendar 
quarters.
    (2) If the ALJ determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ALJ determines that a complaint was frivolous or 
was brought in bad faith, the ALJ may award to the respondent a 
reasonable attorney fee, not exceeding $1,000.
    (e) The decision will be served upon all parties to the proceeding, 
the Assistant Secretary, and the Associate Solicitor, Division of Fair 
Labor Standards, U.S. Department of Labor. Any ALJ'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 respondent. All other portions of the ALJ's order will be effective 
14 days after the date of the decision unless a timely petition for 
review has been filed with the Administrative Review Board (ARB), U.S. 
Department of Labor. The decision of the ALJ will become the final order 
of the Secretary unless a petition for review is timely filed with the 
ARB and the ARB accepts the petition for review.



Sec. 1988.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the ALJ, or a respondent alleging that the complaint was 
frivolous or brought in bad faith who seeks an award of attorney fees, 
must file a written petition for review with the ARB, which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The parties should identify in their 
petitions for review the legal conclusions or orders to which they 
object, or the objections may be deemed waived. A

[[Page 212]]

petition must be filed within 14 days of the date of the decision of the 
ALJ. The date of the postmark, facsimile transmittal, or electronic 
communication transmittal 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 ARB. Copies of the petition for review must be served 
on the Assistant Secretary and on the Associate Solicitor, Division of 
Fair Labor Standards, U.S. Department of Labor.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the ALJ will become the final order 
of the Secretary unless the ARB, 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 ALJ will be inoperative unless and until the ARB issues an order 
adopting the decision, except that any order of reinstatement will be 
effective while review is conducted by the ARB, unless the ARB grants a 
motion by the respondent to stay that order based on exceptional 
circumstances. The ARB will specify the terms under which any briefs are 
to be filed. The ARB will review the factual determinations of the ALJ 
under the substantial evidence standard. If no timely petition for 
review is filed, or the ARB denies review, the decision of the ALJ will 
become the final order of the Secretary. If no timely petition for 
review is filed, the resulting final order is not subject to judicial 
review.
    (c) The final decision of the ARB will be issued within 120 days of 
the conclusion of the hearing, which will be deemed to be 14 days after 
the decision of the ALJ, unless a motion for reconsideration has been 
filed with the ALJ in the interim. In such case, the conclusion of the 
hearing is the date the motion for reconsideration is ruled upon or 14 
days after a new decision is issued. The ARB's final decision will be 
served upon all parties and the Chief Administrative Law Judge by mail. 
The final decision will also be served on the Assistant Secretary and on 
the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, even if the Assistant Secretary is not a party.
    (d) If the ARB concludes that the respondent has violated the law, 
the ARB will issue a final order providing relief to the complainant. 
The final order will require, where appropriate: Affirmative action to 
abate the violation; reinstatement of the complainant to his or her 
former position, together with the compensation (including back pay and 
interest), terms, conditions, and privileges of the complainant's 
employment; and payment of compensatory damages, including, at the 
request of the complainant, the aggregate amount of all costs and 
expenses (including attorney and expert witness fees) reasonably 
incurred. Interest on back pay will be calculated using the interest 
rate applicable to underpayment of taxes under 26 U.S.C. 6621 and will 
be compounded daily. The order will also require the respondent to 
submit appropriate documentation to the Social Security Administration 
allocating any back pay award to the appropriate calendar quarters.
    (e) If the ARB determines that the respondent has not violated the 
law, an order will be issued denying the complaint. If, upon the request 
of the respondent, the ARB determines that a complaint was frivolous or 
was brought in bad faith, the ARB may award to the respondent a 
reasonable attorney fee, not exceeding $1,000.



                   Subpart C_Miscellaneous Provisions



Sec. 1988.111  Withdrawal of complaints, findings, objections,
and petitions for review; settlement.

    (a) At any time prior to the filing of objections to the Assistant 
Secretary's findings and/or preliminary order, a complainant may 
withdraw his or her complaint by notifying OSHA, orally or in writing, 
of his or her withdrawal. OSHA then will confirm in writing the 
complainant's desire to withdraw and determine whether to approve the 
withdrawal. OSHA will notify the parties (and each party's legal counsel 
if the party is represented by counsel) of

[[Page 213]]

the approval of any withdrawal. If the complaint is withdrawn because of 
settlement, the settlement must be submitted for approval in accordance 
with paragraph (d) of this section. A complainant may not withdraw his 
or her complaint after the filing of objections to the Assistant 
Secretary's findings and/or preliminary order.
    (b) The Assistant Secretary may withdraw the findings and/or 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1988.106, provided that no objection 
has been filed yet, and substitute new findings and/or a new 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 Assistant Secretary's findings and/or 
order become final, a party may withdraw objections to the Assistant 
Secretary's findings and/or order by filing a written withdrawal with 
the ALJ. If the case is on review with the ARB, a party may withdraw a 
petition for review of an ALJ's decision at any time before that 
decision becomes final by filing a written withdrawal with the ARB. The 
ALJ or the ARB, as the case may be, will determine whether to approve 
the withdrawal of the objections or the petition for review. If the ALJ 
approves a request to withdraw objections to the Assistant Secretary's 
findings and/or order, and there are no other pending objections, the 
Assistant Secretary's findings and/or order will become the final order 
of the Secretary. If the ARB approves a request to withdraw a petition 
for review of an ALJ decision, and there are no other pending petitions 
for review of that decision, the ALJ's decision will become the final 
order of the Secretary. If objections or a petition for review are 
withdrawn because of settlement, the settlement must be submitted for 
approval in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint, but before the findings and/or order are objected to or 
become a final order by operation of law, the case may be settled if 
OSHA, the complainant, and the respondent agree to a settlement. OSHA's 
approval of a settlement reached by the respondent and the complainant 
demonstrates OSHA's consent and achieves the consent of all three 
parties.
    (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 ALJ if the case is before the ALJ, or 
by the ARB if the ARB has accepted the case for review. A copy of the 
settlement will be filed with the ALJ or the ARB, as appropriate.
    (e) Any settlement approved by OSHA, the ALJ, or the ARB will 
constitute the final order of the Secretary and may be enforced in 
United States district court pursuant to Sec. 1988.113.



Sec. 1988.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Secs. 1988.109 and 1988.110, 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.
    (b) A final order is not subject to judicial review in any criminal 
or other civil proceeding.
    (c) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the ALJ, will be transmitted 
by the ARB or the ALJ, as the case may be, to the appropriate court 
pursuant to the Federal Rules of Appellate Procedure and the local rules 
of such court.



Sec. 1988.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under MAP-21, 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 have occurred. Whenever 
any person has failed to comply with a preliminary order of 
reinstatement, or a final order, including one approving a settlement 
agreement, issued under MAP-21, a person on whose behalf the order was 
issued

[[Page 214]]

may file a civil action seeking enforcement of the order in the 
appropriate United States district court.



Sec. 1988.114  District court jurisdiction of retaliation complaints.

    (a) If the Secretary has not issued a final decision with 210 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. At the 
request of either party, the action shall be tried by the court with a 
jury.
    (b) A proceeding under paragraph (a) of this section shall be 
governed by the same legal burdens of proof specified in Sec. 1988.109.
    (c) Within seven days after filing a complaint in federal court, a 
complainant must file with OSHA, the ALJ, or the ARB, depending on where 
the proceeding is pending, a copy of the file-stamped complaint. A copy 
of the complaint also must be served on the OSHA official who issued the 
findings and/or preliminary order, the Assistant Secretary, and the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor.



Sec. 1988.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules, or for good cause shown, the ALJ or the ARB on review may, upon 
application, after three-days' notice to all parties, waive any rule or 
issue such orders that justice or the administration of MAP-21 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.
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.''

[[Page 215]]



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 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.

[[Page 216]]

    (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 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:

[[Page 217]]

    (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 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

[[Page 218]]

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 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.

[[Page 219]]

    (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: At 48 FR 243, Jan. 4, 1983, in Sec. 1990.121, 
paragraphs (a) and (b) were stayed 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: At 48 FR 243, Jan. 4, 1983, Sec. 1990.122 was 
stayed 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. 1990.131  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: At 48 FR 243, Jan. 4, 1983, Sec. 1990.131 was 
stayed 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

[[Page 220]]

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: At 48 FR 243, Jan. 4, 1983, Sec. 1990.133 was 
stayed 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).

            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

[[Page 221]]

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
    (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.

[[Page 222]]

    (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 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

[[Page 223]]

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 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

[[Page 224]]

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 
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;

[[Page 225]]

    (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 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

[[Page 226]]

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 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

[[Page 227]]

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).
    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

[[Page 228]]

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 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.

[[Page 229]]

    (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.
    (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).

[[Page 230]]

    (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.
    (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

[[Page 231]]

___ 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.
    (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

[[Page 232]]

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.
    (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.


[[Page 233]]


    (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 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;

[[Page 234]]

    (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.
    ___ 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.

[[Page 235]]

    (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). 
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

[[Page 236]]

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, 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.

[[Page 237]]

    (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 
____).
    (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 paragraph (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;

[[Page 238]]

    (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 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:


[[Page 239]]



                                 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) 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 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

[[Page 240]]

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]

                       PARTS 1991	1999 [RESERVED]

[[Page 241]]



      CHAPTER XX--OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
2200            Rules of procedure..........................         243
2201            Regulations implementing the Freedom of 
                    Information Act.........................         278
2202            [Reserved]

2203            Regulations implementing the Government in 
                    the Sunshine Act........................         290
2204            Implementation of the Equal Access to 
                    Justice Act in proceedings before the 
                    Occupational Safety and Health Review 
                    Commission..............................         294
2205            Enforcement of nondiscrimination on the 
                    basis of disability in programs or 
                    activities conducted by the Occupational 
                    Safety and Health Review Commission and 
                    in accessibility of Commission 
                    electronic and information technology...         300
2400            Regulations implementing the Privacy Act....         307
2401-2499       [Reserved]

[[Page 243]]



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  [Reserved]
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  [Reserved]

              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  Failure to obey rules.
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 procedure.

Subparts I-L [Reserved]

                    Subpart M_Simplified Proceedings

2200.200  Purpose.
2200.201  Application.
2200.202  Eligibility for Simplified Proceedings.
2200.203  Commencing Simplified Proceedings.
2200.204  Discontinuance of Simplified Proceedings.
2200.205  Filing of pleadings.
2200.206  Disclosure of information.
2200.207  Pre-hearing conference.
2200.208  Discovery.

[[Page 244]]

2200.209  Hearing.
2200.210  Review of Judge's decision.
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, 29 U.S.C. 652.
    (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, 29 U.S.C. 658(a).
    (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, 29 U.S.C. 659(a) or (b).
    (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.

[51 FR 32015, Sept. 8, 1986, as amended at 74 FR 63986, Dec. 7, 2009]



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,

[[Page 245]]

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 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.

    The Commission or Judge on their own initiative or, upon motion of a 
party, for good cause shown, may enlarge or shorten 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.

[70 FR 22787, May 3, 2005]



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, by electronic transmission, or by personal delivery. Service is 
deemed effected at the time of mailing (if by mail), at the time of 
receipt (if by electronic transmission), 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.

[[Page 246]]

Documents may be served by electronic transmission only when all parties 
consent in writing and the certificate of service of the electronic 
transmission states such consent and the method of transmission. All 
parties must be electronically served. Electronic service must be 
accomplished by following the requirements set forth on the Commission's 
Web site (http://www.OSHRC.gov.).
    (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 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 20036-3457. 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

[[Page 247]]

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 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; 70 FR 22787, May 3, 2005; 70 FR 25652, May 13, 2005]



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 20036-3457. 
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, filings may be 
accomplished by postage-prepaid first class mail, personal delivery, or 
electronic transmission or facsimile transmission.
    (d) Number of copies. Unless otherwise ordered or stated in this 
part, only the original of a document shall be filed.
    (e) Filing date. (1) Except for the documents listed in paragraph 
(e)(2) of this section, filing is effective upon mailing, if by mail, 
upon receipt by the Commission, if filing is by personal delivery, 
overnight delivery service, facsimile transmission or electronic 
transmission.
    (2) Filing is effective upon receipt for petitions for interlocutory 
review (Sec. 2200.73), petitions for discretionary review 
(Sec. 2200.91), and EAJA applications (Sec. 2204.301).
    (3) Counsel and the parties shall have sole responsibility for 
ensuring that the document is timely received by the Commission.
    (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 an original.
    (2) All facsimile transmissions shall include a facsimile of the 
appropriate certificate of service.
    (3) 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.
    (g) Electronic filing. (1) Where all parties consent to electronic 
service and electronic filing, a document may be filed by electronic 
transmission with the Commission and its Judges. The certificate of 
service accompanying the document must state that the other parties 
consent to filing by electronic transmission. The electronic 
transmission shall be in the manner specified by the Commission's Web 
site (http://www.OSHRC.gov).
    (2) A document filed in conformance with these rules constitutes a 
written document for the purpose of applying these rules, and a copy 
printed by the

[[Page 248]]

Commission and placed in the case file shall have the same force and 
effect as the original.
    (3) A certificate of service shall accompany each document 
electronically filed. The certificate shall set forth the dates and 
manner of filing and service. It is the responsibility of the 
transmitting party to retain records showing the date of transmission, 
including receipts.
    (4) A party that files a document by an electronic transmission 
shall utilize equipment and software that is compatible with equipment 
operated by the Commission and shall be responsible for the legibility 
of the document.
    (5) Information that is sensitive but not privileged shall be filed 
as follows:
    (i) If Social Security numbers must be included in a document, only 
the last four digits of that number shall be used;
    (ii) If names of minor children must be mentioned, only the initials 
of that child shall be used;
    (iii) If dates of birth must be included, only the year shall be 
used;
    (iv) If financial account numbers must be filed, only the last four 
digits of these numbers shall be used;
    (v) If a personal identifying number, such as a driver's license 
number must be filed, only the last four digits shall be used. Parties 
shall exercise caution when filing medical records, medical treatment 
records, medical diagnosis records, employment history, and individual 
financial information, and shall redact or exclude certain materials 
unnecessary to a disposition of the case.
    (6) A transmittal letter shall not be filed electronically or by 
other means when a document is transmitted noting:
    (i) The transmittal of a document;
    (ii) The inclusion of an attachment;
    (iii) A request for a return receipt; or
    (iv) A request for additional information concerning the filing.
    (7) The signature line of any document shall include the notation 
``/s/'' followed by the typewritten name or graphical duplicate of the 
handwritten signature of the party representative filing the document. 
Such representation of the signature shall be deemed to be the original 
signature of the representative for all purposes unless the party 
representative shows that such representation of the signature was 
unauthorized.
    (8) Privileged information shall not be filed electronically. 
Privileged information or information that is asserted by any party to 
be privileged shall not be filed electronically.

[70 FR 22787, May 3, 2005; 70 FR 25652, May 13, 2005; 74 FR 63986, Dec. 
7, 2009]



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  [Reserved]



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)

[[Page 249]]

(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 10 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 10 days before the hearing. A notice 
filed less than 10 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; 
74 FR 63986, Dec. 7, 2009]



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 10 days before commencement of the hearing. A petition 
filed less than 10 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.

[51 FR 32015, Sept. 8, 1986, as amended at 74 FR 63986, Dec. 7, 2009]



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

[[Page 250]]

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.



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.

[[Page 251]]

    (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 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

[[Page 252]]

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. 2200.101 or 
Sec. 2200.104. A signature by a party representative constitutes a 
representation by him that he understands that the rules and orders of 
the Commission and its Judges apply equally to attorney and non-attorney 
representatives.

[70 FR 22788, May 3, 2005; 70 FR 25652, May 13, 2005]



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]



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

[[Page 253]]

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, 29 U.S.C. 659(a) and (c).
    (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:
    (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

[[Page 254]]

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. 2200.35(b) through 
(d) 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; 74 FR 63986, Dec. 7, 2009]



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 20 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 10 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 may within 5 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; 74 FR 63986, 
Dec. 7, 2009]



Sec. 2200.41  [Reserved]



              Subpart D_Prehearing Procedures and Discovery



Sec. 2200.50  [Reserved]



Sec. 2200.51  Prehearing conferences and orders.

    (a) Scheduling conference. (1) The Judge may, upon his or her 
discretion, consult with all attorneys and any unrepresented parties, by 
a scheduling conference, telephone, mail, or other suitable means, and 
within 30 days

[[Page 255]]

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 Federal Rule of Civil Procedure 16, 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, as amended at 70 FR 22788, May 3, 2005; 74 
FR 63986, Dec. 7, 2009]



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. 
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, except that the provisions of Federal Rule of Civil 
Procedure 26(a) do not apply to Commission proceedings.
    (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 7 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) Privilege--(1) Claims of privilege. The initial claim of 
privilege shall specify the privilege claimed and the general nature of 
the material for which the privilege is claimed. In response to an order 
from the Judge or the Commission, or in response to a motion to compel, 
the claim shall: Identify the information that would be disclosed; set 
forth the privilege that is claimed; and allege 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 ruled upon in camera, that is, with the record and

[[Page 256]]

hearing room closed to the public, or ex parte, that is, without the 
participation of parties and their representatives. The Judge may enter 
an order and impose terms and conditions on his or her examination of 
the claim as justice may require, including an order designed to ensure 
that the allegedly privileged information not be disclosed until after 
the examination is completed.
    (2) Upholding or rejecting claims of privilege. If the Judge upholds 
the claim of privilege, the Judge may order and impose terms and 
conditions as justice may require, including a protective order. If the 
Judge overrules the claim, 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.
    (e) 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.
    (f) 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 Federal Rule of 
Civil Procedure 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;
    (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.
    (g) 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.
    (h) Show cause orders. All show cause orders issued by the 
Commission or Judge under paragraph (f) of this section shall be served 
upon the affected party by certified mail, return receipt requested.
    (i) Supplementation of responses. A party who has responded to a 
request for discovery with a response that was

[[Page 257]]

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; or
    (ii) The party knows 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.
    (j) Filing of discovery. Requests for production or inspection under 
Sec. 2200.53, requests for admission under Sec. 2200.54 and responses 
thereto, interrogatories under Sec. 2200.55 and the answers thereto, and 
depositions under Sec. 2200.56 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.
    (k) Relief from discovery requests. If relief is sought under 
Sec. 2200.101 or Sec. 2200.52(e), (f), or (g) 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 Sec. 2200.101 
or Sec. 2200.52(e), (f), or (g).
    (l) 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.
    (m) 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; 70 FR 22788, May 
3, 2005; 70 FR 25652, May 13, 2005; 74 FR 63987, Dec. 7, 2009]



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 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

[[Page 258]]

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.
    (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 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 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.
    (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.

[51 FR 32015, Sept. 8, 1986, as amended at 70 FR 22790, May 3, 2005; 70 
FR 25652, May 13, 2005]



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 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

[[Page 259]]

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 Federal Rule of Civil 
Procedure 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 10 days written notice to the other party or 
parties. The 10-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 Federal 
Rule of Civil Procedure 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 Federal Rule of Civil Procedure 
32(a)(4), 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 Federal Rule of Civil Procedure 30(b)(4).
    (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 have moved 
for such an order under Federal Rule of Civil Procedure 30(b)(3). 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 Federal 
Rule of Civil Procedure 30(e) (submission to witness).
    (2) Cost. The noticing party shall bear the expense of both the 
videotaping and the stenographic recording. Any

[[Page 260]]

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 Federal Rule of Civil 
Procedure 28 (c). 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 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; 74 FR 63987, Dec. 7, 2009]



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

[[Page 261]]

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-
3457. 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; 73 FR 56492, Sept. 29, 2008]



                           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 30 days in advance of the hearing. If a hearing is being 
rescheduled, or if exigent circumstances are present, at least 10 days 
notice 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; 74 FR 63987, Dec. 7, 2009]



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

[[Page 262]]

of proof. Motions for summary judgment are covered by Federal Rule of 
Civil Procedure 56.

[51 FR 32015, Sept. 8, 1986, as amended at 74 FR 63987, Dec. 7, 2009]



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 7 days prior to the hearing. A motion for 
postponement received less than 7 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; 74 FR 63987, 
Dec. 7, 2009]



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 requested 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; 
73 FR 56492, Sept. 29, 2008]



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 must be 
made, in the absence of extraordinary circumstances, within 5 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; 74 FR 63987, Dec. 7, 2009]



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.

[[Page 263]]



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; 74 
FR 63987, Dec. 7, 2009]



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 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.

[51 FR 32015, Sept. 8, 1986, as amended at 74 FR 63987, Dec. 7, 2009]

[[Page 264]]



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 6 
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; 74 FR 63987, 
Dec. 7, 2009]



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 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

[[Page 265]]

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 5 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 5 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. 2200.35 
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.
    (g) When filing effective. A petition for interlocutory review is 
deemed to be filed only when received by the Commission.

[51 FR 32015, Sept. 8, 1986, as amended at 54 FR 18491, May 1, 1989; 55 
FR 22782, June 4, 1990; 74 FR 63987, Dec. 7, 2009]



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 3 days prior to the due date and shall recite that the 
moving party has advised the other parties of the 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.

[51 FR 32015, Sept. 8, 1986, as amended at 74 FR 63987, Dec. 7, 2009]

[[Page 266]]



                    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. 2200.101(b), Sec. 2200.52(f) or Sec. 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; 70 FR 22790, May 3, 2005]



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 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

[[Page 267]]

review. The cross-petition may be conditional. See paragraph (b) of this 
section. A cross-petition shall be filed with the Judge during the 10 
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 
prejudicial 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.

[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; 73 FR 56492, Sept. 
29, 2008; 74 FR 63987, Dec. 7, 2009]



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 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

[[Page 268]]

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 memoranda it incorporates by 
reference, shall contain no more than 35 pages of text. A reply brief, 
including briefs and legal memoranda 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) 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 
(g) 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; 74 FR 63987, Dec. 7, 2009]



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.

[[Page 269]]

    (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. Upon motion of any party, or upon its own motion, 
the Commission may order oral argument. Parties requesting oral argument 
must demonstrate why oral argument would facilitate resolution of the 
issues before the Commission. Normally, motions for oral argument shall 
not be considered until after all briefs have been filed.
    (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 7 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 5 days before the 
argument.
    (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

[[Page 270]]

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. Oral arguments shall also be transcribed verbatim. A copy of 
the transcript of the oral argument taken by a qualified court reporter, 
shall be filed with the Commission. The Commission shall bear all 
expenses for court reporters' fees and for copies of the hearing 
transcript received by it.
    (2) Persons desiring to listen to the recordings shall make 
appropriate arrangements with the Executive Secretary. Any party 
desiring a written copy of the transcript is responsible for securing 
and paying for its copy.
    (3) Error in the transcript of the oral argument may be corrected by 
the Commission on its 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.
    (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; 
70 FR 22790, May 3, 2005; 74 FR 63987, Dec. 7, 2009]



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 20036-3457. 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; 73 
FR 56492, Sept. 29, 2008]



                   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 states otherwise, 
the withdrawal of a

[[Page 271]]

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  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 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 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 section. 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(f).
    (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.

[70 FR 22790, May 3, 2005]



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 272]]

    (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 5 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 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; 74 
FR 63987, Dec. 7, 2009]



Sec. 2200.105  Ex parte communication.

    (a) General. Except as permitted by Sec. 2200.120 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.

[51 FR 32015, Sept. 8, 1986, as amended at 70 FR 22790, May 3, 2005]



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

[[Page 273]]

grounds therefor, amend or revoke any 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., Suite 980, Washington, DC 20036-3457.

[70 FR 22790, May 3, 2005]



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 procedure.

    (a) Voluntary Settlement--(1) Applicability and duration. (i) 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.
    (ii) Upon motion of any party after the docketing of the notice of 
contest, or otherwise with the consent of the parties at any time in the 
proceedings, the Chief Administrative Law Judge may assign a case to a 
Settlement Judge for proceedings under this section. In the event either 
the Secretary or the employer objects to the use of a Settlement Judge 
procedure, such procedure shall not be imposed.
    (2) Length of voluntary settlement procedures. The settlement 
procedures under this section shall be for a period not to exceed 45 
days.
    (b) Mandatory settlement--(1) Applicability. This section applies 
only to notices of contest by employers in which the aggregate amount of 
the penalties sought by the Secretary is $100,000 or greater.
    (2) Proceedings under this part--(i) Assignment of case and 
appointment of Settlement Judge. Notwithstanding any other provisions of 
these rules, upon the docketing of the notice of contest the Chief 
Administrative Law Judge shall assign to the Settlement Part any case 
which satisfies the criteria set forth in paragraph (b)(1) of this 
section. The Chief Administrative Law Judge shall appoint a Settlement 
Judge, who shall be a Judge other than the one assigned to hear and 
decide the case, except as provided in paragraph (f)(2) of this section.
    (ii) Discovery proceedings to be followed by settlement proceedings. 
The Settlement Judge shall issue a discovery scheduling order and 
supervise all discovery proceedings. At the conclusion of discovery the 
Settlement Judge will conduct settlement proceedings during a period not 
to exceed 60 days. If, at the conclusion of the settlement proceedings 
the case has not been settled the Settlement Judge shall promptly notify 
the Chief Administrative Law Judge in accordance with paragraph (f) of 
this section.
    (c) 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 and seek resolution of as many of the issues as 
is feasible.
    (2) 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 and may enter other orders as appropriate to 
facilitate the proceedings.

[[Page 274]]

    (3) In voluntary settlement proceedings the Judge may allow or 
suspend discovery during the settlement proceedings.
    (4) 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.
    (5) The Judge may, with the consent of the parties, conduct such 
other settlement proceedings as may aid in the settlement of the case.
    (d) Settlement conference--(1) General. The Settlement Judge shall 
convene and preside over conferences between the parties. Settlement 
conferences may be conducted telephonically or in person. The Judge 
shall designate a place and time of conference.
    (2) Participation in conference. The Settlement Judge may require 
that any attorney or other representative who is expected to try the 
case for each party be present. The Settlement 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 Judge so that he may properly 
guide settlement discussions. The failure to be present at a settlement 
conference or otherwise to comply with the orders of the Settlement 
Judge or the refusal to cooperate fully within the spirit of this rule 
may result in the imposition of sanctions under Sec. 2200.101.
    (3) Confidentiality of settlement proceedings. All statements made 
and all information presented during the course of settlement 
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 Judge shall issue appropriate 
orders to protect confidentiality of settlement proceedings. The 
Settlement Judge shall not divulge any statements or information 
presented during private negotiations with a party or his representative 
during settlement proceedings except with the consent of that party. No 
evidence of statements or conduct in settlement 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 Judge in 
connection with settlement proceedings, and no communications between 
the Settlement Judge and the Chief Administrative Law Judge in 
connection with settlement proceedings including the report of the 
Settlement 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 proceeding may not be used in 
litigation unless obtained through appropriate discovery or subpoena. 
With respect to the Settlement Judge's participation in settlement 
proceedings, the Settlement 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 settlement 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 section 12(g) of the Act, 29 U.S.C. 661(g), nor shall 
any such material be open to public inspection as required by section 
12(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 Judge shall not file or cause to be filed in the official 
case record any material in his possession relating to these settlement 
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 Judge. (1) The Settlement Judge shall 
promptly notify the Chief Administrative Law Judge in writing of the 
status of the case at the conclusion of the settlement period or such 
time that he determines further negotiations would be fruitless. If the 
Settlement Judge has made such a determination and a settlement 
agreement is not achieved

[[Page 275]]

within 45 days for voluntary settlement proceedings or 60 days for 
mandatory settlement proceedings, the Settlement Judge shall then advise 
the Chief Administrative Law Judge in writing. 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 Judge has not approved a full settlement, 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 Judge or 
Chief Administrative Law Judge for appropriate action on the remaining 
issues. If all the parties, the Settlement Judge and the Chief 
Administrative Law Judge agree, the Settlement Judge may be retained as 
the Hearing Judge.
    (g) Non-reviewability. Notwithstanding the provisions of 
Sec. 2200.73 regarding interlocutory review, any decision concerning the 
assignment of any Judge and any decision by the Settlement Judge to 
terminate settlement proceedings under this section is not subject to 
review, appeal, or rehearing.

[70 FR 22791, May 3, 2005; 70 FR 25652, May 13, 2005; 74 FR 63987, Dec. 
7, 2009]

Subparts I-L [Reserved]



                    Subpart M_Simplified Proceedings

    Source: 60 FR 41809, Aug. 14, 1995, unless otherwise noted.



Sec. 2200.200  Purpose.

    (a) The purpose of the Simplified Proceedings 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.

[60 FR 41809, Aug. 14, 1995, as amended at 70 FR 22792, May 3, 2005]



Sec. 2200.201  Application.

    The rules in this subpart will govern proceedings before a Judge in 
a case chosen for Simplified Proceedings 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; 70 FR 22792, May 3, 2005]



Sec. 2200.202  Eligibility for Simplified Proceedings.

    (a) Those cases selected for Simplified Proceedings will be those 
that do not involve complex issues of law or fact. Cases appropriate for 
Simplified Proceedings 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 $20,000,
    (3) No allegation of willfulness or a repeat violation,

[[Page 276]]

    (4) Not involving a fatality,
    (5) A hearing that is expected to take less than 2 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 
$20,000, but not more than $30,000, if otherwise appropriate, may be 
selected for Simplified Proceedings at the discretion of the Chief 
Administrative Law Judge.

[62 FR 40934, July 31, 1997, as amended at 70 FR 22792, May 3, 2005; 74 
FR 63987, Dec. 7, 2009]



Sec. 2200.203  Commencing Simplified Proceedings.

    (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 Simplified Proceedings.
    (b) Party request. Within 20 days of the notice of docketing, any 
party may request that the case be assigned for Simplified Proceedings. 
The request must be in writing. For example, ``I request Simplified 
Proceedings'' 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 Administrative Law Judge or 
the Judge assigned to the case may grant a party's request and assign a 
case for Simplified Proceedings at his or her discretion. Such request 
shall be acted upon within 15 days of its receipt by the Judge.
    (d) Time for filing complaint or answer under Sec. 2200.34. If a 
party has requested Simplified Proceedings or the Judge has assigned the 
case for Simplified Proceedings, the times for filing a complaint or 
answer will not run. If a request for Simplified Proceedings is denied, 
the period for filing a complaint or answer will begin to run upon 
issuance of the notice denying Simplified Proceedings.

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 61012, Nov. 14, 1997; 
70 FR 22792, May 3, 2005; 74 FR 63987, Dec. 7, 2009]



Sec. 2200.204  Discontinuance of Simplified Proceedings.

    (a) Procedure. If it becomes apparent at any time that a case is not 
appropriate for Simplified Proceedings, the Judge assigned to the case 
may, upon motion by any party or upon the Judge's own motion, 
discontinue Simplified Proceedings and order the case to continue under 
conventional rules. Before discontinuing Simplified Proceedings, the 
Judge will consult with the Chief Administrative Law Judge.
    (b) Party motion. At any time during the proceedings any party may 
request that Simplified Proceedings 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 Simplified 
Proceedings. All other parties will have 7 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 Simplified Proceedings are discontinued, the Judge 
may issue such orders as are necessary for an orderly continuation under 
conventional rules.

[60 FR 41809, Aug. 14, 1995, as amended at 70 FR 22792, May 3, 2005; 74 
FR 63987, Dec. 7, 2009]



Sec. 2200.205  Filing of pleadings.

    (a) Complaint and answer. Once a case is designated for Simplified 
Proceedings, 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 Simplified Proceedings have been ordered, 
no response to these documents will be required.
    (b) Motions. A primary purpose of Simplified Proceedings 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.

[60 FR 41809, Aug. 14, 1995, as amended at 70 FR 22792, May 3, 2005]



Sec. 2200.206  Disclosure of information.

    (a) Disclosure to employer. (1) Within 12 working days after a case 
is designated for Simplified Proceedings, the

[[Page 277]]

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 
Simplified Proceedings, 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 
Simplified Proceedings, 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; 
70 FR 22792, May 3, 2005]



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 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

[[Page 278]]

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 Administrative Law Judge 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 11-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; 
73 FR 56492, Sept. 29, 2008; 74 FR 63988, Dec. 7, 2009; 75 FR 18404, 
Apr. 12, 2010]



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 Simplified Proceedings. 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 Simplified 
Proceedings.

[60 FR 41809, Aug. 14, 1995, as amended at 70 FR 22792, May 3, 2005]



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 and responsibilities.
2201.4  General policy and definitions.
2201.5  Procedure for requesting records.
2201.6  Responses to requests.
2201.7  Confidential commercial information.
2201.8  Fees for copying, searching, and review.
2201.9  Waiver of fees.
2201.10  Appeal of denials.
2201.11  Maintenance of statistics.
2201.12  Preservation of records.

Appendix A to Part 2201--Schedule of Fees

    Authority: 29 U.S.C. 661(g); 5 U.S.C. 552.

    Source: 71 FR 56350, Sept. 27, 2006, unless otherwise noted.



Sec. 2201.1  Purpose and scope.

    This part prescribes procedures to obtain information and records of 
the Occupational Safety and Health Review Commission (OSHRC or 
Commission) under the Freedom of Information Act (FOIA), 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.

    OSHRC 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. The President designates one of the Commissioners as 
Chairman, who is responsible on behalf of the Commission for the 
administrative operations of the Commission.



Sec. 2201.3  Delegation of authority and responsibilities.

    (a) The Chairman delegates to the Chief FOIA Officer the authority 
to act upon all requests for agency records. The Chief FOIA Officer 
shall, subject to the authority of the Chairman:
    (1) Have agency-wide responsibility for efficient and appropriate 
compliance with this section;
    (2) Monitor implementation of the FOIA throughout the agency and 
keep the Chairman and the Attorney General appropriately informed of the

[[Page 279]]

agency's performance in implementing this section;
    (3) Recommend to the Chairman such adjustments to agency practices, 
policies, personnel, and funding as may be necessary to improve 
implementation of this section;
    (4) Review and report to the Attorney General, through the Chairman, 
at such times and in such formats as the Attorney General may direct, on 
the agency's performance in implementing this section; and
    (5) Facilitate public understanding of the purposes of the statutory 
exemptions of this section by including concise descriptions of the 
exemptions in both the agency's FOIA Reference Guide, and the agency's 
annual report on this section, and by providing an overview, where 
appropriate, of certain general categories of agency records to which 
those exemptions apply.
    (b) The Chief FOIA Officer shall designate the FOIA Disclosure 
Officer(s), who shall be responsible for processing FOIA requests.
    (c) The Chief FOIA Officer shall designate the FOIA Public 
Liaison(s), who shall serve as the official(s) to whom a FOIA requester 
can raise concerns about the service the FOIA requester has received 
following an initial response. FOIA Public Liaisons shall be responsible 
for assisting in reducing delays, increasing transparency and 
understanding of the status of requests, and assisting in the resolution 
of disputes.
    (d) OSHRC establishes a FOIA Requester Service Center that shall be 
staffed by the FOIA Disclosure Officer(s) and FOIA Public Liaison(s). 
The address of the FOIA Requester Service Center is 1120 20th Street 
NW., 9th Floor, Washington, DC 20036-3457. The telephone number, fax 
number and additional contact information for the FOIA Requester Service 
Center is located on the agency's Web site at: http://www.oshrc.gov/
foia/index.html. The FOIA Requester Service Center is available to 
provide information about the status of a request to the requester using 
the assigned tracking number (as described in Sec. 2201.6(h)), 
including:
    (1) The date on which the agency originally received the request; 
and
    (2) An estimated date on which the agency will complete action on 
the request.

[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41371, July 16, 2010; 
81 FR 95037, Dec. 27, 2016]



Sec. 2201.4  General policy and definitions.

    (a) Non-exempt records available to public. Except for records and 
information exempted from disclosure by 5 U.S.C. 552(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. 2201.5. Records include any information 
that would be a record subject to the requirements of 5 U.S.C. 552 when 
maintained by the Commission in any format, including electronic format. 
In response to FOIA requests, the Commission will search for records 
manually or by automated means, except when an automated search would 
significantly interfere with the operation of the Commission's automated 
information system.
    (b) Record availability at the OSHRC e-FOIA Reading Room. The 
records of Commission activities are publicly available for inspection 
and copying, and may be accessed electronically on the Commission's Web 
site at http://www.oshrc.gov/foia/foia_reading_room.html. These records 
include:
    (1) Final decisions, including concurring and dissenting opinions, 
remand orders, as well as Administrative Law Judge decisions pending 
OSHRC review, briefing notices, and other significant orders;
    (2) OSHRC Rules of Procedure and Guides to those procedures;
    (3) Agency policy statements and interpretations adopted by OSHRC 
and not published in the Federal Register, if any;
    (4) Administrative staff manuals that affect a member of the public, 
if any;
    (5) Copies of records that have been released to a person under the 
FOIA that, because of the subject matter, the Commission determines have 
become or are likely to become the subject of subsequent requests for 
substantially

[[Page 280]]

the same records, or that have been requested three or more times, as 
well as records the Commission determines absent a FOIA request could be 
of significant public interest; and
    (6) A general index of records referred to under paragraph (b)(5) of 
this section.
    (c) Record availability onsite at OSHRC National Office. Any member 
of the public may, upon request, access OSHRC's e-FOIA Reading Room via 
a computer terminal at the OSHRC National Office, located at 1120 20th 
St. NW., 9th Floor, Washington, DC 20036-3457. Such a request must be 
made in writing to the FOIA Requester Service Center, and indicate a 
preferred date and time for the requested access. OSHRC reserves the 
right to arrange a different date and time with the requester, if 
necessary.
    (d) Definitions. For purposes of this part:
    Commercial use request means a request from or on behalf of a person 
who seeks information for a use or purpose that furthers his or her 
commercial, trade, or profit interests, which can include furthering 
those interests through litigation. The FOIA Disclosure Officer shall 
determine, whenever reasonably possible, the use to which a requester 
will put the requested records. When it appears that the requester will 
put the records to a commercial use, either because of the nature of the 
request itself or because the FOIA Disclosure Officer has reasonable 
cause to doubt a requester's stated use, the FOIA Disclosure Officer 
shall provide the requester a reasonable opportunity to submit further 
clarification.
    Direct costs means those expenses that the Commission actually 
incurs in searching for and duplicating (and, in the case of commercial 
use requests, reviewing) records to respond to a FOIA request. Direct 
costs include, for example, the salary of the employee performing the 
work (the basic rate of pay for the employee, plus 16 percent of that 
rate to cover benefits) and the cost of operating duplication machinery. 
Not included in direct costs are overhead expenses such as the costs of 
space and heating or lighting of the facility in which the records are 
kept.
    Duplication means the making of a copy of a record, or of the 
information contained in it, necessary to respond to a FOIA request. 
Copies can take the form of paper, microform, audiovisual materials, or 
electronic records (for example, magnetic tape or disk), among others. 
The FOIA Disclosure Officer shall honor a requester's specified 
preference of form or format of disclosure if the record is readily 
reproducible with reasonable efforts in the requested form or format.
    Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate higher 
education, an institution of graduate higher education, an institution 
of professional education, or an institution of vocational education, 
that operates a program of scholarly research. To be in this category, a 
requester must show that the request is authorized by and is made under 
the auspices of a qualifying institution and that the records are not 
sought for a commercial use but are sought to further scholarly 
research.
    Exceptional circumstances does not include a delay that results from 
a predictable agency workload of requests under this section, unless the 
agency demonstrates reasonable progress in reducing its backlog of 
pending requests.
    Noncommercial scientific institution means an institution that is 
not operated on a ``commercial'' basis, as that term is defined in this 
paragraph, and that is operated solely for the purpose of conducting 
scientific research the results of which are not intended to promote any 
particular product or industry. To be in this category, a requester must 
show that the request is authorized by and is made under the auspices of 
a qualifying institution and that the records are not sought for a 
commercial use but are sought to further scientific research.
    Record means any information that would be an OSHRC record subject 
to the requirements of the FOIA when maintained by OSHRC in any format, 
including an electronic format, and any such OSHRC record that is 
maintained for OSHRC by an entity under Government contract, for the 
purposes of records management.

[[Page 281]]

    Representative of the news media, or news media requester is any 
person or entity that gathers information of potential interest to a 
segment of the public, uses its editorial skills to turn the raw 
materials into a distinct work, and distributes that work to an 
audience. For purposes of this definition, 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 where they can 
qualify as disseminators of ``news'') who make their products available 
for purchase or subscription by, or free distribution to, the general 
public. These examples are not all-inclusive. Moreover, as methods of 
news delivery evolve (for example the adoption of the electronic 
dissemination of newspapers through telecommunications services), such 
alternative media shall be considered to be news-media entities. For 
``freelance'' journalists to be regarded as working for a news 
organization, they must demonstrate a solid basis for expecting 
publication through that organization. A publication contract would be 
the clearest proof, but OSHRC shall also look to the past publication 
record of a requester in making this determination. To be in this 
category, a requester must not be seeking the requested records for a 
commercial use. However, a request for records supporting the news-
dissemination function of the requester shall not be considered to be 
for a commercial use.
    Review means the examination of a record located in response to a 
request in order to determine whether any portion of it is exempt from 
disclosure. It also includes processing any record for disclosure--for 
example, doing all that is necessary to redact it and prepare it for 
disclosure. Review costs are recoverable even if a record ultimately is 
not disclosed. Review time does not include time spent resolving general 
legal or policy issues regarding the application of exemptions.
    Search means the process of looking for and retrieving records or 
information responsive to a request. It includes page-by-page or line-
by-line identification of information within records and also includes 
reasonable efforts to locate and retrieve information from records 
maintained in electronic form or format. The FOIA Disclosure Officer 
shall ensure that searches are done in the most efficient and least 
expensive manner reasonably possible. For example, the FOIA Disclosure 
Officer shall not search line-by-line where duplicating an entire 
document would be quicker and less expensive.
    Working day means a regular Federal working day. It does not include 
Saturdays, Sundays, or Federal legal public holidays.

[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41371, July 16, 2010; 
81 FR 95037, Dec. 27, 2016]



Sec. 2201.5  Procedure for requesting records.

    (a) General information. All requests for information must be made 
in writing to the FOIA Disclosure Officer and may be: Mailed or 
delivered; faxed; or emailed. Requests may also be made using the 
Commission's online FOIA request form (which is a downloadable PDF file 
found at http://www.oshrc.gov/foia/foia_request_form.html) and the 
completed form can be submitted by mail, fax, or email. Contact 
information for the FOIA Disclosure Officer is described in 
Sec. 2201.3(d). For mailed or delivered requests, the words ``Freedom of 
Information Act Request'' must be printed on the face of the request's 
envelope or covering as well as the request itself.
    (b) A requester who is making a request for records about himself or 
herself must comply with verification of identity requirements as 
required by 29 CFR 2400.6 in OSHRC's Privacy Act regulations.
    (c) Where a request for records pertains to another individual, a 
requester may receive greater access by submitting either a notarized 
authorization signed by that individual or a declaration made in 
compliance with the requirements set forth in 28 U.S.C. 1746 by that 
individual authorizing disclosure of the records to the requester, or by 
submitting proof that the individual is deceased (e.g., a copy of a 
death certificate or an obituary).

[[Page 282]]

    (d) Description of records sought. A request must describe the 
records sought in sufficient detail to enable the Commission to locate 
them with a reasonable amount of effort. To the extent possible, the 
request should include specific information to identify the requested 
records, such as the docket number(s) or case name(s). Before submitting 
a request, the requester may contact the FOIA Disclosure Officer, as 
described in Sec. 2201.3(d), to discuss the records being sought and 
receive assistance in describing them. If a determination is made after 
receiving a request that it does not reasonably describe the records 
sought, the FOIA Disclosure Officer will contact the requester to 
explain what additional information is needed or why the request is 
otherwise insufficient. A requester attempting to reformulate or modify 
such a request is encouraged to discuss the request with the FOIA 
Disclosure Officer. If a request does not reasonably describe the 
records sought, the agency's response may be delayed.
    (e) Requests may specify the preferred form or format (including 
electronic formats) of the response. The FOIA Disclosure Officer shall 
honor a requester's specified preference of form or format of disclosure 
if the record is readily reproducible with reasonable efforts in the 
requested form or format. When a requester does not specify the 
preferred form or format of the response, the FOIA Disclosure Officer 
shall respond in the form or format in which the record is most 
accessible to the Commission.
    (f) The requester must provide contact information, such as a phone 
number, email address, and/or mailing address, to facilitate the 
agency's communication with the requester.
    (g) Date of receipt. A request that complies with paragraph (a) of 
this section is deemed received on the actual date it is received by the 
Commission. A request that does not comply with paragraph (a) of this 
section is deemed received when it is actually received by the FOIA 
Disclosure Officer. For requests that are expected to result in fees 
exceeding $250, the request shall not be deemed to have been received 
until the requester is advised of the anticipated costs and the 
Commission has received full payment or satisfactory assurance of full 
payment as provided under Sec. 2201.8(f).

[81 FR 95037, Dec. 27, 2016]



Sec. 2201.6  Responses to requests.

    (a) Responses within 20 working days. The FOIA Disclosure Officer 
will either grant or deny a request for records within 20 working days 
after receiving the request. The 20-day period shall not be tolled by 
the agency except in the following cases. In these cases, the agency's 
receipt of the requester's response to the agency's request for 
information or clarification ends the tolling period.
    (1) The agency may toll the 20-day period once while awaiting 
information that it has reasonably requested from the requester under 
this section. The agency may make more than one request to the requester 
for information not related to issues regarding fee assessment, but can 
only toll the 20-day period once; or
    (2) The agency may toll the 20-day period as many times as are 
necessary to clarify any issues regarding fee assessment.
    (b) Extensions of response time in unusual circumstances. In unusual 
circumstances, the Commission may extend the time limit prescribed in 
paragraph (a) of this section by not more than 10 working days. The FOIA 
Disclosure Officer shall notify the requester in writing of the 
extension, the reasons for the extension and the date on which a 
determination is expected. ``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 one of OSHRC's 
regional offices or off-site storage facilities;
    (2) Search for, collect, and appropriately examine a voluminous 
amount of separate and distinct records that 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.

[[Page 283]]

    (c) Additional extension. The FOIA Disclosure Officer shall notify 
the requester in writing 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. The FOIA Disclosure Officer or FOIA Public 
Liaison shall be available to assist the requester for this purpose and 
shall notify the requester of the right to seek dispute resolution 
services from the National Archives and Records Administration's Office 
of Government Information Services (OGIS).
    (d) Two-track 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) A requester should assume, unless otherwise notified by the 
Commission, that its request is in the first track of processing. The 
Commission will notify a requester when its 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 in writing. In the case of a request expected 
to take more than 30 working days 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 a requester as documents 
are obtained by the FOIA Disclosure Officer 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.
    (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 Commission as a matter of agency 
discretion.
    (3) The FOIA Disclosure 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 processing will be expedited.
    (f) Content of denial. When the FOIA Disclosure Officer denies a 
request for records, either in whole or in part, a request for expedited 
processing, and/or a request for fee waivers (see Sec. 2201.9), the 
written notice of the denial shall state the reason for denial, give a 
reasonable estimate of the volume of matter denied (unless doing so 
would harm an interest protected by the exemption(s) under which the 
request was denied), set forth the name and title or position of the 
person responsible for the denial of the request, notify the requester 
of the right to appeal the determination as specified in Sec. 2201.10, 
and notify the requester of the assistance available from the FOIA 
Public Liaison and the dispute resolution services offered by OGIS. A 
refusal by the FOIA Disclosure Officer to process the request because 
the requester has not made advance

[[Page 284]]

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 Sec. 2201.10.
    (g) Deletions. The FOIA Disclosure Officer shall provide to the 
requester in writing a justification for deletions within records. 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 place in the record where the 
deletion is made, and the exemption under which the deletion is made, 
shall be marked.
    (h) Tracking numbers. The FOIA Disclosure Officer shall assign an 
individualized tracking number to each request received for processing 
and provide the requester with the tracking number.
    (i) Determining responsive records. In determining which records are 
responsive to a request, OSHRC ordinarily will include only records in 
its possession as of the date it begins its search for them. If any 
other date is used, OSHRC shall inform the requester of that date.

[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41372, July 16, 2010; 
81 FR 95038, Dec. 27, 2016]



Sec. 2201.7  Confidential commercial information.

    (a) Definitions. (1) Confidential commercial information means 
commercial or financial information obtained by OSHRC from a submitter 
that may be protected from disclosure under Exemption 4 of the FOIA, 5 
U.S.C. 552(b)(4).
    (2) Submitter means any person or entity, including a corporation, 
State, or foreign government, but not including another Federal 
Government entity, that provides confidential commercial information, 
either directly or indirectly to OSHRC.
    (b) Designation of confidential commercial information. A submitter 
of confidential commercial information must use good faith efforts to 
designate by appropriate markings, at the time of submission, any 
portion of its submission that it considers to be protected from 
disclosure under Exemption 4. These designations expire 10 years after 
the date of the submission unless the submitter requests and provides 
justification for a longer designation period.
    (c) When notice to submitters is required. OSHRC shall promptly 
provide written notice to the submitter of confidential commercial 
information whenever records containing such information are requested 
under the FOIA if OSHRC determines that it may be required to disclose 
the records, provided the submitter has complied with paragraph (b) of 
this section or OSHRC has a reason to believe that the requested 
information may be protected from disclosure under Exemption 4, but has 
not yet determined whether the information is protected from disclosure. 
The notice must either describe the commercial information requested or 
include a copy of the requested records or portions of records 
containing the information.
    (d) Exceptions to submitter notice requirements. The notice 
requirements of this section do not apply if:
    (1) OSHRC determines that the information is exempt under the FOIA, 
and therefore will not be disclosed;
    (2) The information has been lawfully published or has been 
officially made available to the public;
    (3) Disclosure of the information is required by a statute other 
than the FOIA or by a regulation issued in accordance with the 
requirements of Executive Order 12600 of June 23, 1987; or
    (4) The designation made by the submitter under paragraph (b) of 
this section appears obviously frivolous. In such case, OSHRC shall give 
the submitter written notice of any final decision to disclose the 
information within a reasonable number of days prior to a specified 
disclosure date.
    (e) Opportunity to object to disclosure. OSHRC shall specify a 
reasonable time period within which the submitter must provide a 
response to the notice referenced above. If a submitter has any 
objections to disclosure, it should provide a detailed written statement 
that specifies all grounds for withholding the particular information 
under any exemption of the FOIA. In

[[Page 285]]

order to rely on Exemption 4 as basis for nondisclosure, the submitter 
must explain why the information constitutes a trade secret or 
commercial or financial information that is confidential. A submitter 
who fails to respond within the time period specified in the notice will 
be considered to have no objection to disclosure of the information. 
OSHRC is not required to consider any information received after the 
date of any disclosure decision. Any information provided by a submitter 
under this subpart may itself be subject to disclosure under the FOIA.
    (f) Analysis of objections. OSHRC shall consider a submitter's 
objections and specific grounds for nondisclosure in deciding whether to 
disclose the requested information.
    (g) Notice of decision. OSHRC shall provide the submitter with 
written notice once a decision is made as to whether or not to disclose 
information over the submitter's objection. When a decision is made to 
disclose information over the submitter's objection, this notice shall 
include a statement of the reasons why each of the submitter's 
disclosure objections was not sustained, a description of the 
information to be disclosed or copies of the records as the agency 
intends to release them, and a specified disclosure date (which must be 
a reasonable time after the notice).
    (h) Notice of FOIA lawsuit. OSHRC shall promptly notify the 
submitter when a requester files a lawsuit seeking to compel the 
disclosure of confidential commercial information.
    (i) Requester notification. OSHRC shall notify the requester 
whenever it provides the submitter with notice and an opportunity to 
object to disclosure; whenever it notifies the submitter of its intent 
to disclose the requested information; and whenever a submitter files a 
lawsuit to prevent the disclosure of the information.

[81 FR 95038, Dec. 27, 2016]



Sec. 2201.8  Fees for copying, searching, and review.

    (a) Fees required unless waived. The FOIA Disclosure Officer shall 
charge fees in accordance with the Uniform Freedom of Information Fee 
Schedule and Guidelines published by the Office of Management and Budget 
and in accordance with paragraph (b) of this section. See appendix A to 
this part. If the fees for a request are less than the threshold amount 
as provided in OSHRC's fee schedule, no fees shall be charged. The FOIA 
Disclosure Officer shall, however, waive the fees in the circumstances 
stated in Sec. 2201.9.
    (b) Calculation of fees. Fees for copying, searching and reviewing 
will be based on the direct costs of these services, including the 
average hourly salary (base plus DC locality payment), plus 16 percent 
for benefits, of the following three categories of employees involved in 
responding to FOIA requests: Clerical--based on an average of all 
employees at GS-9 and below; professional--based on an average of all 
employees at GS-10 through GS-14; and managerial--based on an average of 
all employees at GS-15 and above. OSHRC will calculate a schedule of 
fees based on these direct costs. The schedule of fees under this 
section appears in appendix A to this part. A copy of the schedule of 
fees may also be obtained at no charge from the FOIA Disclosure Officer. 
See Sec. 2201.3(d).
    (1) Copying fee. The fee per copy of each page shall be calculated 
in accordance with the per-page amount established in OSHRC's fee 
schedule. See appendix A to this part. For other forms of duplication, 
direct costs of producing the copy, including operator time, shall be 
calculated and assessed. Copying fees shall not be charged for the first 
100 pages of copies unless the copies are requested for a commercial 
use. No copying fee shall be charged for educational, scientific, or 
news media requests if the agency fails to comply with any time limit in 
Sec. 2201.6, provided that no unusual or exceptional circumstances (as 
those terms are defined in Secs. 2201.6(b) and 2201.4(d), respectively) 
apply to the processing of the request.
    (2) Search fee. Search fees shall be calculated in accordance with 
the amounts established in OSHRC's fee schedule. See appendix A to this 
part. Commercial requesters shall be charged for all search time, except 
as described below. Search fees shall be charged even if the responsive 
documents are not located or if they are located but withheld on the 
basis of an

[[Page 286]]

exemption. 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).
    (v) Failure to comply with time limits. No search fee shall be 
charged if the Commission fails to comply with any time limit in 
Sec. 2201.6, provided that no unusual or exceptional circumstances (as 
those terms are defined in Secs. 2201.6(b) and2201.4(d), respectively) 
apply to the processing of the request.
    (3) Unusual circumstances. (i) If the Commission has determined that 
unusual circumstances, as defined in Sec. 2201.6(b), apply and has 
provided timely written notice to the requester, a failure to comply 
with the time limit shall be excused for an additional 10 days and the 
Commission shall assess fees as usual.
    (ii) If the Commission has determined that unusual circumstances, as 
defined in Sec. 2201.6(b), apply and more than 5,000 pages are necessary 
to respond to the request, the Commission may charge search fees, or, in 
the case of requesters described in Sec. 2201.8(b)(2)(ii), may charge 
duplication fees, if the Commission provided timely written notice of 
unusual circumstances to the requester in accordance with Sec. 2201.6(b) 
and the Commission discussed with the requester via written mail, email, 
or telephone (or made not less than three good-faith attempts to do so) 
how the requester could effectively limit the scope of the request in 
accordance with the FOIA. If this exception is satisfied, the Commission 
may charge all applicable fees incurred in the processing of the request 
even if such processing extends beyond an additional 10 days.
    (4) If a court has determined that exceptional circumstances exist, 
as defined in Sec. 2201.4(d), a failure to comply with the time limits 
shall be excused for the length of time provided by the court order.
    (5) Review fee. A review fee shall be charged only for commercial 
requests. Review fees shall be calculated in accordance with the amounts 
established in OSHRC's schedule of fees. See appendix A to this part. A 
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. However, a 
review fee shall not be charged for review by the Chairman under 
Sec. 2201.10 (Appeal of denials).
    (c) Invoices. The FOIA Disclosure Officer shall provide the 
requester with an invoice containing an itemization of assessed fees.
    (d) Aggregation of requests. When the FOIA Disclosure 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 FOIA Disclosure 
Officer may aggregate any such requests and charge accordingly.
    (e) Fees likely to exceed $25. If the total fee charges are likely 
to exceed $25, the FOIA Disclosure Officer shall notify the requester of 
the estimated amount of the charges, unless the requester has indicated 
a willingness to pay fees up to the estimated amount. The notification 
shall offer the requester an opportunity to confer with the FOIA 
Disclosure Officer to reformulate the request to meet the requester's 
needs at a lower cost. In cases in which a requester has been notified 
that actual or estimated fees amount to more than $25, the request shall 
not be considered received and further

[[Page 287]]

work shall not be done on it until the requester agrees to pay the 
actual or estimated total fee. Any such agreement shall be memorialized 
in writing.
    (f) Advance payments. Advance payment of fees will generally not be 
required. If, however, charges are likely to exceed $250, the FOIA 
Disclosure 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 FOIA Disclosure Officer 
shall require the requester to pay the full amount owed plus any 
interest owed as provided in paragraph (h) of this section or 
demonstrate that he or she has, in fact, paid the fee, and to make an 
advance payment of the full amount of the estimated charges before the 
FOIA Disclosure Officer begins to process the new request or a pending 
request from that requester.
    (g) Fees for services not required by the Freedom of Information 
Act. The Commission has discretion regarding its response to requests 
for services not required by the FOIA. For example, the FOIA does not 
require agencies to certify or authenticate responsive documents, nor 
does it require responsive documents to be sent by express mail. If 
these services are requested, the FOIA Disclosure Officer shall assess 
the direct costs of such services.
    (h) Interest on unpaid bills. The Commission's Office of the 
Executive Director shall begin assessing interest charges on unpaid 
bills starting on the thirty-first day after the date the bill was sent. 
Interest will accrue from the date of billing until the Commission 
receives full payment. Interest will be at the rate described in 31 
U.S.C. 3717.
    (i) Debt collection procedures. If bills are unpaid 60 days after 
the mailing of a written notice to the requester, the Commission's 
Office of the Executive Director may resort to the debt collection 
procedures set out in the Debt Collection Act of 1982 (Pub. L. 97-365, 
96 Stat. 1749), as amended, and its administrative procedures, including 
the use of consumer reporting agencies, collection agencies, and offset.

[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41372, July 16, 2010. 
Redesignated and amended at 81 FR 95038, 95039, Dec. 27, 2016]



Sec. 2201.9  Waiver of fees.

    (a) General. The FOIA Disclosure 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. Where the FOIA 
Disclosure 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 FOIA Disclosure Officer may seek 
clarification from the requester before assigning the request to a 
specific category for fee assessment purposes. The FOIA Disclosure 
Officer shall afford the requester the opportunity to show that the 
requester 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 FOIA Disclosure 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

[[Page 288]]

minimally satisfies the ``public interest'' requirement in paragraph (a) 
of this section.

[71 FR 56350, Sept. 27, 2006. Redesignated and amended at 81 FR 95038, 
95039, Dec. 27, 2016]



Sec. 2201.10  Appeal of denials.

    (a) Requirements for making an appeal. A denial of a request for 
records, either in whole or in part, a request for expedited processing, 
or a request for fee waivers, may be appealed in writing to the Chairman 
of the Commission. To be considered timely, the appeal must be 
postmarked, or in the case of electronic submissions, transmitted, 
within 90 calendar days of the date of the agency's written notice of 
denial. The appeal should clearly identify the agency determination that 
is being appealed and the assigned FOIA tracking number. To facilitate 
handling, the requester should mark both the appeal and its envelope, or 
state in the subject line of an electronic transmission, ``Freedom of 
Information Act Appeal.''
    (b) Adjudication of appeals. The Chairman shall act on the appeal 
under 5 U.S.C. 552(a)(6)(A)(ii) within 20 working days after the receipt 
of the appeal. An appeal ordinarily will not be adjudicated if the 
request becomes a matter of FOIA litigation. On receipt of any appeal 
involving classified information, the Chairman shall take appropriate 
action to ensure compliance with applicable classification rules.
    (c) Decisions on appeals. The Chairman shall provide the decision on 
an appeal in writing. If the Chairman wholly or partially upholds the 
denial of the request, the decision shall contain a statement that 
identifies the reasons for the affirmance, including any FOIA exemptions 
applied. The decision must include notification that the requester may 
obtain judicial review of the decision under 5 U.S.C. 552(a)(4)(B)-(G). 
The decision shall also inform the requester of the dispute resolution 
services offered by OGIS as a non-exclusive alternative to litigation. 
If the Chairman's decision is remanded or modified on appeal to the 
court, the requester will be notified by the agency of that 
determination in writing. The Commission shall then further process the 
request in accordance with the appeal determination and shall respond 
directly to the requester.
    (d) Engaging in dispute services provided by OGIS. Dispute 
resolution is a voluntary process. If the Commission agrees to 
participate in the dispute resolution services provided by OGIS, it will 
actively engage as a partner in the process in an attempt to resolve the 
dispute.
    (e) When appeal is required. Before seeking review by a court of the 
Commission's adverse determination, a requester generally must first 
submit a timely administrative appeal.

[81 FR 95039, Dec. 27, 2016]



Sec. 2201.11  Maintenance of statistics.

    (a) The FOIA Disclosure 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 and the number of occasions on which each statute was 
relied upon;
    (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 and average 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, based on the date on

[[Page 289]]

which the requests were received by the agency;
    (8) The average number of days for the agency to respond to a 
request beginning on the date on which the request was received by the 
agency, the median number of days for the agency to respond to such 
requests, and the range in number of days for the agency to respond to 
such requests;
    (9) Based on the number of business days that have elapsed since 
each request was originally received by the agency--
    (i) The number of requests for records to which the agency has 
responded with a determination within a period up to and including 20 
days, and in 20-day increments up to and including 200 days;
    (ii) The number of requests for records to which the agency has 
responded with a determination within a period greater than 200 days and 
less than 301 days;
    (iii) The number of requests for records to which the agency has 
responded with a determination within a period greater than 300 days and 
less than 401 days; and
    (iv) The number of requests for records to which the agency has 
responded with a determination within a period greater than 400 days;
    (10) The average number of days for the agency to provide the 
granted information beginning on the date on which the request was 
originally filed, the median number of days for the agency to provide 
the granted information, and the range in number of days for the agency 
to provide the granted information;
    (11) The median and average number of days for the agency to respond 
to administrative appeals based on the date on which the appeals 
originally were received by the agency, the highest number of business 
days taken by the agency to respond to an administrative appeal, and the 
lowest number of business days taken by the agency to respond to an 
administrative appeal;
    (12) Data on the 10 active requests with the earliest filing dates 
pending at the agency, including the amount of time that has elapsed 
since each request was originally received by the agency;
    (13) Data on the 10 active administrative appeals with the earliest 
filing dates pending before the agency as of September 30 of the 
preceding year, including the number of business days that have elapsed 
since the requests were originally received by the agency;
    (14) The number of expedited review requests that are granted and 
denied, the average and median number of days for adjudicating expedited 
review requests, and the number adjudicated within the required 10 days;
    (15) The number of fee waiver requests that are granted and denied, 
and the average and median number of days for adjudicating fee waiver 
determinations;
    (16) The total amount of fees collected by the agency for processing 
requests;
    (17) The number of full-time staff of the agency devoted to the 
processing of requests for records under this section; and
    (18) The total amount expended by the agency for processing these 
requests.
    (b) The FOIA Disclosure 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 section, for the 
previous fiscal year. A copy of the report will be available for public 
inspection and copying at the OSHRC FOIA Reading Room, and a copy will 
be accessible on OSHRC's Web site at http://www.oshrc.gov.

[71 FR 56350, Sept. 27, 2006, as amended at 75 FR 41373, July 16, 2010. 
Redesignated and amended at 81 FR 95038, 95040, Dec. 27, 2016]



Sec. 2201.12  Preservation of records.

    OSHRC shall preserve all correspondence pertaining to FOIA requests, 
as well as copies of all requested records, until disposition or 
destruction is authorized pursuant to title 44 of the United States Code 
or the applicable General Records Schedule of the National Archives and 
Records Administration. OSHRC shall not dispose of or

[[Page 290]]

destroy records while they are the subject of a pending request, appeal 
or lawsuit under the FOIA.

[81 FR 95040, Dec. 27, 2016]



             Sec. Appendix A to Part 2201--Schedule of Fees

------------------------------------------------------------------------
                Type of fee                         Amount of fee
------------------------------------------------------------------------
Threshold Amount (Amount below which fees   $10
 will not be assessed).
Search and Review Hourly Fees:
    Clerical (GS-9 and below).............  23
    Professional (GS-10 through GS 14)....  46
    Managerial (GS-15 and above)..........  76
Duplication cost per page.................  0.25
Computer printout copying fee.............  0.40
Searches of computerized records..........  Actual cost to the
                                             Commission, but shall not
                                             exceed $300 per hour,
                                             including machine time and
                                             the cost of the operator
                                             and clerical personnel.
Certification Fee.........................  $35 per authenticating
                                             affidavit or declaration.
                                             (Note: Search and review
                                             charges may be assessed in
                                             accordance with the rates
                                             listed above.)
------------------------------------------------------------------------

                          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, 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 10:30 a.m. on Thursday of each week, except on legal 
holidays. The

[[Page 291]]

term includes regularly-scheduled meetings that have been rescheduled 
for another time or day.

[50 FR 51679, Dec. 19, 1985, as amended at 73 FR 56492, Sept. 29, 2008; 
74 FR 63988, Dec. 7, 2009]



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. 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 that 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 trial 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

[[Page 292]]

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.
    (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; 74 
FR 63988, Dec. 7, 2009]



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 10:30 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 20036-3457. 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.

[[Page 293]]

    (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; 
73 FR 56492, Sept. 29, 2008]



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 
announcement 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 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 requires 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 required 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

[[Page 294]]

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 
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 20036-3457. 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; 
73 FR 56492, Sept. 29, 2008]



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.

[[Page 295]]

             Subpart B_Information Required From Applicants

2204.201  Contents of application.
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.

    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(j);
    (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; 
74 FR 63988, Dec. 7, 2009]



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.

[[Page 296]]

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
    (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. 2200.37(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.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987; 
62 FR 59569, Nov. 4, 1997; 70 FR 22792, May 3, 2005; 74 FR 63988, Dec. 
7, 2009]



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:

[[Page 297]]

    (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;
    (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(j). 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.

[46 FR 48080, Sept. 30, 1981, as amended at 74 FR 63988, Dec. 7, 2009]



             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]

[[Page 298]]



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.
    (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 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 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 period for seeking 
appellate review expires.
    (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

[[Page 299]]

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.

[46 FR 48080, Sept. 30, 1981, as amended at 70 FR 22792, May 3, 2005]



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 filed, 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

[[Page 300]]

conclusions on the applicant's eligibility and status as a prevailing 
party and an explanation of the reasons for 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
DISABILITY IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE OCCUPATIONAL
SAFETY AND HEALTH REVIEW COMMISSION AND IN ACCESSIBILITY OF 
COMMISSION ELECTRONIC AND INFORMATION TECHNOLOGY--Table of Contents



Sec.
2205.101  Purpose.
2205.102  Application.
2205.103  Definitions.
2205.104-2205.10  [Reserved]
2205.111  Notice.
2205.112-2205.129  [Reserved]
2205.130  General prohibitions against discrimination.
2205.131-2205.134  [Reserved]
2205.135  Electronic and information technology requirements.
2205.136-2205.139  [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; 29 U.S.C. 794d.

    Source: 76 FR 39285, July 6, 2011, 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 disability in programs or 
activities conducted by Executive agencies or the United States Postal 
Service. This part also effectuates section 508 of the Rehabilitation 
Act of 1973, as amended, with respect to the accessibility of electronic 
and information technology developed, procured, maintained, or used by 
the agency.

[[Page 301]]



Sec. 2205.102  Application.

    This part applies to all programs or activities conducted by the 
agency and to its development, procurement, maintenance, and use of 
electronic and information technology.



Sec. 2205.103  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 or section 508. 
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.
    Electronic and Information technology includes information 
technology and any equipment or interconnected system or subsystem of 
equipment that is used in the creation, conversion, or duplication of 
data or information. The term electronic and information technology 
includes, but is not limited to, telecommunications products (such as 
telephones), information kiosks and transaction machines, World Wide Web 
sites, multimedia, and office equipment such as copiers and fax 
machines. The term does not include any equipment that contains embedded 
information technology that is used as an integral part of the product, 
but the principal function of which is not the acquisition, storage, 
manipulation, management, movement, control, display, switching, 
interchange, transmission, or reception of data or information. For 
example, HVAC (heating, ventilation, and air conditioning) equipment 
such as thermostats or temperature control devices, and medical 
equipment where information technology is integral to its operation are 
not information technology.
    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.
    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.
    Individual with a disability 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,

[[Page 302]]

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.
    Information technology means any equipment or interconnected system 
or subsystem of equipment that is used in the automatic acquisition, 
storage, manipulation, management, movement, control, display, 
switching, interchange, transmission, or reception of data or 
information. The term information technology includes computers, 
ancillary equipment, software, firmware and similar procedures, services 
(including support services), and related resources.
    Qualified individual with a disability means--
    (1) With respect to any agency program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, an individual with a disability 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;
    (2) With respect to any other program or activity, an individual 
with a disability who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (3) Qualified individual with a disability is defined for purposes 
of employment in 29 CFR 1630.2(m), 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); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955); and the 
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810). 
As used in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Section 508 means section 508 of the Rehabilitation Act of 1973, 
Pub. L. 93-112, Title V, section 508, as added by Pub. L. 99-506, Title 
VI, section 603(a), Oct. 21, 1986, 100 Stat. 1830, and amended Pub. L. 
100-630, Title II, section 206(f), Nov. 7, 1988, 102 Stat. 3312; Pub. L. 
102-569, Title V, section 509(a), Oct. 29, 1992, 106 Stat. 4430; Pub. L. 
105-220, Title IV, section 408(b), Aug. 7, 1998, 112 Stat. 1203.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2205.104-2205.110  [Reserved]



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 Chairman finds 
necessary to apprise such persons of the protections against 
discrimination assured them by section 504 or the access to technology 
provided under section 508 and this regulation.

[[Page 303]]



Secs. 2205.112-2205.129  [Reserved]



Sec. 2205.130  General prohibitions against discrimination.

    (a) No qualified individual with a disability shall, on the basis of 
disability, 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 disability--
    (i) Deny a qualified individual with a disability the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with a disability 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 individual with a disability 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 
individuals with disabilities or to any class of individuals with 
disabilities than is provided to others unless such action is necessary 
to provide qualified individuals with disabilities with aid, benefits, 
or services that are as effective as those provided to others;
    (v) Deny a qualified individual with a disability the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified individual with a disability 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 individual with a disability 
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 individuals with disabilities to 
discrimination on the basis of disability; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with disabilities.
    (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 individuals with disabilities 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 individuals with 
disabilities.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with disabilities to 
discrimination on the basis of disability.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with 
disabilities to discrimination on the basis of disability, nor may the 
agency establish requirements for the programs or activities of 
licensees or certified entities that subject qualified individuals with 
disabilities to discrimination on the basis of disability. 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 individuals without disabilities from the 
benefits of a program limited by Federal statute or Executive order to 
individuals with disabilities or the exclusion of a specific class of 
individuals with disabilities from a program limited by Federal statute 
or Executive order to a different class of individuals with disabilities 
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 individuals 
with disabilities.

[[Page 304]]



Secs. 2205.131-2205.134  [Reserved]



Sec. 2205.135  Electronic and information technology requirements.

    (a) In accordance with section 508 and the standards published by 
the Architectural and Transportation Barriers Compliance Board at 36 CFR 
part 1194, the agency shall ensure, absent an undue burden, that the 
electronic and information technology developed, procured, maintained, 
or used by the agency allows:
    (1) Individuals with disabilities who are agency employees or 
applicants to have access to and use of information and data that is 
comparable to the access to and use of information and data by agency 
employees who are individuals without disabilities; and
    (2) Individuals with disabilities who are members of the public 
seeking information or services from the agency to have access to and 
use of information and data that is comparable to the access to and use 
of information and data by such members of the public who are not 
individuals with disabilities.
    (b) When development, procurement, maintenance, or use of electronic 
and information technology that meets the standards at 36 CFR part 1194 
would impose an undue burden, the agency shall provide individuals with 
disabilities covered by this section with the information and data 
involved by an alternative means of access that allows the individuals 
to use the information and data.



Secs. 2205.136-2205.139  [Reserved]



Sec. 2205.140  Employment.

    No qualified individual with a disability shall, on the basis of 
disability, 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 1614, 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 
individual with a disability shall, because the agency's facilities are 
inaccessible to or unusable by individuals with disabilities, 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 usable by individuals with disabilities. This 
paragraph (a) does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with disabilities;
    (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 this paragraph (a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the Chairman 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

[[Page 305]]

in such an alteration or such burdens but would nevertheless ensure that 
individuals with disabilities 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 individuals with disabilities. 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 
individuals with disabilities in the most integrated setting 
appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
paragraph (a) of this section in historic preservation programs, the 
agency shall give priority to methods that provide physical access to 
individuals with disabilities. In cases where a physical alteration to 
an historic property is not required because of paragraph (a)(2) or (3) 
of this section, 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 individuals with disabilities into 
or through portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.



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 
individuals with disabilities. The definitions, requirements, and 
standards of the Architectural Barriers Act (42 U.S.C. 4151-4157), as 
established in 41 CFR 102-76.60 to 102-76.95, 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 an individual with a disability 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 
individual with a disability.
    (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, 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

[[Page 306]]

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 this section would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the Chairman 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, 
individuals with disabilities 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 
disability in programs or activities conducted by the agency in 
violation of section 504. Paragraphs (c) through (j) of this section 
also apply to all complaints alleging a violation of the agency's 
responsibility to procure electronic and information technology under 
section 508, whether filed by members of the public or agency employees 
or applicants.
    (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 1614 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c)(1) Any person who believes that he or she has been subjected to 
discrimination prohibited by this part or that the agency's procurement 
of electronic and information technology has violated section 508, or an 
authorized representative of such person, may file a complaint with the 
Executive Director.
    (2) The Executive Director shall be responsible for coordinating 
implementation of this section. Complaints shall be sent to Executive 
Director, Occupational Safety and Health Review Commission, One 
Lafayette Centre, 1120-20th Street NW., 9th Floor, Washington, DC 20036-
3457. Complaints shall be filed with the Executive Director within 180 
days of the alleged act of discrimination. A complaint shall be deemed 
filed on the date it is postmarked, or, in the absence of a postmark, on 
the date it is received by the agency. The agency may extend this time 
period for good cause.
    (d)(1) The agency shall accept a complete complaint that is filed in 
accordance with paragraph (c) of this section and over which it has 
jurisdiction. The Executive Director shall notify the complainant and 
the respondent of receipt and acceptance of the complaint.
    (2) If the agency receives a complaint that is not complete, the 
Executive Director shall notify the complainant, within 30 days of 
receipt of the incomplete complaint, that additional information is 
needed. If the complainant fails to complete the complaint within 30 
days of receipt of this notice, the Executive Director shall dismiss the 
complaint without prejudice and shall so inform the complainant.
    (3) 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.
    (e) 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 individuals with disabilities.

[[Page 307]]

    (f) 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.
    (g) Appeals of the findings of fact and conclusions of law or 
remedies must be filed with the Chairman by the complainant within 90 
days of receipt from the agency of the letter required by paragraph (f) 
of this section. The agency may extend this time for good cause. Appeals 
shall be sent to the Chairman, Occupational Safety and Health Review 
Commission, One Lafayette Centre, 1120-20th Street, NW., 9th Floor, 
Washington, DC 20036-3457. An appeal shall be deemed filed on the date 
it is postmarked, or, in the absence of a postmark, on the date it is 
received by the agency. It should be clearly marked ``Appeal of Section 
504 decision'' or ``Appeal of Section 508 decision'' and should contain 
specific objections explaining why the complainant believes the initial 
decision was factually or legally wrong. Attached to the appeal letter 
should be a copy of the initial decision being appealed.
    (h) Timely appeals shall be accepted and decided by the Chairman. 
The Chairman shall notify the complainant of the results of the appeal 
within 60 days of the receipt of the request. If the Chairman 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.
    (i) The time limits cited in paragraphs (f) and (h) of this section 
may be extended with the permission of the Assistant Attorney General.
    (j) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies or may contract with non-
Federal entities to conduct such investigations, except that the 
authority for making the final determination may not be delegated.



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  Special procedures for requesting medical records.
2400.8  Procedures for requesting amendment.
2400.9  Procedures for appealing.
2400.10  Schedule of fees.

    Authority: 5 U.S.C. 552a(f); 5 U.S.C. 553.

    Source: 71 FR 57421, Sept. 29, 2006, 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). This part is 
applicable only to records that are maintained by the Occupational 
Safety and Health Review Commission (OSHRC or the Commission), which 
includes all systems of records operated on behalf of OSHRC, pursuant to 
a contract, to accomplish an agency function, except for records that 
are disclosed to consumer reporting agencies under section 3711(e) of 
title 31, United States Code. This part is not applicable to the rights 
of parties appearing in 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.



Sec. 2400.2  Description of agency.

    The Commission 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

[[Page 308]]

has the authority to direct that a decision of a Judge be reviewed by 
the full Commission before becoming a final order. The President 
designates one of the Commissioners as Chairman, who is responsible on 
behalf of the Commission for the administrative operations of the 
Commission.



Sec. 2400.3  Delegation of authority.

    (a) The Chairman shall designate an OSHRC employee as the Privacy 
Officer, and shall delegate to the Privacy Officer the authority to 
ensure agency-wide compliance with this part.
    (b) Custodians of the systems of records are responsible for the 
following:
    (1) Adhering to this part within their respective units and, in 
particular, collecting, using and disclosing records, and affording 
individuals the right to inspect, obtain copies of and correct records 
concerning them;
    (2) Reporting the existence of systems of records, changes to the 
contents of those systems and changes of routine use to the Privacy 
Officer, and also establishing the relevancy of records within those 
systems; and
    (3) Maintaining an accurate accounting of each disclosure in 
conformance with Sec. 2400.4(c) of this part.



Sec. 2400.4  Collection and disclosure of personal information.

    (a) The following rules govern the collection of personal 
information throughout OSHRC operations:
    (1) OSHRC shall:
    (i) Solicit, collect and maintain in its records only such personal 
information as is relevant and necessary to accomplish a purpose 
required by statute or executive order;
    (ii) Maintain all records which are used by OSHRC in making any 
determination about any individual with such accuracy, relevance, 
timeliness, and completeness as is reasonably necessary to ensure 
fairness to the individual in the determination;
    (iii) 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 under Federal programs; and
    (iv) 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 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 record shall be collected or maintained which describes how 
any individual exercises 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 OSHRC, and the 
collection or maintenance of the record is expressly authorized by 
statute or by the individual about whom the record is maintained, or 
unless the record is pertinent to and within the scope of an authorized 
law enforcement activity.
    (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 disclose any 
record which is contained in a system of records by any means of 
communication to any person, or to another agency, except pursuant to a 
written request by, or with the prior written consent of, the individual 
to whom the record pertains.
    (2) Exceptions. A record may be disseminated without satisfying the 
requirements of paragraph (b)(1) of this section if disclosure is 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 
the record in the performance of their duties;

[[Page 309]]

    (iii) For a routine use as contained in the system notices published 
in the Federal Register;
    (iv) To a recipient who has provided OSHRC with adequate advance 
written assurance that the record shall be used solely as a statistical 
reporting or research record, and the record is to be transferred in a 
form that is not personally 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, United States Code;
    (vi) To the National Archives and Records Administration 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 
Archivist of the United States or the designee of the Archivist 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 another 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 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, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, or any joint 
committee of Congress or subcommittee of any such joint committee;
    (x) To the Comptroller General or any of his authorized 
representatives in the course of the performance of the duties of the 
Government Accountability Office;
    (xi) Pursuant to the order of a court of competent jurisdiction; or
    (xii) To a consumer reporting agency in accordance with section 
3711(e) of title 31, United States Code.
    (3) Employee credit references. OSHRC's Office of Administration 
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 paragraph (b)(3) of this section in addition to the date 
and reason for separation, if applicable, upon the request of the 
employee or former employee.
    (5) Disclosures to third parties. Prior to disseminating any record 
about an individual to any person other than an agency, unless the 
record is disseminated pursuant to paragraph (b)(2)(i) of this section, 
OSHRC shall make reasonable efforts to ensure that the record is 
accurate, complete, timely and relevant.
    (6) Anticipated legal action. Nothing in this section shall allow an 
individual access to any information compiled in reasonable anticipation 
of a civil action or proceeding.
    (c) Accounting of disclosures--(1) OSHRC shall maintain an accurate 
accounting of each disclosure, except for any disclosure made pursuant 
to paragraphs (b)(2)(i) and (b)(2)(ii) of this section.
    (2) When an accounting is required under paragraph (c)(1) of this 
section, the following information shall be recorded: The date, nature, 
and purpose of each disclosure of a record to any person or to another 
agency, and the name and address of the person or agency to whom the 
disclosure is made.
    (3) The accounting shall be maintained for at least five (5) years 
after disclosure or for the life of the record, whichever is longer.
    (4) The accounting shall be made available to the individual named 
in the record upon inquiry, except for disclosures made pursuant to 
paragraph (b)(2)(viii) of this section relating to law enforcement 
activities. See Sec. 2400.6 for suggested form of request.



Sec. 2400.5  Notification.

    (a) Notification of systems. The following procedures permit 
individuals

[[Page 310]]

to determine the types of systems of records 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) Upon establishing or revising a system of records, OSHRC shall 
publish in the Federal Register a notice of the existence and character 
of the system of records. This notice shall contain the following 
information:
    (i) System name and location;
    (ii) Security classification;
    (iii) Categories of individuals covered by the system;
    (iv) Categories of records in the system;
    (v) Authority for maintenance of the system;
    (vi) Purpose(s) of the system;
    (vii) Routine uses of records maintained in the system, including 
categories of users and the purpose(s) of such uses;
    (viii) Disclosures to consumer reporting agencies;
    (ix) Policies and practices for storing, retrieving, accessing, 
retaining, and disposing of records in the system;
    (x) System manager(s) and address;
    (xi) Procedures by which an individual can be informed whether a 
system contains a record pertaining to himself, gain access to such 
record, and contest the content, accuracy, completeness, timeliness, 
relevance and necessity for retention of the record;
    (xii) Record source categories; and
    (xiii) Exemptions claimed for the system.
    (3) OSHRC shall submit a report, in accordance with guidelines 
provided by the Office of Management and Budget (OMB), in order to give 
advance notice to the Committee on Government Reform of the House of 
Representatives, the Committee on Homeland Security and Governmental 
Affairs of the Senate, and OMB of any proposal to establish a new system 
of records or to significantly change an existing system of records.
    (b) Notification of disclosure. OSHRC shall make reasonable efforts 
to serve notice on an individual before any record pertaining to the 
individual is made available to any person under compulsory legal 
process when such process becomes a matter of public record.
    (c) Notification of amendment--(1) OSHRC shall inform any person or 
other agency about any correction or notation of dispute made by OSHRC 
to any record that has been disclosed to the person or agency, if the 
correction or notation was made pursuant to Sec. 2400.8, and an 
accounting of the disclosure was made pursuant to Sec. 2400.4(c).
    (2) In any disclosure to a person or other agency containing 
information about which the individual has filed a statement of 
disagreement and occurring after the statement was filed, OSHRC shall 
clearly note any portion of the record which is disputed and provide 
copies of the statement and, if OSHRC deems appropriate, copies of a 
concise statement of OSHRC's reasons for not making the requested 
amendments.
    (d) Notification of new routine use. Any new or revised routine use 
of a system of records maintained by OSHRC shall be published in the 
Federal Register thirty (30) days before such use becomes operational. 
Interested persons may then submit written data, views, or arguments to 
OSHRC.
    (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 gain access to his records.
    (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 Privacy 
Officer, OSHRC, One Lafayette Centre, 1120-20th Street, NW., Ninth 
Floor, Washington, DC 20036-3457.
    (2) Specification of records sought. Requests for access to records 
shall describe the nature of the record sought, the approximate dates 
covered by the

[[Page 311]]

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.
    (3) Period for response. Upon receipt of an inquiry the Privacy 
Officer shall respond promptly to the request and no later than 10 
working days from receipt of such inquiry.
    (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, or a declaration in 
accordance with 28 U.S.C. 1746, 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 notarized statements may be 
obtained on request from the Privacy Officer.
    (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 a form provided by OSHRC 
indicating that OSHRC is authorized to discuss the contents of the 
subject record in the presence of both individuals.
    (e) When compliance is possible--(1) The Privacy Officer 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) of 
this section, or
    (ii) The Privacy Officer 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 
Privacy 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.

[[Page 312]]

    (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.
    (f) Response when compliance is not possible. A reply denying a 
written request to review a record shall be in writing signed by the 
Privacy Officer 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 requester's rights to 
administrative appeal and thereafter judicial review in a district court 
of the United States.



Sec. 2400.7  Special procedures for requesting medical records.

    (a) Upon an individual's request for access to his medical records, 
including psychological records, the Privacy Officer shall make a 
preliminary determination on whether access to such records could have 
an adverse effect upon the requester. If the Privacy Officer determines 
that access could have an adverse effect on the requester, OSHRC shall 
notify the requester in writing and advise that the records at issue can 
be made available only to a physician of the requester's designation. 
Upon receipt of such designation, verification of the identity of the 
physician, and agreement by the physician to review the documents with 
the requesting individual, to explain the meaning of the documents, and 
to offer counseling designed to temper any adverse reaction, OSHRC shall 
forward such records to the designated physician.
    (b) If, within sixty (60) days of OSHRC's written request for a 
designation, the requester has failed to respond or designate a 
physician, or the physician fails to agree to the release conditions, 
then OSHRC shall hold the documents in abeyance and advise the requester 
that this action may be construed as a technical denial. OSHRC shall 
also advise the requester of his rights to administrative appeal and 
thereafter judicial review in a district court of the United States.



Sec. 2400.8  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 
Privacy Officer and shall include a statement of the amendment requested 
and the reasons for such amendment, e.g., relevance, accuracy, 
timeliness or completeness of the record.
    (b) Action to be taken by the Privacy Officer. Upon receiving an 
amendment request, the Privacy Officer 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, irrelevant to a statutory purpose of OSHRC, or 
untimely and notify the requester when this action is complete; or
    (4) Notify the requester of a determination not to amend the record, 
of the reasons for the refusal, and of the requester's right to appeal 
in accordance with Sec. 2400.9.



Sec. 2400.9  Procedures for appealing.

    (a) Submission of appeal--(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, then the requester may appeal 
to the Chairman, Attn: Privacy Appeal, OSHRC, One Lafayette Centre, 
1120-20th Street, NW., Ninth Floor, Washington, DC 20036-3457.
    (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 Privacy Officer 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.

[[Page 313]]

    (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 any 
other related correspondence.
    (b) Final decisions. The Chairman shall make his final decision not 
later than thirty (30) working 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 incomplete, inaccurate, irrelevant, or untimely, shall 
within thirty (30) working days of the date of such findings be 
appropriately amended.
    (c) Decision requirements. 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 of the United States. An indexed file of the 
agency's decisions on appeal shall be maintained by the Privacy Officer.
    (d) Submission of statement of disagreement. If the final decision 
does not satisfy the requester, then 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 
record.



Sec. 2400.10  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 the fees associated with reproduction of 
records, refer to Appendix A to part 2201, Schedule of Fees.
    (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, reviewing, or amending records.

                       PARTS 2401	2499 [RESERVED]

[[Page 315]]



 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 
                                  LABOR




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


  Editorial Note: Nomenclature changes to chapter XXV appear at 68 FR 
16400, Apr. 3, 2003.

                          SUBCHAPTER A--GENERAL
Part                                                                Page
2500-2508       [Reserved]

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            Definition of terms used in subchapters C, 
                    D, E, F, G, AND L of this chapter.......         346
  SUBCHAPTER C--REPORTING AND DISCLOSURE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2520            Rules and regulations for reporting and 
                    disclosure..............................         382
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......         468
                         SUBCHAPTER E [RESERVED]
  SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2550            Rules and regulations for fiduciary 
                    responsibility..........................         511
    SUBCHAPTER G--ADMINISTRATION AND ENFORCEMENT UNDER THE EMPLOYEE 
                 RETIREMENT INCOME SECURITY ACT OF 1974
2560            Rules and regulations for administration and 
                    enforcement.............................         590
2570            Procedural regulations under the Employee 
                    Retirement Income Security Act..........         621

[[Page 316]]

2571            Procedural regulations for administration 
                    and enforcement under the Employee 
                    Retirement Income Security Act..........         676
2575            Adjustment of civil penalties under ERISA 
                    Title I.................................         681
2578            Rules and regulations for abandoned plans...         684
                         SUBCHAPTER H [RESERVED]
  SUBCHAPTER I--TEMPORARY BONDING RULES UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2580            Temporary bonding rules.....................         699
  SUBCHAPTER J--FIDUCIARY RESPONSIBILITY UNDER THE FEDERAL EMPLOYEES' 
                      RETIREMENT SYSTEM ACT OF 1986
2582            Rules and regulations for fiduciary 
                    responsibility..........................         716
2584            Rules and regulations for the allocation of 
                    fiduciary responsibility................         717
     SUBCHAPTER K--ADMINISTRATION AND ENFORCEMENT UNDER THE FEDERAL 
                EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986
2589            Rules and regulations for administration and 
                    enforcement.............................         721
                    SUBCHAPTER L--GROUP HEALTH PLANS
2590            Rules and regulations for group health plans         722
2591-2599       [Reserved]

[[Page 317]]



                          SUBCHAPTER A_GENERAL



                       PARTS 2500	2508 [RESERVED]



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.
2509.94-3  Interpretive bulletin relating to in-kind contributions to 
          employee benefit plans.
2509.95-1  Interpretive bulletin relating to the fiduciary standards 
          under ERISA when selecting an annuity provider for a defined 
          benefit pension plan.
2509.99-1  Interpretive bulletin relating to payroll deduction IRAs.
2509.2015-1  Interpretive bulletin relating to the fiduciary standard 
          under ERISA in considering economically targeted investments.
2509.2015-2  Interpretive bulletin relating to state savings programs 
          that sponsor or facilitate plans covered by the Employee 
          Retirement Income Security Act of 1974.
Sec. 2509.2016-01  Interpretive Bulletin relating to the exercise of 
          shareholder rights and written statements of investment 
          policy, including proxy voting policies or guidelines.

    Authority: 29 U.S.C. 1135. Secretary of Labor's Order 1-2003, 68 FR 
5374 (Feb. 3, 2003). Sections 2509.75-10 and 2509.75-2 issued under 29 
U.S.C. 1052, 1053, 1054. Sec. 2509.75-5 also issued under 29 U.S.C. 
1002. Sec. 2509.95-1 also issued under sec. 625, Pub. L. 109-280, 120 
Stat. 780.



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.

[[Page 318]]

    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, 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

[[Page 319]]

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 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

[[Page 320]]

services, absent a showing that such consultant (a) exercises 
discretionary authority or discretionary control respecting the 
management of the plan, (b) exercises authority or 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

[[Page 321]]

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, 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 neither registered under the Investment 
Advisers Act of 1940 nor registered as an investment adviser in the 
State where it maintains its principal office and place of business, 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, 
persons registered as investment advisers under the Investment Advisers 
Act of 1940, or persons not registered under the Investment Advisers Act 
by reason of paragraph 1 of section 203A(a) of that Act who are 
registered as investment advisers in the State where they maintain their 
principal office and place of business in accordance with ERISA section 
3(38) and who have met the filing requirements of 29 CFR 2510.3-38.
    FR-7 Q: May an investment adviser that has a registration 
application pending for federal registration under the Investment 
Advisers Act of 1940, or pending with the appropriate state regulatory 
body under State investment adviser registration laws if relying on the 
provisions of 29 CFR 2510.3-38 to qualify as a state-registered 
investment manager, function as an investment manager under the Act 
prior to the effective date of their federal or state registration?
    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

[[Page 322]]

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 make 
reasonable efforts under the circumstances to remedy the breach.

[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976; 
69 FR 52125, Aug. 24, 2004]



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.

[[Page 323]]



------------------------------------------------------------------------
                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 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?

[[Page 324]]

    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 
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

[[Page 325]]

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.
    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

[[Page 326]]

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.
    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

[[Page 327]]

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 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.

[[Page 328]]

 
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.
                                     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

[[Page 329]]

of the plan is entitled to a party other than the participant or 
beneficiary. \1\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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 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.
---------------------------------------------------------------------------

    \2\ Section 403 (c) and (d) provide certain exceptions to this 
requirement, not here relevant.
---------------------------------------------------------------------------

    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).

[[Page 330]]

    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]



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.
---------------------------------------------------------------------------

    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

[[Page 331]]

of the contribution obligation is measured in 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 
standards under ERISA when selecting an annuity provider for a 
defined benefit pension plan.

    (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 an annuity provider for the purpose of 
benefit distributions from a defined benefit pension plan (hereafter 
``pension plan'') when the pension plan intends to transfer liability 
for benefits to an annuity provider. For guidance applicable to the 
selection of an annuity provider for benefit distributions from an 
individual account plan see 29 CFR 2550.404a-4.
    (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.

[[Page 332]]

    (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 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, as amended at 72 FR 52006, Sept. 12, 2007; 
73 FR 58447, Oct. 7, 2008]



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

[[Page 333]]

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 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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    (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

[[Page 334]]

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\
---------------------------------------------------------------------------

    \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 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

[[Page 335]]

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]



Sec. 2509.2015-01  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

[[Page 336]]

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.

[80 FR 65137, Oct. 26, 2015]



Sec. 2509.2015-02  Interpretive bulletin relating to state savings
programs that sponsor or facilitate plans covered by the Employee
Retirement Income Security Act of 1974.

    (a) Scope. This document sets forth the views of the Department of 
Labor (Department) concerning the application of the Employee Retirement 
Income Security Act of 1974 (ERISA) to certain state laws designed to 
expand the retirement savings options available to private sector 
workers through ERISA-covered retirement plans. Concern over adverse 
social and economic consequences of inadequate retirement savings levels 
has prompted several states to adopt or consider legislation to address 
this problem.\1\ An impediment to state adoption of such measures is 
uncertainty about the effect of ERISA's broad preemption of statelaws 
that ``relate to'' private sector employee benefit plans. In the 
Department's view, ERISA preemption principles leave room for states to 
sponsor or facilitate ERISA-based retirement savings options for private 
sector employees, provided employers participate voluntarily and ERISA's 
requirements, liability provisions, and remedies fully apply to the 
state programs.
---------------------------------------------------------------------------

    \1\ For information on the problem of inadequate retirement savings, 
see the May 2015 Report of the United States Government Accountability 
Office (GAO), RETIREMENT SECURITY--Most Households Approaching 
Retirement Have Low Savings (GAO Report-15-419) (available at 
www.gao.gov/assets/680/670153.pdf). Also see GAO's September 2015 
Report-15-566, RETIREMENT SECURITY--Federal Action Could Help State 
Efforts to Expand Private Sector Coverage (available at www.gao.gov/
assets/680/672419.pdf).
---------------------------------------------------------------------------

    (b) In General. There are advantages to utilizing an ERISA plan 
approach. Employers as well as employees can make contributions to ERISA 
plans, contribution limits are higher than for other state approaches 
that involve individual retirement plans (IRAs) that are not intended to 
be ERISA-covered plans,\2\ and ERISA plan accounts have stronger 
protection from creditors. Tax credits may also allow small employers to 
offset part of the costs of starting certain types of retirement 
plans.\3\ Utilizing ERISA plans also provides a well-established uniform 
regulatory structure with important consumer

[[Page 337]]

protections, including fiduciary obligations, automatic enrollment 
rules, recordkeeping and disclosure requirements, legal accountability 
provisions, and spousal protections.
---------------------------------------------------------------------------

    \2\ Some states are developing programs to encourage employees to 
establish tax-favored IRAs funded by payroll deductions rather than 
encouraging employers to adopt ERISA plans. Oregon, Illinois, and 
California, for example, have adopted laws along these lines. Oregon 
2015 Session Laws, Ch. 557 (H.B. 2960) (June 2015); Illinois Secure 
Choice Savings Program Act, 2014 Ill. Legis. Serv. P.A. 98-1150 (S.B. 
2758) (West); California Secure Choice Retirement Savings Act, 2012 Cal. 
Legis. Serv. Ch. 734 (S.B. 1234) (West). These IRA-based initiatives 
generally require specified employers to deduct amounts from their 
employees' paychecks, unless the employee affirmatively elects not to 
participate, in order that those amounts may be remitted to state-
administered IRAs for the employees. The Department is addressing these 
state ``payroll deduction IRA'' initiatives separately through a 
proposed regulation that describes safe-harbor conditions for employers 
to avoid creation of ERISA-covered plans when they comply with state 
laws that require payroll deduction IRA programs. This Interpretive 
Bulletin does not address those laws.
    \3\ For more information, see Choosing a Retirement Solution for 
Your Small Business, a joint project of the U.S. Department of Labor's 
Employee Benefits Security Administration (EBSA) and the Internal 
Revenue Service. Available at www.irs.gov/pub/irs-pdf/p3998.pdf.
---------------------------------------------------------------------------

    The Department is not aware of judicial decisions or other ERISA 
guidance directly addressing the application of ERISA to state programs 
that facilitate or sponsor ERISA plans, and, therefore, believes that 
the states, employers, other plan sponsors, workers, and other 
stakeholders would benefit from guidance setting forth the general views 
of the Department on the application of ERISA to these state 
initiatives. The application of ERISA in an individual case would 
present novel preemption questions and, if decided by a court, would 
turn on the particular features of the state-sponsored program at issue, 
but, as discussed below, the Department believes that neither ERISA 
section 514 specifically, nor federal preemption generally, are 
insurmountable obstacles to all state programs that promote retirement 
saving among private sector workers through the use of ERISA-covered 
plans.

                          Marketplace Approach

    One state approach is reflected in the 2015 Washington State Small 
Business Retirement Savings Marketplace Act.\4\ This law requires the 
state to contract with a private sector entity to establish a program 
that connects eligible employers with qualifying savings plans available 
in the private sector market. Only products that the state determines 
are suited to small employers, provide good quality, and charge low fees 
would be included in the state's ``marketplace.'' Washington State 
employers would be free to use the marketplace or not and would not be 
required to establish any savings plans for their employees. Washington 
would merely set standards for arrangements marketed through the 
marketplace. The marketplace arrangement would not itself be an ERISA-
covered plan, and the arrangements available to employers through the 
marketplace could include ERISA-covered plans and other non-ERISA 
savings arrangements. The state would not itself establish or sponsor 
any savings arrangement. Rather, the employer using the state 
marketplace would establish the savings arrangement, whether it is an 
ERISA-covered employee pension benefit plan or a non-ERISA savings 
program. ERISA's reporting and disclosure requirements, protective 
standards and remedies would apply to the ERISA plans established by 
employers using the marketplace. On the other hand, if the plan or 
arrangement is of a type that would otherwise be exempt from ERISA (such 
as a payroll deduction IRA arrangement that satisfies the conditions of 
the existing safe harbor at 29 CFR 2510.3-2(d)), the state's involvement 
as organizer or facilitator of the marketplace would not by itself cause 
that arrangement to be covered by ERISA. Similarly, if, as in Washington 
State, a marketplace includes a type of plan that is subject to special 
rules under ERISA, such as the SIMPLE-IRA under section 101(h) of ERISA, 
the state's involvement as organizer or facilitator of the marketplace 
would not by itself affect the application of the special rules.
---------------------------------------------------------------------------

    \4\ 2015 Wash. Sess. Laws chap. 296 (SB 5826) (available at http://
app.leg.wa.gov/billinfo/summary.aspx?bill=5826&year=2015).
---------------------------------------------------------------------------

                         Prototype Plan Approach

    Another potential approach is a state sponsored ``prototype plan.'' 
At least one state, Massachusetts, has enacted a law to allow nonprofit 
organizations with fewer than 20 employees to adopt a contributory 
retirement plan developed and administered by the state.\5\ Banks, 
insurance companies and
---------------------------------------------------------------------------

    \5\ The retirement plan will be overseen by the Massachusetts State 
Treasurer's Office. Mass. Gen. Laws ch.29, Sec. 64E (2012). In June 
2014, the Massachusetts Treasurer's Office announced that the IRS had 
issued a favorable ruling on the proposal, but noted that additional 
approval from the IRS is still needed (see www.massnonprofitnet.org/
blog/nonprofitretirement/). See also GAO's Report 2015 Report-15-566, 
RETIREMENT SECURITY--Federal Action Could Help State Efforts to Expand 
Private Sector Coverage, which included the following statement at 
footnote 93 regarding the Massachusetts program: ``The Massachusetts 
official told us that each participating employer would be considered to 
have created its own plan, characterizing the state's effort as 
development of a volume submitter 401(k) plan, which is a type of 
employee benefit plan that is typically pre-approved by the Internal 
Revenue Service.'' (GAO report is available at www.gao.gov/assets/680/
672419.pdf).

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

[[Page 338]]

other regulated financial institutions commonly market prototype plans 
to employers as simple means for them to establish and administer 
employee pension benefit plans.\6\ The financial institutions develop 
standard form 401(k) or other tax-favored retirement plans (such as 
SIMPLE-IRA plans) and secure IRS approval. Typically, employers may 
choose features such as contribution rates to meet their specific needs. 
Each employer that adopts the prototype sponsors an ERISA plan for its 
employees. The individual employers would assume the same fiduciary 
obligations associated with sponsorship of any ERISA-covered plans. For 
example, the prototype plan documents often specify that the employer is 
the plan's ``named fiduciary'' and ``plan administrator'' responsible 
for complying with ERISA, but they may allow the employer to delegate 
these responsibilities to others. The plan documents for a state-
administered prototype plan could designate the state or a state 
designee to perform these functions. Thus, the state or a designated 
third-party could assume responsibility for most administrative and 
asset management functions of an employer's prototype plan. The state 
could also designate low-cost investment options and a third-party 
administrative service provider for its prototype plans.
---------------------------------------------------------------------------

    \6\ See IRS Online Publication, Types of Pre-Approved Retirement 
Plans at www.irs.gov/Retirement-Plans/Types-of-Pre-Approved-Retirement-
Plans.
---------------------------------------------------------------------------

                  Multiple Employer Plan (MEP) Approach

    A third approach, (referenced, for example, in the ``Report of the 
Governor's Task Force to Ensure Retirement Security for All 
Marylanders''),\7\ involves a state establishing and obtaining IRS tax 
qualification for a ``multiple employer'' 401(k)-type plan, defined 
benefit plan, or other tax-favored retirement savings program. The 
Department anticipates that such an approach would generally involve 
permitting employers that meet specified eligibility criteria to join 
the state multiple employer plan. The plan documents would provide that 
the plan is subject to Title I of ERISA and is intended to comply with 
Internal Revenue Code tax qualification requirements. The plan would 
have a separate trust holding contributions made by the participating 
employers, the employer's employees, or both. The state, or a designated 
governmental agency or instrumentality, would be the plan sponsor under 
ERISA section 3(16)(B) and the named fiduciary and plan administrator 
responsible (either directly or through one or more contract agents, 
which could be private-sector providers) for administering the plan, 
selecting service providers, communicating with employees, paying 
benefits, and providing other plan services. A state could take 
advantage of economies of scale to lower administrative and other costs.
---------------------------------------------------------------------------

    \7\ Governor's Task Force to Ensure Retirement Security for All 
Marylanders, 1,000,000 of Our Neighbors at Risk: Improving Retirement 
Security for Marylanders (February 2015) (available at 
www.dllr.state.md.us/retsecurity/).
---------------------------------------------------------------------------

    As a state-sponsored multiple employer plan (``state MEP''), this 
type of arrangement could also reduce overall administrative costs for 
participating employers in large part because the Department would 
consider this arrangement as a single ERISA plan. Consequently, only a 
single Form 5500 Annual Return/Report would be filed for the whole 
arrangement. In order to participate in the plan, employers simply would 
be required to execute a participation agreement. Under a state MEP, 
each employer that chose to participate would not be considered to have 
established its own ERISA plan, and the state could design its defined 
contribution MEP so that the participating employers could have limited 
fiduciary responsibilities (the duty to prudently select the arrangement 
and to monitor its operation would continue to apply). The continuing 
involvement by participating employers in the ongoing operation and 
administration of a 401(k)-type individual account MEP, however, 
generally could be limited to enrolling employees in

[[Page 339]]

the state plan and forwarding voluntary employee and employer 
contributions to the plan. When an employer joins a carefully structured 
MEP, the employer is not the ``sponsor'' of the plan under ERISA, and 
also would not act as a plan administrator or named fiduciary. Those 
fiduciary roles, and attendant fiduciary responsibilities, would be 
assigned to other parties responsible for administration and management 
of the state MEP.\8\ Adoption of a defined benefit plan structure would 
involve additional funding and other employer obligations.\9\
---------------------------------------------------------------------------

    \8\ A state developing a state sponsored MEP could submit an 
advisory opinion request to the Department under ERISA Procedure 76-1 to 
confirm that the MEP at least in form has assigned those fiduciary 
functions to persons other than the participating employers. ERISA 
Procedure 76-1 is available at www.dol.gov/ebsa/regs/aos/
ao_requests.html.
    \9\ State laws authorizing defined benefit plans for private sector 
employers (as prototypes or as multiple employer plans) might create 
plans covered by Title IV of ERISA and subject to the jurisdiction of 
the Pension Benefit Guaranty Corporation (PBGC). Subject to some 
exceptions, the PBGC protects the retirement incomes of workers in 
private-sector defined benefit pension plans. A defined benefit plan 
provides a specified monthly benefit at retirement, often based on a 
combination of salary and years of service. PBGC was created by ERISA to 
encourage the continuation and maintenance of private-sector defined 
benefit pension plans, provide timely and uninterrupted payment of 
pension benefits, and keep pension insurance premiums at a minimum. More 
information is available on the PBGC's Web site at www.pbgc.gov.
---------------------------------------------------------------------------

    For a person (other than an employee organization) to sponsor an 
employee benefit plan under Title I of ERISA, such person must either 
act directly as the employer of the covered employees or ``indirectly in 
the interest of an employer'' in relation to a plan.\10\ ERISA sections 
3(2), 3(5). A person will be considered to act ``indirectly in the 
interest of an employer, in relation to a plan,'' if such person is tied 
to the contributing employers or their employees by genuine economic or 
representational interests unrelated to the provision of benefits.\11\ 
In the Department's view, a state has a unique representational interest 
in the health and welfare of its citizens that connects it to the in-
state employers that choose to participate in the state MEP and their 
employees, such that the state should be considered to act indirectly in 
the interest of the participating employers.\12\ Having this unique 
nexus distinguishes the state MEP from other business enterprises that 
underwrite benefits or provide administrative services to several 
unrelated employers.\13\
---------------------------------------------------------------------------

    \10\ Different rules may apply under the Internal Revenue Code for 
purposes of determining the plan sponsor of a tax-qualified retirement 
plan.
    \11\ See, e.g., Advisory Opinion 2012-04A. See also MDPhysicians & 
Associates, Inc. v. State Bd. Ins., 957 F.2d 178,185 (5th Cir.), cert. 
denied, 506 U.S. 861 (1992) (``the entity that maintains the plan and 
the individuals that benefit from the plan [must be] tied by a common 
economic or representation interest, unrelated to the provision of 
benefits.'' (quoting Wisconsin Educ. Assoc. Ins. Trust v. Iowa State 
Bd., 804 F.2d 1059, 1063 (8th Cir. 1986)).
    \12\ The Department has also recognized other circumstances when a 
person sponsoring a plan is acting as an ``employer'' indirectly rather 
than as an entity that underwrites benefits or provides administrative 
services. See Advisory Opinion 89-06A (Department would consider a 
member of a controlled group which establishes a benefit plan for its 
employees and/or the employees of other members of the controlled group 
to be an employer within the meaning of section 3(5) of ERISA); Advisory 
Opinion 95-29A (employee leasing company may act either directly or 
indirectly in the interest of an employer in establishing and 
maintaining employee benefit plan).
    \13\ See Advisory Opinion 2012-04A (holding that a group of 
employers can collectively act as the ``employer'' in sponsoring a 
multiple employer plan only if the employers group was formed for 
purposes other than the provision of benefits, the employers have a 
basic level of commonality (such as the participating employers all 
being in the same industry), and the employers participating in the plan 
in fact act as the ``employer'' by controlling the plan).
---------------------------------------------------------------------------

    (c) ERISA Preemption. The Department is aware that a concern for 
states adopting an ERISA plan approach is whether or not those state 
laws will be held preempted. ERISA preemption analysis begins with the 
``presumption that Congress does not intend to supplant state law.'' New 
York State Conference of Blue Cross & Blue Shield Plans v. Travelers 
Ins. Co., 514 U.S. 645, 654

[[Page 340]]

(1995). The question turns on Congress's intent ``to avoid a 
multiplicity of regulation in order to permit nationally uniform 
administration of employee benefit plans.'' Id. at 654, 657. See also 
Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987) (goal of ERISA 
preemption is to ``ensure . . . that the administrative practices of a 
benefit plan will be governed by only a single set of regulations.'').
    Section 514 of ERISA provides that Title I ``shall supersede any and 
all State laws insofar as they . . . relate to any employee benefit 
plan'' covered by the statute. The U.S. Supreme Court has held that 
``[a] law `relates to' an employee benefit plan, in the normal sense of 
the phrase, if it has a connection with or reference to such a plan.'' 
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983) (footnote 
omitted); see, e.g., Travelers, 514 U.S. at 656. A law has a ``reference 
to'' ERISA plans if the law ``acts immediately and exclusively upon 
ERISA plans'' or ``the existence of ERISA plans is essential to the 
law's operation.'' California Div. of Labor Standards Enforcement v. 
Dillingham Constr., N.A., 519 U.S. 316, 325-326 (1997). In determining 
whether a state law has a ``connection with ERISA plans,'' the U.S. 
Supreme Court ``look[s] both to `the objectives of the ERISA statute as 
a guide to the scope of the state laws that Congress understood would 
survive,' as well as to the nature of the effect of the state law on 
ERISA plans,'' to ``determine whether [the] state law has the forbidden 
connection'' with ERISA plans. Egelhoff v. Egelhoff, 532 U.S. 141, 147 
(2001) (quoting Dillingham, 519 U.S. at 325). In various decisions, the 
Court has concluded that ERISA preempts state laws that: (1) Mandate 
employee benefit structures or their administration; (2) provide 
alternative enforcement mechanisms; or (3) bind employers or plan 
fiduciaries to particular choices or preclude uniform administrative 
practice, thereby functioning as a regulation of an ERISA plan 
itself.\14\
---------------------------------------------------------------------------

    \14\ Travelers, 514 U.S. at 658 (1995); Ingersoll-Rand Co. v. 
McClendon, 498 U.S. 133, 142 (1990); Egelhoff v. Egelhoff, 532 U.S. 141, 
148 (2001); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 14 (1987).
---------------------------------------------------------------------------

    In the Department's view, state laws of the sort outlined above 
interact with ERISA in such a way that section 514 preemption principles 
and purposes would not appear to come into play in the way they have in 
past preemption cases. Although the approaches described above involve 
ERISA plans, they do not appear to undermine ERISA's exclusive 
regulation of ERISA-covered plans. The approaches do not mandate 
employee benefit structures or their administration, provide alternative 
regulatory or enforcement mechanisms, bind employers or plan fiduciaries 
to particular choices, or preclude uniform administrative practice in 
any way that would regulate ERISA plans.
    Moreover, the approaches appear to contemplate a state acting as a 
participant in a market rather than as a regulator. The U.S. Supreme 
Court has found that, when a state or municipality acts as a participant 
in the market and does so in a narrow and focused manner consistent with 
the behavior of other market participants, such action does not 
constitute state regulation. Compare Building and Construction Trades 
Council v. Associated Builders and Contractors of Massachusetts/Rhode 
Island, Inc., 507 U.S. 218 (1993); Wisconsin Department of Industry, 
Labor and Human Relations v. Gould, 475 U.S. 282 (1986); see also 
American Trucking Associations, Inc. v. City of Los Angeles, 133 S. Ct. 
2096, 2102 (2013) (Section 14501(c)(1) of the Federal Aviation 
Administration Authorization Act, which preempts a state ``law, 
regulation, or other provision having the force and effect of law 
related to a price, route, or service of any motor carrier,'' 49 U.S.C. 
14501(c)(1), ``draws a rough line between a government's exercise of 
regulatory authority and its own contract-based participation in a 
market''); Associated General Contractors of America v. Metropolitan 
Water District of Southern California, 159 F.3d 1178, 1182-84 (9th Cir. 
1998) (recognizing a similar distinction between state regulation and 
state market participation). By merely offering employers particular 
ERISA-covered plan options \15\ (or non-ERISA plan

[[Page 341]]

options), these approaches (whether used separately or together as part 
of a multi-faceted state initiative) do not dictate how an employer's 
plan is designed or operated or make offering a plan more costly for 
employers or employees. Nor do they make it impossible for employers 
operating across state lines to offer uniform benefits to their 
employees.\16\ Rather than impair federal regulation of employee benefit 
plans, the state laws would leave the plans wholly subject to ERISA's 
regulatory requirements and protections.
---------------------------------------------------------------------------

    \15\ In the Department's view, a state law that required employers 
to participate in a state prototype plan or state sponsored multiple 
employer plan unless they affirmatively opted out would effectively 
compel the employer to decide whether to sponsor an ERISA plan in a way 
that would be preempted by ERISA.
    \16\ The Court in Travelers approved a New York statute that gave 
employers a strong incentive to provide health care benefits through 
Blue Cross and Blue Shield as opposed to other providers. The Court 
noted that the law did not ``mandate'' employee benefit plans or their 
administration, or produce such acute economic effects, either directly 
or indirectly, by intent or otherwise ``as to force an ERISA plan to 
adopt a certain scheme of substantive coverage or effectively restrict 
its choice of insurers.'' Travelers, 514 U.S. at 668. See also De Buono 
v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806, 816 
(1997).
---------------------------------------------------------------------------

    Of course, a state must implement these approaches without 
establishing standards inconsistent with ERISA or providing its own 
regulatory or judicial remedies for conduct governed exclusively by 
ERISA. ERISA's system of rules and remedies would apply to these 
arrangements. A contractor retained by a state using the marketplace 
approach would be subject to the same ERISA standards and remedies that 
apply to any company offering the same services to employers. Similarly, 
a prototype plan or multiple employer plan program that a state offers 
to employers would have to comply with the same ERISA requirements and 
would have to be subject to the same remedies as any private party 
offering such products and services.\17\
---------------------------------------------------------------------------

    \17\ State laws relating to sovereign immunity for state governments 
and their employees would have to be evaluated carefully to ensure they 
do not conflict with ERISA's remedial provisions.
---------------------------------------------------------------------------

    Even if the state laws enacted to establish programs of the sort 
described above ``reference'' employee benefit plans in a literal sense, 
they should not be seen as laws that ``relate to'' ERISA plans in the 
sense ERISA section 514(a) uses that statutory term because they are 
completely voluntary from the employer's perspective, the state program 
would be entirely subject to ERISA, and state law would not impose any 
outside regulatory requirements beyond ERISA. They do not require 
employers to establish ERISA-covered plans, forbid any type of plan or 
restrict employers' choices with respect to benefit structures or their 
administration. These laws would merely offer a program that employers 
could accept or reject. See Dillingham, 519 U.S. at 325-28.
    In addition, none of the state approaches described above resemble 
the state laws that the Court held preempted in its pre-Travelers 
``reference to'' cases. Those laws targeted ERISA plans as a class with 
affirmative requirements or special exemptions. See, e.g., District of 
Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 128, 129-133 
(1992) (workers' compensation law that required employee benefits ``set 
by reference to [ERISA] plans'') (citation omitted); Ingersoll-Rand Co. 
v. McClendon, 498 U.S. 133, 135-136, 140 (1990) (common law claim for 
wrongful discharge to prevent attainment of ERISA benefits); Mackey v. 
Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 828 & n.2, 829-830 
(1988) (exemption from garnishment statute for ERISA plans). In the case 
of the state actions outlined above, any restriction on private economic 
activity arises, not from state regulatory actions, but from the 
application of ERISA requirements to the plans, service providers, and 
investment products, that the state, as any other private sector 
participant in the market, selects in deciding what it is willing to 
offer.
    Finally, it is worth noting that even if the state laws implementing 
these approaches ``relate to'' ERISA plans in some sense of that term, 
it is only because they create or authorize arrangements that are fully 
governed by ERISA's requirements. By embracing ERISA in this way, the 
state would not

[[Page 342]]

on that basis be running afoul of section 514(a) because ERISA fully 
applies to the arrangement and there is nothing in the state law for 
ERISA to ``supersede.'' In this regard, section 514(a) of ERISA, in 
relevant part, provides that Title I of ERISA ``shall supersede any and 
all state laws insofar as they may now or hereafter relate to any 
employee benefit plan . . . .'' To the extent that the state makes plan 
design decisions in fashioning its prototype plan or state sponsored 
plan, or otherwise adopts rules necessary to run the plan, those actions 
would be the same as any other prototype plan provider or employer 
sponsor of any ERISA-covered plan, and the arrangement would be fully 
and equally subject to ERISA.
    This conclusion is supported by the Department's position regarding 
state governmental participation in ERISA plans in another context. 
Pursuant to section 4(b)(1) of ERISA, the provisions of Title I of ERISA 
do not apply to a plan that a state government establishes for its own 
employees, which ERISA section 3(32) defines as a ``governmental plan.'' 
The Department has long held the view, however, that if a plan covering 
governmental employees fails to qualify as a governmental plan, it would 
still be subject to Title I of ERISA.\18\ In these circumstances, the 
failure to qualify as a governmental plan does not prohibit a 
governmental employer from providing benefits through, and making 
contributions to, an ERISA-covered employee benefit plan.\19\ Thus, the 
effect of ERISA is not to prohibit the state from offering benefits, but 
rather to make those benefits subject to ERISA. Here too, ERISA does not 
supersede state law to the extent it merely creates an arrangement that 
is fully governed by ERISA.
---------------------------------------------------------------------------

    \18\ See, e.g., Advisory Opinion 2004-04A.
    \19\ See Information Letter to Michael T. Scaraggi and James M. 
Steinberg from John J. Canary (April 12, 2004).

[80 FR 71937, Nov. 18, 2015]



Sec. 2509.2016-01  Interpretive Bulletin relating to the exercise
of shareholder rights and written statements of investment policy,
including proxy voting policies 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 engagement with 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 section 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 section 403(a)(2). 
Where the authority to manage plan assets has been delegated to an 
investment manager pursuant to section 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 343]]

    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 section 403(a)(1), may be subject to the 
directions of a named fiduciary if the plan so provides.
    The fiduciary duties described at ERISA section 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 section 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. 
This principle applies broadly. However, the Department recognizes that 
in some special cases voting proxies may involve out of the ordinary 
costs or unusual requirements, for example in the case of voting proxies 
on shares of certain foreign corporations. Thus, in such cases, 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 warrants the 
additional cost of voting. Moreover, a fiduciary, in deciding whether to 
purchase shares for which this may be the case, 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

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voting decisions as well as policies concerning economically targeted 
investments or incorporating environmental, social or governance (ESG) 
factors in investment policy statements or integrating ESG-related 
tools, metrics and analyses to evaluate an investment's risk or return 
or choose among equivalent investments. 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 section 402(c)(3), 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 section 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 section 404(a)(1)(D). An investment manager to whom such 
investment policy applies would be required to comply with such policy, 
pursuant to ERISA section 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 section 404(a)(1)(D). Moreover, ERISA 
section 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 section 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 
section 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 section 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

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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 section 404(a)(1)(D) would require 
the investment manager to reconcile, insofar as possible, the 
conflicting policies (assuming compliance with each policy would be 
consistent with ERISA section 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 section 
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 section 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 section 404(a)(1)(D).

                       (3) Shareholder Engagement

    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, where a plan may not be able to 
easily dispose of such an investment, or where the same shareholder 
engagement issue is likely to exist in the case of available alternative 
investments. 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 governance 
structures and practices, particularly those involving board 
composition, executive compensation, transparency and accountability in 
corporate decision-making, responsiveness to shareholders, the 
corporation's policy regarding mergers and acquisitions, the extent of 
debt financing and capitalization, the nature of long-term business 
plans including plans on climate change preparedness and sustainability, 
governance and compliance policies and practices for avoiding criminal 
liability and ensuring employees comply with applicable laws and 
regulations, the corporation's workforce practices (e.g., investment in 
training to develop its work force, diversity, equal employment 
opportunity), policies and practices to address environmental or social 
factors that have an impact on shareholder value, and other 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.

[81 FR 95882, Dec. 29, 2016]

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  SUBCHAPTER B_DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974





PART 2510_DEFINITION OF TERMS USED IN SUBCHAPTERS C, D, E, F, G, AND 
L 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.
2510.3-16  Definition of ``plan administrator.''
2510.3-21  Definition of ``Fiduciary''.
2510.3-37  Multiemployer plan.
2510.3-38  Filing requirements for State registered investment advisers 
          to be investment managers.
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(38), 
1002(40), 1031, and 1135; Secretary of Labor's Order No. 1-2011, 77 FR 
1088 (Jan. 9, 2012); Secs. 2510.3-21, 2510.3-101 and 2510.3-102 also 
issued under sec. 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. 
App. at 237 (2012), E.O. 12108, 44 FR 1065 (Jan. 3, 1979) and 29 U.S.C. 
1135 note. Sec. 2510.3-38 is also issued under sec. 1, Pub. L. 105-72, 
111 Stat. 1457 (1997).



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

[[Page 347]]

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 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

[[Page 348]]

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, 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, 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,

[[Page 349]]

    (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 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

[[Page 350]]

    (1) Participation is completely voluntary for employees;
    (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 351]]

    (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 352]]

    (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 that may be 
paid with respect to August 1980 may be paid at any time after August 
31,

[[Page 353]]

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; 81 FR 59476, Aug. 30, 2016; 81 FR 92653, Dec. 20, 2016; 82 FR 
29237, June 28, 2017]



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 354]]

    (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 355]]

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. 2510.3-16  Definition of ``plan administrator.''

    (a) In general. The term ``plan administrator'' or ``administrator'' 
means the person specifically so designated by the terms of the 
instrument under which the plan is operated. If an administrator is not 
so designated, the plan administrator is the plan sponsor, as defined in 
section 3(16)(B) of ERISA.
    (b) In the case of a self-insured group health plan established or 
maintained by an eligible organization, as defined in Sec. 2590.715-
2713A(a) of this chapter, if the eligible organization provides a copy 
of the self-certification of its objection to administering or funding 
any contraceptive benefits in accordance with Sec. 2590.715-
2713A(b)(1)(ii) of this chapter to a third party administrator, the 
self-certification shall be an instrument under which the plan is 
operated, shall be treated as a designation of the third party 
administrator as the plan administrator under section 3(16) of ERISA for 
any contraceptive services required to be covered under Sec. 2590.715-
2713(a)(1)(iv) of this chapter to which the eligible organization 
objects on religious grounds, and shall supersede any earlier 
designation. If, instead, the eligible organization notifies the 
Secretary of Health and Human Services of its objection to administering 
or funding any contraceptive benefits in accordance with Sec. 2590.715-
2713A(b)(1)(ii) of this chapter, the Department of Labor, working with 
the Department of Health and Human Services, shall separately provide 
notification to each third party administrator that such third party 
administrator shall be the plan administrator under section 3(16) of 
ERISA for any contraceptive services required to be covered under 
Sec. 2590.715-2713(a)(1)(iv) of this chapter to which the eligible 
organization objects on religious grounds, with respect to benefits for 
contraceptive services that the third party administrator would 
otherwise manage. Such notification from the Department of Labor shall 
be an instrument under which the plan is operated and shall supersede 
any earlier designation.
    (c) A third party administrator that becomes a plan administrator 
pursuant to this section shall be responsible for--
    (1) Complying with section 2713 of the Public Health Service Act (42 
U.S.C. 300gg-13) (as incorporated into section 715 of ERISA) and 
Sec. 2590.715-2713 of this chapter with respect to coverage of 
contraceptive services. To the extent the plan contracts with different 
third party administrators for different classifications of benefits 
(such as prescription drug benefits versus inpatient and outpatient 
benefits), each third party administrator is responsible for providing 
contraceptive coverage that complies with section 2713 of the Public 
Health Service Act (as incorporated into section 715 of ERISA) and 
Sec. 2590.715-2713 of this chapter with respect to the classification or 
classifications of benefits subject to its contract.
    (2) Establishing and operating a procedure for determining such 
claims for contraceptive services in accordance with Sec. 2560.503-1 of 
this chapter.
    (3) Complying with disclosure and other requirements applicable to 
group health plans under Title I of ERISA with respect to such benefits.

[78 FR 39894, July 2, 2013, as amended at 79 FR 51099, Aug. 27, 2014]



Sec. 2510.3-21  Definition of ``Fiduciary.''

    (a) Investment advice. For purposes of section 3(21)(A)(ii) of the 
Employee Retirement Income Security Act of 1974 (Act) and section 
4975(e)(3)(B) of the Internal Revenue Code (Code), except as

[[Page 356]]

provided in paragraph (c) of this section, a person shall be deemed to 
be rendering investment advice with respect to moneys or other property 
of a plan or IRA described in paragraph (g)(6) of this section if--
    (1) Such person provides to a plan, plan fiduciary, plan participant 
or beneficiary, IRA, or IRA owner the following types of advice for a 
fee or other compensation, direct or indirect:
    (i) A recommendation as to the advisability of acquiring, holding, 
disposing of, or exchanging, securities or other investment property, or 
a recommendation as to how securities or other investment property 
should be invested after the securities or other investment property are 
rolled over, transferred, or distributed from the plan or IRA;
    (ii) A recommendation as to the management of securities or other 
investment property, including, among other things, recommendations on 
investment policies or strategies, portfolio composition, selection of 
other persons to provide investment advice or investment management 
services, selection of investment account arrangements (e.g., brokerage 
versus advisory); or recommendations with respect to rollovers, 
transfers, or distributions from a plan or IRA, including whether, in 
what amount, in what form, and to what destination such a rollover, 
transfer, or distribution should be made; and
    (2) With respect to the investment advice described in paragraph 
(a)(1) of this section, the recommendation is made either directly or 
indirectly (e.g., through or together with any affiliate) by a person 
who:
    (i) Represents or acknowledges that it is acting as a fiduciary 
within the meaning of the Act or the Code;
    (ii) Renders the advice pursuant to a written or verbal agreement, 
arrangement, or understanding that the advice is based on the particular 
investment needs of the advice recipient; or
    (iii) Directs the advice to a specific advice recipient or 
recipients regarding the advisability of a particular investment or 
management decision with respect to securities or other investment 
property of the plan or IRA.
    (b)(1) For purposes of this section, ``recommendation'' means a 
communication that, based on its content, context, and presentation, 
would reasonably be viewed as a suggestion that the advice recipient 
engage in or refrain from taking a particular course of action. The 
determination of whether a ``recommendation'' has been made is an 
objective rather than subjective inquiry. In addition, the more 
individually tailored the communication is to a specific advice 
recipient or recipients about, for example, a security, investment 
property, or investment strategy, the more likely the communication will 
be viewed as a recommendation. Providing a selective list of securities 
to a particular advice recipient as appropriate for that investor would 
be a recommendation as to the advisability of acquiring securities even 
if no recommendation is made with respect to any one security. 
Furthermore, a series of actions, directly or indirectly (e.g., through 
or together with any affiliate), that may not constitute a 
recommendation when viewed individually may amount to a recommendation 
when considered in the aggregate. It also makes no difference whether 
the communication was initiated by a person or a computer software 
program.
    (2) The provision of services or the furnishing or making available 
of information and materials in conformance with paragraphs (b)(2)(i) 
through (iv) of this section is not a ``recommendation'' for purposes of 
this section. Determinations as to whether any activity not described in 
this paragraph (b)(2) constitutes a recommendation must be made by 
reference to the criteria set forth in paragraph (b)(1) of this section.
    (i) Platform providers. Marketing or making available to a plan 
fiduciary of a plan, without regard to the individualized needs of the 
plan, its participants, or beneficiaries a platform or similar mechanism 
from which a plan fiduciary may select or monitor investment 
alternatives, including qualified default investment alternatives, into 
which plan participants or beneficiaries may direct the investment of 
assets held in, or contributed to, their individual accounts, provided 
the plan fiduciary is independent of the person

[[Page 357]]

who markets or makes available the platform or similar mechanism, and 
the person discloses in writing to the plan fiduciary that the person is 
not undertaking to provide impartial investment advice or to give advice 
in a fiduciary capacity. A plan participant or beneficiary or relative 
of either shall not be considered a plan fiduciary for purposes of this 
paragraph.
    (ii) Selection and monitoring assistance. In connection with the 
activities described in paragraph (b)(2)(i) of this section with respect 
to a plan,
    (A) Identifying investment alternatives that meet objective criteria 
specified by the plan fiduciary (e.g., stated parameters concerning 
expense ratios, size of fund, type of asset, or credit quality), 
provided that the person identifying the investment alternatives 
discloses in writing whether the person has a financial interest in any 
of the identified investment alternatives, and if so the precise nature 
of such interest;
    (B) In response to a request for information, request for proposal, 
or similar solicitation by or on behalf of the plan, identifying a 
limited or sample set of investment alternatives based on only the size 
of the employer or plan, the current investment alternatives designated 
under the plan, or both, provided that the response is in writing and 
discloses whether the person identifying the limited or sample set of 
investment alternatives has a financial interest in any of the 
alternatives, and if so the precise nature of such interest; or
    (C) Providing objective financial data and comparisons with 
independent benchmarks to the plan fiduciary.
    (iii) General Communications. Furnishing or making available to a 
plan, plan fiduciary, plan participant or beneficiary, IRA, or IRA owner 
general communications that a reasonable person would not view as an 
investment recommendation, including general circulation newsletters, 
commentary in publicly broadcast talk shows, remarks and presentations 
in widely attended speeches and conferences, research or news reports 
prepared for general distribution, general marketing materials, general 
market data, including data on market performance, market indices, or 
trading volumes, price quotes, performance reports, or prospectuses.
    (iv) Investment Education. Furnishing or making available any of the 
following categories of investment-related information and materials 
described in paragraphs (b)(2)(iv)(A) through (D) of this section to a 
plan, plan fiduciary, plan participant or beneficiary, IRA, or IRA owner 
irrespective of who provides or makes available the information and 
materials (e.g., plan sponsor, fiduciary or service provider), the 
frequency with which the information and materials are provided, the 
form in which the information and materials are provided (e.g., on an 
individual or group basis, in writing or orally, or via call center, 
video or computer software), or whether an identified category of 
information and materials is furnished or made available alone or in 
combination with other categories of information and materials, provided 
that the information and materials do not include (standing alone or in 
combination with other materials) recommendations with respect to 
specific investment products or specific plan or IRA alternatives, or 
recommendations with respect to investment or management of a particular 
security or securities or other investment property, except as noted in 
paragraphs (b)(2)(iv)(C)(4) and (b)(2)(iv)(D)(6) of this section.
    (A) Plan information. Information and materials that, without 
reference to the appropriateness of any individual investment 
alternative or any individual benefit distribution option for the plan 
or IRA, or a particular plan participant or beneficiary or IRA owner, 
describe the terms or operation of the plan or IRA, inform a plan 
fiduciary, plan participant, beneficiary, or IRA owner about the 
benefits of plan or IRA participation, the benefits of increasing plan 
or IRA contributions, the impact of preretirement withdrawals on 
retirement income, retirement income needs, varying forms of 
distributions, including rollovers, annuitization and other forms of 
lifetime income payment options (e.g., immediate annuity, deferred 
annuity, or incremental purchase of deferred annuity), advantages, 
disadvantages and

[[Page 358]]

risks of different forms of distributions, or describe product features, 
investor rights and obligations, fee and expense information, applicable 
trading restrictions, investment objectives and philosophies, risk and 
return characteristics, historical return information, or related 
prospectuses of investment alternatives available under the plan or IRA.
    (B) General financial, investment, and retirement information. 
Information and materials on financial, investment, and retirement 
matters that do not address specific investment products, specific plan 
or IRA investment alternatives or distribution options available to the 
plan or IRA or to plan participants, beneficiaries, and IRA owners, or 
specific investment alternatives or services offered outside the plan or 
IRA, and inform the plan fiduciary, plan participant or beneficiary, or 
IRA owner about:
    (1) General financial and investment concepts, such as risk and 
return, diversification, dollar cost averaging, compounded return, and 
tax deferred investment;
    (2) Historic differences in rates of return between different asset 
classes (e.g., equities, bonds, or cash) based on standard market 
indices;
    (3) Effects of fees and expenses on rates of return;
    (4) Effects of inflation;
    (5) Estimating future retirement income needs;
    (6) Determining investment time horizons;
    (7) Assessing risk tolerance;
    (8) Retirement-related risks (e.g., longevity risks, market/interest 
rates, inflation, health care and other expenses); and
    (9) General methods and strategies for managing assets in retirement 
(e.g., systematic withdrawal payments, annuitization, guaranteed minimum 
withdrawal benefits), including those offered outside the plan or IRA.
    (C) Asset allocation models. Information and materials (e.g., pie 
charts, graphs, or case studies) that provide a plan fiduciary, plan 
participant or beneficiary, or IRA owner with models of asset allocation 
portfolios of hypothetical individuals with different time horizons 
(which may extend beyond an individual's retirement date) and risk 
profiles, where--
    (1) Such models 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;
    (2) 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;
    (3) The asset allocation models are accompanied by a statement 
indicating that, in applying particular asset allocation models to their 
individual situations, plan participants, beneficiaries, or IRA owners 
should consider their other assets, income, and investments (e.g., 
equity in a home, Social Security benefits, individual retirement plan 
investments, savings accounts, and interests in other qualified and non-
qualified plans) in addition to their interests in the plan or IRA, to 
the extent those items are not taken into account in the model or 
estimate; and
    (4) The models do not include or identify any specific investment 
product or investment alternative available under the plan or IRA, 
except that solely with respect to a plan, asset allocation models may 
identify a specific investment alternative available under the plan if 
it is a designated investment alternative within the meaning of 29 CFR 
2550.404a-5(h)(4) under the plan subject to oversight by a plan 
fiduciary independent from the person who developed or markets the 
investment alternative and the model:
    (i) Identifies all the other designated investment alternatives 
available under the plan that have similar risk and return 
characteristics, if any; and
    (ii) is accompanied by a statement indicating that those other 
designated investment alternatives have similar risk and return 
characteristics and identifying where information on those investment 
alternatives may be obtained, including information described in 
paragraph (b)(2)(iv)(A) of this section and, if applicable, paragraph 
(d) of 29 CFR 2550.404a-5.

[[Page 359]]

    (D) Interactive investment materials. Questionnaires, worksheets, 
software, and similar materials that provide a plan fiduciary, plan 
participant or beneficiary, or IRA owner the means to: Estimate future 
retirement income needs and assess the impact of different asset 
allocations on retirement income; evaluate distribution options, 
products, or vehicles by providing information under paragraphs 
(b)(2)(iv)(A) and (B) of this section; or estimate a retirement income 
stream that could be generated by an actual or hypothetical account 
balance, where--
    (1) 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;
    (2) There is an objective correlation between the asset allocations 
generated by the materials and the information and data supplied by the 
plan participant, beneficiary or IRA owner;
    (3) There is an objective correlation between the income stream 
generated by the materials and the information and data supplied by the 
plan participant, beneficiary, or IRA owner;
    (4) All material facts and assumptions (e.g., retirement ages, life 
expectancies, income levels, financial resources, replacement income 
ratios, inflation rates, rates of return and other features, and rates 
specific to income annuities or systematic withdrawal plans) that may 
affect a plan participant's, beneficiary's, or IRA owner's assessment of 
the different asset allocations or different income streams accompany 
the materials or are specified by the plan participant, beneficiary, or 
IRA owner;
    (5) The materials either take into account other assets, income and 
investments (e.g., equity in a home, Social Security benefits, 
individual retirement plan investments, savings accounts, and interests 
in other qualified and non-qualified plans) or are accompanied by a 
statement indicating that, in applying particular asset allocations to 
their individual situations, or in assessing the adequacy of an 
estimated income stream, plan participants, beneficiaries, or IRA owners 
should consider their other assets, income, and investments in addition 
to their interests in the plan or IRA; and
    (6) The materials do not include or identify any specific investment 
alternative or distribution option available under the plan or IRA, 
unless such alternative or option is specified by the plan participant, 
beneficiary, or IRA owner, or it is a designated investment alternative 
within the meaning of 29 CFR 2550.404a-5(h)(4) under a plan subject to 
oversight by a plan fiduciary independent from the person who developed 
or markets the investment alternative and the materials:
    (i) Identify all the other designated investment alternatives 
available under the plan that have similar risk and return 
characteristics, if any; and
    (ii) Are accompanied by a statement indicating that those other 
designated investment alternatives have similar risk and return 
characteristics and identifying where information on those investment 
alternatives may be obtained; including information described in 
paragraph (b)(2)(iv)(A) of this section and, if applicable, paragraph 
(d) of 29 CFR 2550.404a-5;
    (c) Except for persons who represent or acknowledge that they are 
acting as a fiduciary within the meaning of the Act or the Code, a 
person shall not be deemed to be a fiduciary within the meaning of 
section 3(21)(A)(ii) of the Act or section 4975(e)(3)(B) of the Code 
solely because of the activities set forth in paragraphs (c)(1), (2), 
and (3) of this section.
    (1) Transactions with independent fiduciaries with financial 
expertise--The provision of any advice by a person (including the 
provision of asset allocation models or other financial analysis tools) 
to a fiduciary of the plan or IRA (including a fiduciary to an 
investment contract, product, or entity that holds plan assets as 
determined pursuant to sections 3(42) and 401 of the Act and 29 CFR 
2510.3-101) who is independent of the person providing the advice with 
respect to an arm's length sale, purchase, loan, exchange, or other 
transaction related to the investment of securities or other investment 
property, if, prior to entering into the transaction the person 
providing the advice satisfies the requirements of this paragraph 
(c)(1).

[[Page 360]]

    (i) The person knows or reasonably believes that the independent 
fiduciary of the plan or IRA is:
    (A) A bank as defined in section 202 of the Investment Advisers Act 
of 1940 or similar institution that is regulated and supervised and 
subject to periodic examination by a State or Federal agency;
    (B) An insurance carrier which is qualified under the laws of more 
than one state to perform the services of managing, acquiring or 
disposing of assets of a plan;
    (C) An investment adviser registered under the Investment Advisers 
Act of 1940 or, if not registered an as investment adviser under the 
Investment Advisers Act by reason of paragraph (1) of section 203A of 
such Act, 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;
    (D) A broker-dealer registered under the Securities Exchange Act of 
1934; or
    (E) Any independent fiduciary that holds, or has under management or 
control, total assets of at least $50 million (the person may rely on 
written representations from the plan or independent fiduciary to 
satisfy this paragraph (c)(1)(i));
    (ii) The person knows or reasonably believes that the independent 
fiduciary of the plan or IRA is capable of evaluating investment risks 
independently, both in general and with regard to particular 
transactions and investment strategies (the person may rely on written 
representations from the plan or independent fiduciary to satisfy this 
paragraph (c)(1)(ii));
    (iii) The person fairly informs the independent fiduciary that the 
person is not undertaking to provide impartial investment advice, or to 
give advice in a fiduciary capacity, in connection with the transaction 
and fairly informs the independent fiduciary of the existence and nature 
of the person's financial interests in the transaction;
    (iv) The person knows or reasonably believes that the independent 
fiduciary of the plan or IRA is a fiduciary under ERISA or the Code, or 
both, with respect to the transaction and is responsible for exercising 
independent judgment in evaluating the transaction (the person may rely 
on written representations from the plan or independent fiduciary to 
satisfy this paragraph (c)(1)(iv)); and
    (v) The person does not receive a fee or other compensation directly 
from the plan, plan fiduciary, plan participant or beneficiary, IRA, or 
IRA owner for the provision of investment advice (as opposed to other 
services) in connection with the transaction.
    (2) Swap and security-based swap transactions. The provision of any 
advice to an employee benefit plan (as described in section 3(3) of the 
Act) by a person who is a swap dealer, security-based swap dealer, major 
swap participant, major security-based swap participant, or a swap 
clearing firm in connection with a swap or security-based swap, as 
defined in section 1a of the Commodity Exchange Act (7 U.S.C. 1a) and 
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) 
if--
    (i) The employee benefit plan is represented by a fiduciary under 
ERISA independent of the person;
    (ii) In the case of a swap dealer or security-based swap dealer, the 
person is not acting as an advisor to the employee benefit plan (within 
the meaning of section 4s(h) of the Commodity Exchange Act or section 
15F(h) of the Securities Exchange Act of 1934) in connection with the 
transaction;
    (iii) The person does not receive a fee or other compensation 
directly from the plan or plan fiduciary for the provision of investment 
advice (as opposed to other services) in connection with the 
transaction; and
    (iv) In advance of providing any recommendations with respect to the 
transaction, or series of transactions, the person obtains a written 
representation from the independent fiduciary that the independent 
fiduciary understands that the person is not undertaking to provide 
impartial investment advice, or to give advice in a fiduciary capacity, 
in connection with the transaction and that the independent fiduciary is 
exercising independent judgment in evaluating the recommendation.
    (3) Employees. (i) In his or her capacity as an employee of the plan 
sponsor of a plan, as an employee of an affiliate of such plan sponsor, 
as an employee of

[[Page 361]]

an employee benefit plan, as an employee of an employee organization, or 
as an employee of a plan fiduciary, the person provides advice to a plan 
fiduciary, or to an employee (other than in his or her capacity as a 
participant or beneficiary of an employee benefit plan) or independent 
contractor of such plan sponsor, affiliate, or employee benefit plan, 
provided the person receives no fee or other compensation, direct or 
indirect, in connection with the advice beyond the employee's normal 
compensation for work performed for the employer; or
    (ii) In his or her capacity as an employee of the plan sponsor of a 
plan, or as an employee of an affiliate of such plan sponsor, the person 
provides advice to another employee of the plan sponsor in his or her 
capacity as a participant or beneficiary of the plan, provided the 
person's job responsibilities do not involve the provision of investment 
advice or investment recommendations, the person is not registered or 
licensed under federal or state securities or insurance law, the advice 
he or she provides does not require the person to be registered or 
licensed under federal or state securities or insurance laws, and the 
person receives no fee or other compensation, direct or indirect, in 
connection with the advice beyond the employee's normal compensation for 
work performed for the employer.
    (d) Scope of fiduciary duty--investment advice. A person who is a 
fiduciary with respect to an plan or IRA by reason of rendering 
investment advice (as defined in paragraph (a) of this section) for a 
fee or other compensation, direct or indirect, with respect to any 
securities or other investment property of such plan or IRA, or having 
any authority or responsibility to do so, shall not be deemed to be a 
fiduciary regarding any assets of the plan or IRA 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 described in paragraph 
(a)(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:
    (1) 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
    (2) Exclude such person from the definition of the term ``party in 
interest'' (as set forth in section 3(14)(B) of the Act) or 
``disqualified person'' (as set forth in section 4975(e)(2) of the Code) 
with respect to any assets of the employee benefit plan or IRA.
    (e) 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 or section 
4975(e)(3)(B) of the Code, with respect to a plan or IRA 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 or IRA, if:
    (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 22c1 under 
the Investment Company Act of 1940 (17 CFR 270.22c1);
    (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,

[[Page 362]]

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 (e)(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 a plan or IRA solely by reason of the 
possession or exercise of discretionary authority or discretionary 
control in the management of the plan or IRA, or the management or 
disposition of plan or IRA assets in connection with the execution of a 
transaction or transactions for the purchase or sale of securities on 
behalf of such plan or IRA which fails to comply with the provisions of 
paragraph (e)(1) of this section, shall not be deemed to be a fiduciary 
regarding any assets of the plan or IRA 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 (a) 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) or ``disqualified person'' (as set forth in section 
4975(e)(2) of the Code) with respect to any assets of the plan or IRA.
    (f) Internal Revenue Code. Section 4975(e)(3) of the Code contains 
provisions parallel to section 3(21)(A) of the Act which define the term 
``fiduciary'' for purposes of the prohibited transaction provisions in 
Code section 4975. Effective December 31, 1978, section 102 of the 
Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 237 transferred the 
authority of the Secretary of the Treasury to promulgate regulations of 
the type published herein to the Secretary of Labor. All references 
herein to section 3(21)(A) of the Act should be read to include 
reference to the parallel provisions of section 4975(e)(3) of the Code. 
Furthermore, the provisions of this section shall apply for purposes of 
the application of Code section 4975 with respect to any plan, including 
any IRA, described in Code section 4975(e)(1).
    (g) Definitions. For purposes of this section--
    (1) The term ``affiliate'' means any person directly or indirectly, 
through one or more intermediaries, controlling, controlled by, or under 
common control with such person; any officer, director, partner, 
employee, or relative (as defined in paragraph (g)(8) of this section) 
of such person; and any corporation or partnership of which such person 
is an officer, director, or partner.
    (2) The term ``control,'' for purposes of paragraph (g)(1) of this 
section, means the power to exercise a controlling influence over the 
management or policies of a person other than an individual.
    (3) The term ``fee or other compensation, direct or indirect'' 
means, for purposes of this section and section 3(21)(A)(ii) of the Act, 
any explicit fee or compensation for the advice received by the person 
(or by an affiliate) from any source, and any other fee or compensation 
received from any source in connection with or as a result of the 
purchase or sale of a security or the provision of investment advice 
services, including, though not limited to, commissions, loads, finder's 
fees, revenue sharing payments, shareholder servicing fees, marketing or 
distribution fees, underwriting compensation, payments to brokerage 
firms in return for shelf space, recruitment compensation paid in 
connection with transfers of accounts to a registered representative's 
new broker-dealer firm, gifts and gratuities, and expense 
reimbursements. A fee or compensation is paid ``in connection with or as 
a result of'' such transaction or service if the fee or compensation 
would not have been paid

[[Page 363]]

but for the transaction or service or if eligibility for or the amount 
of the fee or compensation is based in whole or in part on the 
transaction or service.
    (4) The term ``investment property'' does not include health 
insurance policies, disability insurance policies, term life insurance 
policies, and other property to the extent the policies or property do 
not contain an investment component.
    (5) The term ``IRA owner'' means, with respect to an IRA, either the 
person who is the owner of the IRA or the person for whose benefit the 
IRA was established.
    (6)(i) The term ``plan'' means any employee benefit plan described 
in section 3(3) of the Act and any plan described in section 
4975(e)(1)(A) of the Code, and
    (ii) The term ``IRA'' means any account or annuity described in Code 
section 4975(e)(1)(B) through (F), including, for example, an individual 
retirement account described in section 408(a) of the Code and a health 
savings account described in section 223(d) of the Code.
    (7) The term ``plan fiduciary'' means a person described in section 
(3)(21)(A) of the Act and 4975(e)(3) of the Code. For purposes of this 
section, a participant or beneficiary of the plan or a relative of 
either is not a ``plan fiduciary'' with respect to the plan, and the IRA 
owner or a relative is not a ``plan fiduciary'' with respect to the IRA.
    (8) The term ``relative'' means a person described in section 3(15) 
of the Act and section 4975(e)(6) of the Code or a brother, a sister, or 
a spouse of a brother or sister.
    (9) The term ``plan participant'' or ``participant'' means, for a 
plan described in section 3(3) of the Act, a person described in section 
3(7) of the Act.
    (h) Effective and applicability dates--(1) Effective date. This 
section is effective on June 7, 2016.
    (2) Applicability date. Paragraphs (a), (b), (c), (d), (f), and (g) 
of this section apply June 9, 2017.
    (3) Until the applicability date under this paragraph (h), the prior 
regulation under the Act and the Code (as it appeared in the July 1, 
2015 edition of 29 CFR part 2510 and the April 1, 2015 edition of 26 CFR 
part 54) applies.
    (i) Continued applicability of State law regulating insurance, 
banking, or securities. Nothing in this part shall be construed to 
affect or modify the provisions of section 514 of Title I of the Act, 
including the savings clause in section 514(b)(2)(A) for state laws that 
regulate insurance, banking, or securities.

[81 FR 20997, 21001, Apr. 8, 2016, as amended at 82 FR 16918, Apr. 7, 
2017]



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 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

[[Page 364]]

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. 2510.3-38  Filing requirements for State registered investment
advisers to be investment managers.

    (a) General. Section 3(38) of the Act sets forth the criteria for a 
fiduciary to be an investment manager for purposes of section 405 of the 
Act. Subparagraph (B)(ii) of section 3(38) of the Act provides that, in 
the case of a fiduciary who is not registered under the Investment 
Advisers Act of 1940 by reason of paragraph (1) of section 203A(a) of 
such Act, the fiduciary must be registered as an investment adviser 
under the laws of the State in which it maintains its principal office 
and place of business, and, at the time the fiduciary files registration 
forms with such State to maintain the fiduciary's registration under the 
laws of such State, also files a copy of such forms with the Secretary 
of Labor. The purpose of this section is to set forth the exclusive 
means for investment advisers to satisfy the filing obligation with the 
Secretary described in subparagraph (B)(ii) of section 3(38) of the Act.
    (b) Filing requirement. To satisfy the filing requirement with the 
Secretary in section 3(38)(B)(ii) of the Act, a fiduciary must be 
registered as an investment adviser with the State in which it maintains 
its principal office and place of business and file through the 
Investment Adviser Registration Depository (IARD), in accordance with 
applicable IARD requirements, the information required to be registered 
and maintain the fiduciary's registration as an investment adviser in 
such State. Submitting to the Secretary investment adviser registration 
forms filed with a State does not constitute compliance with the filing 
requirement in section 3(38)(B)(ii) of the Act.
    (c) Definitions. For purposes of this section, the term ``Investment 
Adviser Registration Depository'' or ``IARD'' means the centralized 
electronic depository described in 17 CFR 275.203-1.
    (d) Cross reference. Information for investment advisers on how to 
file through the IARD is available on the Securities and Exchange 
Commission website at www.sec.gov/iard.

[69 FR 52125, Aug. 24, 2004]



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

[[Page 365]]

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 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;

[[Page 366]]

    (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 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;

[[Page 367]]

    (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 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

[[Page 368]]

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 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:

------------------------------------------------------------------------
                                         Total        Nexus
     Categories of participants          number       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-     100 (20%)    50 (10%)   50 (10%)
 CBA-alumni.........................
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.

[[Page 369]]

    (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 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

[[Page 370]]

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 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

[[Page 371]]

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, 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

[[Page 372]]

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 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

[[Page 373]]

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).
    (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.

[[Page 374]]

    (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, 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

[[Page 375]]

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 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

[[Page 376]]

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 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

[[Page 377]]

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 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

[[Page 378]]

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.
    (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)(1) 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 or repayment of 
a participant loan to the plan, as of the earliest date on which such 
contributions or repayments can reasonably be segregated from the 
employer's general assets.

[[Page 379]]

    (2) Safe harbor. (i) For purposes of paragraph (a)(1) of this 
section, in the case of a plan with fewer than 100 participants at the 
beginning of the plan year, any amount deposited with such plan not 
later than the 7th business day following the day on which such amount 
is received by the employer (in the case of amounts that a participant 
or beneficiary pays to an employer), or the 7th business day following 
the day on which such amount would otherwise have been payable to the 
participant in cash (in the case of amounts withheld by an employer from 
a participant's wages), shall be deemed to be contributed or repaid to 
such plan on the earliest date on which such contributions or 
participant loan repayments can reasonably be segregated from the 
employer's general assets.
    (ii) This paragraph (a)(2) sets forth an optional alternative method 
of compliance with the rule set forth in paragraph (a)(1) of this 
section. This paragraph (a)(2) does not establish the exclusive means by 
which participant contribution or participant loan repayment amounts 
shall be considered to be contributed or repaid to a plan by the 
earliest date on which such contributions or repayments 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)(1) of this 
section occur later than the 15th business day of the month following 
the month in which the participant contribution or participant loan 
repayment 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)(1) of this section occur later than the 30th calendar 
day following the month in which the participant contribution 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)(1) 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

[[Page 380]]

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 A sponsors a 401(k) plan. There are 30 participants in 
the 401(k) plan. A has one payroll period for its employees and uses an 
outside payroll processing service to pay employee wages and process 
deductions. A has established a system under which the payroll 
processing service provides payroll deduction information to A within 1 
business day after the issuance of paychecks. A checks this information 
for accuracy within 5 business days and then forwards the withheld 
employee contributions to the plan. The amount of the total withheld 
employee contributions is deposited with the trust that is maintained 
under the plan on the 7th business day following the date on which the 
employees are paid. Under the safe harbor in paragraph (a)(2) of this 
section, when the participant contributions are deposited with the plan 
on the 7th business day following a pay date, the participant 
contributions are deemed to be contributed to the plan on the earliest 
date on which such contributions can reasonably be segregated from A's 
general assets.
    (2) Employer B is a large national corporation which sponsors a 
401(k) plan with 600 participants. B 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 issues the employees' 
paychecks and deducts all payroll taxes and elective employee 
deductions. The payroll processing service forwards the employee payroll 
deduction data to B on the date of issuance of paychecks. B checks this 
data for accuracy and transmits this data along with the employee 401(k) 
deferral funds to the plan's investment firm within 3 business days. The 
plan's investment firm deposits the employee 401(k) deferral funds into 
the plan on the day received from B. The assets of B's 401(k) plan would 
include the participant contributions no later than 3 business days 
after the issuance of paychecks.
    (3) Employer C sponsors a self-insured contributory group health 
plan with 90 participants. Several former employees have elected, 
pursuant to the provisions of ERISA section 602, 29 U.S.C. 1162, to pay 
C for continuation of their coverage under the plan. These checks arrive 
at various times during

[[Page 381]]

the month and are deposited in the employer's general account at bank Z. 
Under paragraphs (a) and (c) of this section, the assets of the plan 
include the former employees' payments as soon after the checks have 
cleared the bank as C could reasonably be expected to segregate the 
payments from its general assets, but in no event later than 90 days 
after the date on which the former employees' participant contributions 
are received by C. If, however, C deposits the former employees' 
payments with the plan no later than the 7th business day following the 
day on which they are received by C, the former employees' participant 
contributions will be deemed to be contributed to the plan on the 
earliest date on which such contributions can reasonably be segregated 
from C's general assets.
    (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 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; 75 
FR 2076, Jan. 14, 2010]

[[Page 382]]



  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  Filing by multiple employer welfare arrangements and certain 
          other related entities.
2520.101-3  Notice of blackout periods under individual account plans.
2520.101-4  [Reserved]
2520.101-5  Annual funding notice for defined benefit pension plans.
2520.101-6  Multiemployer pension plan information made available on 
          request.

  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.
2520.103-13  Special terminal report for abandoned plans.

    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 383]]

                    Subpart E_Reporting Requirements

2520.104a-1  Filing with the Secretary of Labor.
2520.104a-2  Electronic filing of annual reports.
2520.104a-3--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; 
and Secretary of Labor's Order 1-2011 77 FR 1088 (Jan. 9, 2012). 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. Sec. 2520.101-5 also issued under sec. 
501 of Pub. L. 109-280, 120 Stat. 780 and sec. 105(a), Pub. L. 110-458, 
122 Stat. 5092.



         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  Filing by multiple employer welfare arrangements 
and certain other related entities.

    (a) Basis and scope. Section 101(g) of the Employee Retirement 
Income Security Act (ERISA), as amended by the Patient Protection and 
Affordable Care Act, requires the Secretary of Labor (the Secretary) to 
establish, by regulation, a requirement that multiple employer welfare 
arrangements (MEWAs) providing benefits that consist of medical care (as 
described in paragraph (b)(6) of this section), which are not group 
health plans, to register with the Secretary prior to operating in a 
State. Section 101(g) also permits the Secretary to require, by 
regulation, such MEWAs 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 
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). The reporting 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:
    (1) Administrator means--(i) The person specifically so designated 
by the terms of the instrument under which the MEWA or ECE is operated;
    (ii) 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

[[Page 384]]

    (iii) 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.
    (2) 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 Sec. 2510.3-40.
    (3) Excepted benefits means excepted benefits within the meaning of 
section 733(c) of ERISA and Sec. 2590.701-2 of this chapter.
    (4) Group health plan means a group health plan within the meaning 
of section 733(a) of ERISA and Sec. 2590.701-2 of this chapter.
    (5) Health insurance issuer means a health insurance issuer within 
the meaning of section 733(b)(2) of ERISA and Sec. 2590.701-2 of this 
chapter.
    (6) Medical care means medical care within the meaning of section 
733(a)(2) of ERISA and Sec. 2590.701-2 of this chapter.
    (7) Multiple employer welfare arrangement (MEWA) means a multiple 
employer welfare arrangement within the meaning of section 3(40) of 
ERISA.
    (8) Operating means any activity including but not limited to 
marketing, soliciting, providing, or offering to provide benefits 
consisting of medical care.
    (9) Origination means, with regard to an ECE, the occurrence of any 
of the following events (an ECE is considered to have been originated 
only when an event described below occurs)--
    (i) The ECE begins operating with regard to the employees of two or 
more employers (including one or more self-employed individuals);
    (ii) The ECE begins operating following a merger with another ECE 
(unless all of the ECEs that participate in the merger previously were 
last originated at least three years prior to the merger); or
    (iii) The number of employees receiving coverage for medical care 
under the 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 ECE under which all ECEs that 
participate in the merger were last originated at least three years 
prior to the merger).
    (10) Reporting or to report means to file the Form M-1 as required 
pursuant to sections 101(g) of ERISA; Sec. 2520.101-2; or the 
instructions to the Form M-1.
    (11) Special filing event means, with regard to an ECE--
    (i) The ECE begins knowingly operating in any additional State or 
States that were not indicated on a previous report filed pursuant to 
paragraph (e)(1)(i) or (f)(2)(i) of this section; or
    (ii) The ECE experiences a material change as defined in the Form M-
1 instructions.
    (12) State means State within the meaning of Sec. 2590.701-2 of this 
chapter.
    (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 regardless of whether the entity is 
a group health plan; and
    (ii) The administrator of an ECE during the three-year period 
following an event described in paragraph (b)(9) of this section.
    (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 described under this paragraph (c)(2)(i).
    (A) A MEWA or ECE 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;
    (B) A MEWA or ECE that provides coverage that consists solely of 
excepted benefits, which are not subject to ERISA part 7. If the MEWA or 
ECE provides coverage that consists of both

[[Page 385]]

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) A MEWA or ECE that is a group health plan 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) A MEWA or ECE that 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 
under this paragraph (c)(2)(ii).
    (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 principles similar to 
the principles of section 414(c) of the Internal Revenue Code;
    (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, determined 
as of the 60th day following the date the MEWA or ECE began operating in 
a manner such that a filing is required pursuant to paragraph (e)(1)(i), 
(2), or (3) of this section.
    (3) Examples. The rules of this paragraph (c) are illustrated by the 
following examples:

    Example 1. (i) Facts. MEWA A begins operating by offering coverage 
to the employees of two or more employers on August 1, 2013. MEWA A 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 1, the administrator of MEWA A is 
not required to report via Form M-1. MEWA A meets the exception to the 
filing requirement in paragraph (c)(2)(i)(A) of this section 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 2. (i) Facts. Company B maintains a group health plan that 
provides benefits for medical care for its employees (and their 
dependents). Company B establishes a joint venture in which it has a 25 
percent stock ownership interest, determined by applying the principles 
similar to the principles under section 414(c) of the Internal Revenue 
Code, and transfers some of its employees to the joint venture. Company 
B continues to cover these transferred employees under its group health 
plan.
    (ii) Conclusion. In this Example 2, the administrator is not 
required to file the Form M-1 because Company B's group health plan 
meets the exception to the filing requirement in paragraph (c)(2)(ii)(A) 
of this section. This is because Company B'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 3. (i) Facts. Company C maintains a group health plan that 
provides benefits for medical care for its employees. The plan year of 
Company C's group health plan is the fiscal year for Company C, which is 
October 1st--September 30th. Therefore, October 1, 2012--September 30, 
2013 is the 2013 plan year. Company C decides to sell a portion of its

[[Page 386]]

business, Division Z, to Company D. Company C signs an agreement with 
Company D under which Division Z will be transferred to Company D, 
effective September 30, 2013. The change in control of Division Z 
therefore occurs on September 30, 2013. Under the terms of the 
agreement, Company C agrees to continue covering all of the employees 
that formerly worked for Division Z under its group health plan until 
Company D has established a new group health plan to cover these 
employees. Under the terms of the agreement, it is anticipated that 
Company C will not be required to cover the employees of Division Z 
under its group health plan beyond the end of the 2014 plan year, which 
is the plan year following the plan year in which the change in control 
of Division Z occurred.
    (ii) Conclusion. In this Example 3, the administrator of Company C's 
group health plan is not required to report via the Form M-1 on March 1, 
2014 for fiscal year 2013 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 2013 Form 
M-1 annual report because it is anticipated that Company C will not be 
required to cover the employees of Division Z under its group health 
plan beyond the end of the 2014 plan year, which is the plan year 
following the plan year in which the change in control of businesses 
occurred.
    Example 4. (i) Facts. Company E 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 E's group health plan uses calendar year data to report for 
purposes of the Form M-1. The administrator of Company E'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 2013 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 
2013.
    (ii) Conclusion. In this Example 4, the administrator of Company E's 
group health plan is not required to report via the Form M-1 for 
calendar year 2013 (a filing that is otherwise due by March 1, 2014) 
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.

    (d) Information to be reported--(1) Any reporting required by this 
section shall consist of a completed copy of the Form M-1 Report for 
Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities 
Claiming Exception (ECEs) (Form M-1) and any additional statements 
required pursuant to the instructions for the Form M-1.
    (2) Rejected filings.--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 of this chapter.
    (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 
Sec. 2560.502c-5 of this chapter).
    (e) Origination, registration, and other non-annual reporting 
requirements and timing--(1) General rule for ECEs--(i) Except as 
provided in paragraph (e)(1)(ii) of this section, and subject to the 
limitations established by paragraph (c)(1)(ii) of this section, when an 
ECE experiences an event described in paragraphs (b)(9) or (b)(11) of 
this section, the administrator of the ECE shall file Form M-1 by the 
30th day following the date of the event.
    (ii) Exception. Paragraph (e)(1)(i) of this section does not apply 
to ECEs that experience an origination as described in paragraph 
(b)(9)(i) of this section. Such entities are required, subject to the 
limitations established by paragraph (c)(1)(ii) of this section, to file 
the Form M-1 30 days prior to the date of the event.
    (2) General rule for MEWAs--(i) In general. Except as provided in 
paragraph (e)(2)(ii) of this section, the administrator of the MEWA is 
required to register with the Secretary by filing the Form M-1 30 days 
prior to operating in any State.
    (ii) Exception. Paragraph (e)(2)(i) of this section does not apply 
to MEWAs that, prior to the effective date of this section, were already 
in operation in a

[[Page 387]]

State (or States). Such entities are required to submit an annual filing 
pursuant to annual reporting rules described in paragraph (f)(2)(i) of 
this section for that State (or those States).
    (3) Special rule requiring MEWAs to make additional filings. 
Subsequent to registering with the Secretary pursuant to paragraph 
(e)(2)(i) of this section, the administrator of a MEWA shall file the 
Form M-1:
    (i) Within 30 days of knowingly operating in any additional State or 
States that were not indicated on a previous report filed pursuant to 
paragraph (e)(2)(i) or (f)(2)(i) of this section;
    (ii) Within 30 days of the MEWA operating with regard to the 
employees of an additional employer (or employers, including one or more 
self-employed individuals) after a merger with another MEWA;
    (iii) Within 30 days of the date the number of employees receiving 
coverage for medical care under the MEWA is at least 50 percent greater 
than the number of such employees on the last day of the previous 
calendar year; or
    (iv) Within 30 days of experiencing a material change as defined in 
the Form M-1 instructions.
    (4) Anti-abuse rule. If a MEWA or ECE neither offers nor provides 
benefits consisting of medical care within a State during the calendar 
year immediately following the year in which a filing is made by the ECE 
pursuant to paragraph (e)(1) of this section (due to an event described 
in paragraph (b)(9)(i) or (b)(11)(i) of this section) or a filing is 
made by the MEWA pursuant to paragraph (e)(2) or (3) of this section, 
with respect to operating in such State, such filing will be considered 
to have lapsed.
    (5) Multiple filings not required in certain circumstances. If 
multiple filings are required under this paragraph (e), a single filing 
will satisfy this section so long as the filing is timely for each 
required filing.
    (6) Extensions. (i) An extension may be granted for filing a report 
required by paragraph (e)(1), (2), or (3) of this section if the 
administrator complies with the extension procedure prescribed in the 
instructions to the Form M-1.
    (ii) If the filing deadline set forth in this paragraph (e) is a 
Saturday, Sunday, or federal holiday, the form must be filed no later 
than the next business day.
    (f) Annual reporting requirements and timing--(1) Period for which 
reporting 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 is 
operating and for each of the three calendar years following an 
origination during all or part of which the ECE is operating.
    (2) Filing deadline--(i) General March 1 filing due date for annual 
filings. Except as provided in paragraph (f)(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 for which reporting is required (as 
described in paragraph (f)(1) of this section).
    (ii) Exception. Paragraph (f)(2)(i) of this section does not apply 
to ECEs and MEWAs if, between October 1 and December 31, the entity is 
required to make a filing pursuant to paragraph (e)(1), (2), or (3) of 
this section and makes that filing timely.
    (3) Extensions. (i) An extension may be granted for filing a report 
required by paragraph (f)(2)(i) of this section if the administrator 
complies with the extension procedure prescribed in the instructions to 
the Form M-1.
    (ii) If the filing deadline set forth in this paragraph (f) is a 
Saturday, Sunday, or federal holiday, the form must be filed no later 
than the next business day.
    (4) Examples. The rules of paragraphs (e) and (f) 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 on July 1, 2003 (and 
continues to offer such coverage). MEWA A has satisfied all filing 
requirements to date.
    (ii) Conclusion. In this Example 1, the administrator of MEWA A must 
continue to file a timely completed Form M-1 annual report each year, 
but the administrator is not required to register with the Secretary 
because MEWA A meets the exception to the registration requirement in 
paragraph (e)(2)(ii) of this section and has not experienced any event 
described in paragraph (e)(3) that would require registering with the 
Secretary.

[[Page 388]]

    Example 2. (i) Facts. On August 25, 2013, MEWA B is operating in 
State P and has made all appropriate filings related to those 
operations. On December 22, 2013 one of the employers that participates 
in MEWA B is awarded a new contract in State Q. The employer adds an 
office in State Q and the employees there are eligible to access its 
group health plan.
    (ii) Conclusion. In this Example 2, the administrator of MEWA B must 
report the addition of State Q by filing the Form M-1 within 30 days of 
knowing that it is operating in State Q.
    Example 3. (i) Facts. As of July 1, 2013, MEWA C is preparing to 
operate in States Y and Z. MEWA C is not licensed or authorized to 
operate as a health insurance issuer in any State and does not meet any 
of the other exceptions set forth in paragraph (c)(2) of this section.
    (ii) Conclusion. In this Example 3, the administrator of MEWA C is 
required to register with the Secretary by filing a completed Form M-1 
30 days prior to operating in States Y or Z. The administrator of MEWA C 
must also report by filing the Form M-1 annually by every March 1 
thereafter.
    Example 4. (i) Facts. As of July 28, 2013, MEWA D is operating in 
States V and W. MEWA D has satisfied the requirements of (e)(2) and, if 
applicable, (e)(3) with respect to those States. MEWA D is not licensed 
or authorized to operate as a health insurance issuer in any State and 
does not meet any of the other exceptions set forth in (c)(2) of this 
section. On August 5, 2013 MEWA D knowingly begins operating in State X.
    (ii) Conclusion. In this Example 4, the administrator of MEWA D is 
required to make an additional registration filing with the Secretary by 
September 4, 2013 (within 30 days of knowingly operating in State X). 
Additionally, the administrator of MEWA D must continue to file the Form 
M-1 annually by every March 1 thereafter.
    Example 5. (i) Facts. ECE A began offering coverage for medical care 
to the employees of two or more employers on January 1, 2007 and ECE A 
has not been involved in any mergers or experienced any other 
origination as described in paragraph (b)(9) of this section.
    (ii) Conclusion. In this Example 5, ECE A was originated on January 
1, 2007 and has not been originated since then. Therefore, the 
administrator of ECE A is not required to file a 2012 Form M-1 because 
the last time the ECE A was originated was January 1, 2007 which is more 
than three years prior. Further, the ECE has satisfied its reporting 
requirements by making three timely annual filings after its 
origination.
    Example 6. (i) Facts. ECE B wants to begin offering coverage for 
medical care to the employees of two or more employers on July 1, 2013.
    (ii) Conclusion. In this Example 6, the administrator of ECE B must 
file a completed Form M-1 on or before June 1, 2013 (which is 30 days 
prior to the origination date). In addition, the administrator of ECE B 
must file an updated copy of the Form M-1 by March 1, 2014 because the 
last date ECE B was originated was July 1, 2013 (which is less than 
three years prior to the March 1, 2014 due date). Furthermore, the 
administrator of ECE B must file the Form M-1 by March 1, 2015 and again 
by March 1, 2016 (because July 1, 2013 is less than three years prior to 
March 1, 2015 and March 1, 2016, respectively). However, if ECE B is not 
involved in any mergers and does not experience any other origination as 
described in paragraph (b)(9) of this section, there would not be a new 
origination date and no Form M-1 is required to be filed after March 1, 
2016.
    Example 7. (i) Facts. ECE D, which currently operates in State A and 
is still within the three-year window following its origination and the 
timely filing related thereto, is making preparations to operate in 
State B beginning on November 1, 2013.
    (ii) Conclusion. In this Example 7, by operating in State B, ECE D 
experiences a special event within the three-year window following its 
origination and must make a filing by December 2, 2013.
    Example 8. (i) Facts. Same facts as Example 7. ECE D satisfied its 
special filing requirement but is unsure about its annual filing 
requirements.
    (ii) Conclusion. ECE D is exempt from the next annual filing due 
March 1, 2014 pursuant to the filing deadline exception under (f)(2)(ii) 
of this section. However, ECE D must continue making annual filings for 
the remainder of the three years following its origination.
    Example 9. (i) Facts. MEWA E begins distributing marketing materials 
on August 31, 2013.
    (ii) Conclusion. In this Example 8, because MEWA E began operating 
on August 31, 2013, the administrator of MEWA E must register with the 
Secretary by filing a completed Form M-1 on or before August 1, 2013 (30 
days prior to operating in any State). In addition, the administrator of 
MEWA E must file the Form M-1 annually by every March 1 thereafter.
    Example 10. (i) Facts. Same facts as Example 9, but MEWA E registers 
on or before August 1, 2013 by filing a Form M-1 indicating it will 
begin operating in every State. However, in the calendar year 
immediately following the filing, MEWA E only offered or provided 
benefits consisting of medical care to participants in State Z.
    (ii) Conclusion. In this Example 10, the registration for all States 
(other than State Z) have lapsed under (e)(4) because MEWA E only 
offered or provided benefits consisting of medical care to participants 
in State Z in

[[Page 389]]

the calendar year immediately following the filing. If subsequently, 
MEWA E begins offering or providing benefits consisting of medical care 
to participants in any additional State (or States), it must make a new 
registration filing pursuant to (e)(3) of this section.

    (g) Electronic filing. A completed Form M-1 is filed with the 
Secretary by submitting it electronically as prescribed in the 
instructions to the Form M-1.
    (h) Penalties--(1) 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, see Sec. 2560.502c-
5 of this chapter. For information relating to administrative hearings 
and appeals in connection with the assessment of civil penalties under 
section 502(c)(5) of ERISA, see Secs. 2570.90 through 2570.101 of this 
chapter.
    (2) Criminal penalties and procedures. For information on criminal 
penalties under section 519 of ERISA for persons who knowingly make 
false statements or false representation of fact with regards to the 
information required under this section, see section 501(b) of ERISA.
    (3) Cease and desist and summary seizure orders. For information on 
the Secretary's authority to issue a cease and desist or summary seizure 
order under section 521 of ERISA, see Sec. 2560.521.

[78 FR 13792, Mar. 1, 2013]



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:
    (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

[[Page 390]]

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 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

[[Page 391]]

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, 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

[[Page 392]]

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]



Sec. 2520.101-4  [Reserved]



Sec. 2520.101-5  Annual funding notice for defined benefit pension plans.

    (a) In general. (1) Except as provided in paragraphs (a)(2) and (3) 
of this section, pursuant to section 101(f) of the Act, the 
administrator of a defined benefit plan to which title IV of the Act 
applies shall furnish annually to each person specified in paragraph (f) 
of this section a funding notice that conforms to the requirements of 
this section.
    (2) A plan administrator shall not be required to furnish a funding 
notice--
    (i) In the case of a multiemployer plan, for a plan year if the due 
date for such notice is on or after the earlier of:
    (A) The date the plan complies with the insolvency notice 
requirements of section 4245(e) or 4281(d)(3) of the Act and regulations 
thereunder; or
    (B) The date the plan has distributed assets in satisfaction of all 
nonforfeitable benefits under the plan pursuant to section 4041A of the 
Act and the regulations thereunder.
    (ii) In the case of a single-employer plan, for a plan year if the 
due date for the funding notice is on or after the date:

[[Page 393]]

    (A) The Pension Benefit Guaranty Corporation is appointed as trustee 
of the plan pursuant to section 4042 of the Act;
    (B) The plan has distributed assets in satisfaction of all benefit 
liabilities in a distress termination pursuant to section 
4041(c)(3)(B)(i) of the Act or of all guaranteed benefits in a distress 
termination pursuant to section 4041(c)(3)(B)(ii) of the Act; or
    (C) The plan administrator filed a standard termination notice with 
the Pension Benefit Guaranty Corporation pursuant to 29 CFR 4041.25, 
provided that the proposed termination date is on or before the due date 
of the funding notice and a final distribution of assets in satisfaction 
of all benefit liabilities proceeds in accordance with section 4041(b) 
of the Act.
    (3) In the case of a merger or consolidation of two or more plans--
    (i) The plan administrator of a non-successor plan shall not be 
required to furnish a funding notice for the plan year in which the 
merger or consolidation occurred; and
    (ii) The funding notice of the successor plan, for the plan year in 
which the merger or consolidation occurred, must, in addition to the 
requirements of paragraph (b) of this section, contain a general 
explanation, including the effective date, of the merger or 
consolidation and an identification of each plan (e.g., name and plan 
number) involved in the merger or consolidation.
    (b) Content of notice. A funding notice shall include the following 
information:
    (1) Identifying information. The name of the plan, the name, 
address, and phone number of the plan administrator and the plan's 
principal administrative officer (if different than the plan 
administrator), each plan sponsor's name and employer identification 
number, and the plan number.
    (2) Funding percentage--(i) Single-employer plans. For single-
employer plans, a statement as to whether the plan's funding target 
attainment percentage (as defined in section 303(d)(2) of the Act) for 
the notice year, and for each of the two preceding plan years, is at 
least 100 percent (and, if not, the actual percentages).
    (ii) Multiemployer plans. For multiemployer plans, a statement as to 
whether the plan's funded percentage (as defined in section 305(i) of 
the Act) for the notice year, and for each of the two preceding plan 
years, is at least 100 percent (and, if not, the actual percentages).
    (3) Assets and liabilities--(i) Single-employer plans. For single-
employer plans--
    (A) A statement of the total assets (separately stating the 
prefunding balance and the funding standard carryover balance) and 
liabilities of the plan, determined in the same manner as under section 
303 of the Act, as of the valuation date of the notice year and for each 
of the two preceding plan years, as reported in the annual report filed 
under section 104 of the Act for each such preceding plan year, and
    (B) A statement of the value of the plan's assets and liabilities 
determined as of the last day of the notice year. For purposes of this 
statement, the value of the plan's assets is the fair market value of 
plan assets. Plan liabilities are equal to the present value of benefits 
accrued through the last day of the notice year determined in the same 
manner as liabilities are calculated under section 303 of the Act 
(including actuarial assumptions and methods), but using the interest 
rate under section 4006(a)(3)(E)(iv) of the Act in effect for the last 
month of the notice year.
    (ii) Multiemployer plans. For multiemployer plans--
    (A) A statement of the value of the plan's assets (determined in the 
same manner as under section 304(c)(2) of the Act) and liabilities 
(determined in the same manner as under section 305(i)(8) of the Act, 
using reasonable actuarial assumptions as required under section 
304(c)(3) of the Act) as of the valuation date of the notice year and 
each of the two preceding plan years, and
    (B) A statement of the fair market value of plan assets as of the 
last day of the notice year, and as of the last day of each of the two 
preceding plan years as reported in the annual report filed under 
section 104(a) of the Act for each such preceding plan year.
    (iii) Contributions receivable. For purposes of determining the fair 
market

[[Page 394]]

value of plan assets as of the last day of the notice year under 
paragraphs (b)(3)(i)(B) and (b)(3)(ii)(B) of this section, the plan 
administrator may, but is not required to, include contributions made 
after the notice year and before the notice is furnished to recipients, 
but only to the extent such contributions are treated for funding 
purposes as having been made on account of the notice year under section 
303(g)(4) of the Act, in the case of a single-employer plan, or under 
section 304(c)(8) of the Act, in the case of a multiemployer plan.
    (4) Demographic information. A statement of the number of 
participants and beneficiaries who, as of the valuation date of the 
notice year, are: Retired or separated from service and receiving 
benefits; retired or separated from service and entitled to future 
benefits (but currently not receiving benefits); or active participants 
under the plan. The statement shall indicate the number of participants 
and beneficiaries in each category and the sum of all such participants 
and beneficiaries. The terms ``active'' and ``retired or separated'' 
shall have the same meaning given to those terms in instructions to the 
annual report filed under section 104(a) of the Act.
    (5) Funding policy. A statement setting forth--
    (i) The funding policy of the plan;
    (ii) The asset allocation of investments under the plan (expressed 
as percentages of total assets) as of the end of the notice year; and
    (iii) A general description of any investment policy of the plan as 
it relates to the funding policy in paragraph (b)(5)(i) of this section 
and the asset allocation of investments under paragraph (b)(5)(ii) of 
this section.
    (6) Endangered, critical, or critical and declining status. In the 
case of a multiemployer plan, a statement whether the plan was in 
endangered, critical, or critical and declining status under section 305 
of the Act for the notice year and, if so--
    (i) A statement describing how a person may obtain a copy of the 
plan's funding improvement plan or rehabilitation plan, as appropriate, 
adopted under section 305 of the Act and the actuarial and financial 
data that demonstrate any action taken by the plan toward fiscal 
improvement;
    (ii) A summary of the plan's funding improvement plan or 
rehabilitation plan, including any update or modification of such 
funding improvement or rehabilitation plan adopted under section 305 of 
the Act during the notice year; and
    (iii) In the case of a multiemployer plan in critical and declining 
status:
    (A) The projected date of insolvency;
    (B) A clear statement that such insolvency may result in benefit 
reductions; and
    (C) A statement describing whether the plan sponsor has taken 
legally permitted actions to prevent insolvency.
    (7) Events having a material effect on liabilities or assets. 
Subject to paragraph (g) of this section, in the case of any plan 
amendment, scheduled benefit increase or reduction, or other known event 
taking effect in the current plan year and having a material effect on 
plan liabilities or assets for the year, an explanation of the 
amendment, scheduled benefit increase or reduction, or event, and a 
projection to the end of such plan year of the effect of the amendment, 
scheduled benefit increase or reduction, or event on plan liabilities.
    (8) Rules on termination or insolvency--(i) Single-employer plans. 
In the case of a single-employer plan, a summary of the rules governing 
termination of single-employer plans under subtitle C of title IV of the 
Act.
    (ii) Multiemployer plans. In the case of a multiemployer plan, a 
summary of the rules governing insolvency, including the limitations on 
benefit payments.
    (9) PBGC guarantees. A general description of the benefits under the 
plan which are eligible to be guaranteed by the Pension Benefit Guaranty 
Corporation, along with an explanation of the limitations on the 
guarantee and the circumstances under which such limitations apply.
    (10) Annual report information. A statement that a person entitled 
to notice under paragraph (f) of this section may obtain a copy of the 
annual report of the plan filed under section 104(a) of the Act upon 
request, through the Internet Web site of the Department of

[[Page 395]]

Labor, or through any Intranet Web site maintained by the applicable 
plan sponsor (or plan administrator on behalf of the plan sponsor).
    (11) Information disclosed to PBGC. In the case of a single-employer 
plan, if applicable, a statement that the contributing sponsor of the 
plan or a member of the contributing sponsor's controlled group was 
required to provide information under section 4010 of the Act for the 
information year ending in the notice year (see 29 CFR 4010.5).
    (12) Additional information. Any additional information that the 
plan administrator elects to include, provided that such information is 
necessary or helpful to understanding the mandatory information in the 
notice, or is otherwise permitted by law.
    (c) Style and format of notice. Funding notices shall be written in 
a manner that is consistent with the style and format requirements of 
Sec. 2520.102-2 of this chapter.
    (d) When to furnish notice. (1) Except as provided in paragraph 
(d)(2) of this section, a funding notice shall be provided not later 
than 120 days after the end of the notice year.
    (2) In the case of a small plan, a funding notice shall be provided 
not later than the earlier of the date on which the annual report is 
filed under section 104(a) of the Act or the latest date the annual 
report must be filed under that section (including extensions). For this 
purpose, a single-employer plan is a small plan if it meets the 
exception in section 303(g)(2)(B) of the Act, and a multiemployer plan 
is a small plan if it had 100 or fewer participants on each day during 
the plan year preceding the notice year.
    (e) Manner of furnishing notice. (1) [Reserved.]
    (2) A funding notice must be furnished to the Pension Benefit 
Guaranty Corporation in a manner consistent with the requirements of 
part 4000 of title IV of the Act. The date that the notice is furnished 
to the Pension Benefit Guaranty Corporation is determined consistent 
with that part.
    (f) Persons entitled to notice. Persons entitled to a funding notice 
under this section are:
    (1) Each participant covered under the plan on the last day of the 
notice year;
    (2) Each beneficiary receiving benefits under the plan on the last 
day of the notice year;
    (3) Each alternate payee under the plan on the last day of the 
notice year;
    (4) Each labor organization representing participants under the plan 
on the last day of the notice year;
    (5) In the case of a multiemployer plan, each employer that, as of 
the last day of the notice year, is a party to the collective bargaining 
agreement(s) pursuant to which the plan is maintained or who otherwise 
may be subject to withdrawal liability pursuant to section 4203 of the 
Act; and
    (6) The Pension Benefit Guaranty Corporation.
    (g) Special rules and definitions for material effect disclosures. 
(1) The term ``current plan year'' means the plan year after the notice 
year. Thus, for example, if the notice year is January 1, 2017 through 
December 31, 2017, then the current plan year would be January 1, 2018 
through December 31, 2018.
    (2) An event described in paragraph (b)(7) of this section is 
recognized as ``taking effect'' in the current plan year if the effect 
of the event is taken into account for the first time for funding under 
section 430 or 431 of the Internal Revenue Code, as applicable, in such 
year.
    (3) An event described in paragraph (b)(7) of this section has a 
``material effect'' if it results, or is projected to result, in an 
increase or decrease of five percent or more in the value of assets or 
liabilities from the valuation date of the notice year. For this 
measurement, calculate assets and liabilities in the same manner as 
under paragraph (b)(2) of this section.
    (4) An event described in paragraph (b)(7) of this section has a 
``material effect'' if, in the judgment of the plan's enrolled actuary, 
the effect of the event is considered material for purposes of the 
plan's funding status under section 430 or 431, as applicable, of the 
Internal Revenue Code, without regard to paragraph (g)(3) of this 
section.
    (5) An event described in paragraph (b)(7) of this section is 
``known'' only if it is known by the plan administrator

[[Page 396]]

prior to 120 days before the due date of the notice. Thus, if an event 
otherwise described in paragraph (b)(7) first becomes known to a plan 
administrator 120 days or less before the due date of a notice, the plan 
administrator is not required to explain, or project the effect of, the 
event in that notice.
    (6) The term ``other known event'' includes, but is not limited to, 
an extension of coverage under the existing terms of the plan to a new 
group of employees; a plan merger, consolidation, or spinoff pursuant to 
regulations under section 414(l) of the Internal Revenue Code; or, a 
shutdown of any facility, plant, store, or such other similar corporate 
event that creates immediate eligibility for benefits that would not 
otherwise be immediately payable for participants separating from 
service. The term does not include market fluctuations.
    (7) With respect to events described in paragraph (g)(4) of this 
section, the plan administrator may, instead of projecting the effect on 
plan liabilities to the end of the current plan year, include an 
explanation why the event is considered material by the enrolled 
actuary.
    (8) Example. The following example illustrates the special rules and 
definitions of paragraph (g) of this section:

    Example. Plan Y is a single-employer calendar year plan. Company X, 
the sponsor of Plan Y, adopts an amendment on June 1, 2017, offering a 
subsidized early retirement benefit to participants age 50 or older who 
retire on or after September 1, 2017 and before March 1, 2018. The 
amendment increases the liabilities of Plan Y by an amount greater than 
5% of the value of Plan Y's liabilities on January 1, 2017. Company X 
does not make an election under Code section 412(d)(2) to accelerate 
recognition of the event for funding. The amendment is taken into 
account for the first time under section 430 of the Code as of the 
January 1, 2018 valuation date. Therefore, the amendment is recognized 
as taking effect under the final rule in 2018. Since the amendment 
adopted on June 1, 2017, is known more than 120 days prior to the April 
30, 2018 due date of the 2017 funding notice, the amendment must be 
disclosed in the 2017 funding notice under paragraph (b)(7) of the final 
regulations as a material effect event taking effect in 2018 (i.e., the 
current plan year).

    (h) Model notices. (1) The appendices to this section contain a 
model notice for single-employer plans and a model notice for 
multiemployer plans. These models are intended to assist plan 
administrators in discharging their notice obligations under this 
section. Use of a model notice is not mandatory. However, subject to 
paragraph (h)(2) of this section, use of a model notice will be deemed 
to satisfy the requirements of paragraphs (b)(1) through (b)(11) and 
paragraph (c) of this section.
    (2) To the extent a plan administrator elects to include in a model 
notice information described in paragraph (b)(12) of this section, such 
additional information must be consistent with the style and format 
requirements in paragraph (c) of this section.
    (i) Notice year. For purposes of this section, the term ``notice 
year'' means the plan year to which the notice relates. For example, for 
a calendar year plan that must furnish its 2010 funding notice no later 
than the 120th day of 2011, the ``notice year'' is the 2010 plan year.
    (j) Alternative method of compliance for furnishing notice to PBGC 
for certain single-employer plans. Notwithstanding any other provision 
of this section, the plan administrator of a single-employer plan is not 
required to furnish a notice to the Pension Benefit Guaranty Corporation 
annually if, based on the data described in paragraph (b)(3)(i)(A) of 
this section for the notice year, plan liabilities do not exceed total 
plan assets by more than $50 million, provided that the plan 
administrator furnishes the latest available funding notice to the 
Pension Benefit Guaranty Corporation within 30 days of a written 
request.
    (k) Alternative method of compliance for multiemployer plans 
terminated by mass withdrawal. (1) Notwithstanding any other provision 
of this section, for plan years beginning after the date specified in 
section 4041A(b)(2) of the Act, an alternative method of compliance is 
available in the case of a multiemployer plan that terminates as a 
result of the withdrawal of every employer from the plan or the 
cessation of the obligation of all employers to contribute under the 
plan, as described in section 4041A(a)(2) of the Act. Under this 
alternative method, the plan administrator shall furnish annually to

[[Page 397]]

each person described in paragraph (f)(1) through (3) of this section a 
notice that complies with paragraphs (c), (d), (e), and (k)(2) of this 
section.
    (2) The notice includes:
    (i) A statement of the fair market value of the plan's assets as of 
the last day of the notice year, and as of the last day of each of the 
two preceding plan years as reported in the annual report filed under 
section 104(a) of the Act for each such preceding plan year;
    (ii) A statement of the amount of benefit payments made during the 
notice year and each of the two preceding plan years;
    (iii) If a notice has not already been furnished pursuant to 29 CFR 
4281.32, a statement that benefits may be reduced pursuant to section 
4281(c) of the Act and a summary of the rules governing such reductions;
    (iv) A summary of the rules governing insolvency, including the 
limitations on benefit payments, pursuant to paragraph (b)(8)(ii) of 
this section;
    (v) The information described in paragraphs (b)(1), (b)(9), and 
(b)(10) of this section; and
    (vi) Any additional information that the plan administrator elects 
to include, subject to the requirements of paragraph (b)(12) of this 
section.
    (l) Alternative method of compliance for Internal Revenue Code 
section 412(e)(3) plans. (1) Notwithstanding any other provision of this 
section, an alternative method of compliance is available in the case of 
an insurance contract plan described in section 412(e)(3) of the 
Internal Revenue Code of 1986. Under this alternative method, the plan 
administrator shall furnish annually to each person described in 
paragraph (f) of this section a notice that complies with paragraphs 
(c), (d), (e), and (l)(2) of this section.
    (2) The notice includes:
    (i) An explanation that the plan is funded exclusively by an 
insurance contract or contracts, that such contract or contracts provide 
for the benefit payments to participants and beneficiaries, that such 
benefit payments are guaranteed by a licensed insurance company or 
companies, and the name of the insurance company or companies;
    (ii) A statement whether, as of the last day of the notice year, 
there were any delinquent premiums and, if so, the amount and date of 
the delinquency and the effect on the plan and on participants and 
beneficiaries in the event of a policy lapse;
    (iii) The information described in paragraph (b)(1), (b)(9), and 
(b)(10) of this section; and
    (iv) Any additional information that the plan administrator elects 
to include, provided that such information meets the standard in 
paragraph (b)(12) of this section.
    (m) CSEC plans. [Reserved].

[[Page 398]]

Appendix A to Sec. 2520.101-5--Single-Employer Plan Model Annual Funding 
                                 Notice
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                                 Notice
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[80 FR 5645, Feb. 2, 2015]



Sec. 2520.101-6  Multiemployer pension plan information made available
on request.

    (a) In general. For purposes of compliance with the requirements of 
section 101(k) of the Employee Retirement Income Security Act of 1974, 
as amended (the Act), 29 U.S.C. 1001, et seq., the administrator of a 
multiemployer pension plan shall, in accordance with the requirements of 
this section, furnish copies of reports and applications described in 
paragraph (c) of this section to plan participants, beneficiaries, 
employee representatives and contributing employers, described in 
paragraph (e) of this section.
    (b) Obligation to furnish. (1) Except as provided in paragraph (d) 
of this section, the administrator of a multiemployer pension plan 
shall, not later than 30 days after receipt of a written request for a 
report(s) or application(s) described in paragraph (c) of this section 
from a plan participant, beneficiary, employee representative or 
contributing employer described in paragraph (e) of this section, 
furnish the requested document or documents to the requester.
    (2) The plan administrator shall furnish reports and applications 
pursuant to paragraph (b)(1) of this section in a manner consistent with 
the requirements of 29 CFR 2520.104b-1, including paragraph (c) of that 
section relating to the use of electronic media.
    (3) The plan administrator may impose a reasonable charge to cover 
the costs of furnishing documents pursuant to this section, but in no 
event may such charge exceed--
    (i) The lesser of: (A) The actual cost to the plan for the least 
expensive means of acceptable reproduction of the document(s) or (B) 25 
cents per page; plus
    (ii) The cost of mailing or delivery of the document.
    (c) Documents to be furnished. For purposes of paragraph (a) of this 
section, and subject to paragraph (d) of this section, a plan 
participant, beneficiary, employee representative or contributing 
employer described in paragraph (e) of this section, shall be entitled 
to request and receive a copy of any:
    (1) Periodic actuarial report. For this purpose the term ``periodic 
actuarial report'' means any--
    (i) Actuarial report prepared by an actuary of the plan and received 
by the plan at regularly scheduled, recurring intervals; and
    (ii) Study, test (including a sensitivity test), document, analysis 
or

[[Page 413]]

other information (whether or not called a ``report'') received by the 
plan from an actuary of the plan that depicts alternative funding 
scenarios based on a range of alternative actuarial assumptions, whether 
or not such information is received by the plan at regularly scheduled, 
recurring intervals.
    (2) Quarterly, semi-annual, or annual financial report prepared for 
the plan by any plan investment manager or advisor (without regard to 
whether such advisor is a fiduciary within the meaning of section 3(21) 
of the Act) or other fiduciary; and
    (3) Application filed with the Secretary of the Treasury requesting 
an extension under section 304 of the Act or section 431(d) of the 
Internal Revenue Code of 1986 and the determination of such Secretary 
pursuant to such application.
    (d) Limitations and exceptions. For purposes of this section, 
reports and applications (and related determinations) required to be 
disclosed under this section shall not include:
    (1) Any report or application that was furnished to the requester 
within the 12-month period immediately preceding the date on which the 
request is received by the plan;
    (2) Any report or application that, as of the date on which the 
request is received by the plan, has been in the plan's possession for 6 
years or more;
    (3) Any report described in paragraph (c)(1) and (c)(2) of this 
section that, as of the date on which the request is received by the 
plan, has not been in the plan's possession for at least 30 days; except 
that, if the plan administrator elects not to furnish any such document, 
the administrator shall furnish a notice, not later than 30 days after 
the date on which request is received by the plan, informing the 
requester of the existence of the document and the earliest date on 
which the document can be furnished by the plan.
    (4) Any information or data which served as the basis for any report 
or application described in paragraph (c) of this section, although 
nothing herein shall limit any other right that a person may have to 
review or obtain such information under the Act; or
    (5)(i) Any information within a report or application that the plan 
administrator reasonably determines to be either:
    (A) individually identifiable information with respect to any plan 
participant, beneficiary, employee, fiduciary, or contributing employer, 
except that such limitation shall not apply to an investment manager, 
adviser, or other person (other than an employee of the plan) preparing 
a financial report described in paragraph (c)(2) of this section; or
    (B) proprietary information regarding the plan, any contributing 
employer, or entity providing services to the plan.
    (ii) For purposes of paragraph (d)(5)(i)(B) of this section, the 
term ``proprietary information'' means trade secrets and other non-
public information (e.g., processes, procedures, formulas, 
methodologies, techniques, strategies) that, if disclosed by the plan, 
may cause, or increase a reasonable risk of, financial harm to the plan, 
a contributing employer, or entity providing services to the plan.
    (iii) The plan administrator may treat information relating to a 
contributing employer or entity providing services to the plan as other 
than proprietary if the contributing employer or service provider has 
not identified such information as proprietary.
    (iv) A plan administrator shall inform the requester if the plan 
administrator withholds any information described in paragraph (d)(5)(i) 
of this section from a report or application requested under paragraph 
(b) of this section.
    (e) Persons entitled to request documents. For purposes of this 
section, a plan participant, beneficiary, employee representative or 
contributing employer entitled to request and receive reports and 
applications includes:
    (1) Any participant within the meaning of section 3(7) of the Act;
    (2) Any beneficiary receiving benefits under the plan;
    (3) Any labor organization representing participants under the plan;
    (4) Any employer that is a party to the collective bargaining 
agreement(s) pursuant to which the plan is maintained or who otherwise 
may be subject

[[Page 414]]

to withdrawal liability pursuant to section 4203 of the Act.

[75 FR 9341, Mar. 2, 2010]



  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, 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

[[Page 415]]

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 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

[[Page 416]]

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;
    (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,

[[Page 417]]

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 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

[[Page 418]]

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 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 benefit 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.

[[Page 419]]

    (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, 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

[[Page 420]]

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 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.

[[Page 421]]

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 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) In 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 simplified report, 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 subsections 104(a)(2), 104(a)(3) and 110 
of the Act, and section 1103(b) of the Pension Protection Act of 2006, a 
simplified report, limited exemption or alternative method of compliance 
is prescribed for employee welfare and pension benefit plans, as 
applicable. A plan filing a simplified report or electing the limited 
exemption or alternative method of compliance shall file an annual 
report containing the information prescribed in paragraph (b) or 
paragraph (c) of this section, as applicable, 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) and paragraph (f) 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

[[Page 422]]

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 SB (Single-Employer Defined 
Benefit Plan Actuarial Information), Schedule MB (Multiemployer Defined 
Benefit Plan and Certain Money Purchase Plan 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 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:
    (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 required 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

[[Page 423]]

    (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 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. (1) Except as provided in paragraph (c)(2), paragraph (d) 
and paragraph (f) of this section, and in Secs. 2520.104-43, 2520.104a-
6, and 2520.104-44, the annual report of an employee benefit plan that 
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 SB (Single 
Employer Defined Benefit Plan Actuarial Information), Schedule MB 
(Multiemployer Defined Benefit Plan and Certain Money Purchase Plan 
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.
    (2)(i) The annual report of an employee benefit plan that covers 
fewer than 100 participants at the beginning of the plan year and that 
meets the conditions in paragraph (c)(2)(ii) of this section with 
respect to a plan year may, as an alternative to the requirements of 
paragraph (c)(1) of this section, meet its annual reporting requirements 
by filing the Form 5500-SF ``Short Form Annual Return/Report of Small 
Employee Benefit Plan'' and any statements or schedules required to be 
attached to the form, including Schedule SB (Single Employer Defined 
Benefit Plan Actuarial Information) and Schedule MB (Multiemployer 
Defined Benefit Plan and Certain Money Purchase Plan Actuarial 
Information), completed in accordance with the instructions for the 
form. See the instructions for this form.
    (ii) A plan meets the conditions in this paragraph (c)(2)(ii) with 
respect to the year if the plan:
    (A) Does not hold any employer securities at any time during the 
year;
    (B) Satisfies the audit waiver conditions in Secs. 2520.104-
46(b)(1)(i)(A)(1), (b)(1)(i)(B) and (b)(1)(i)(C);
    (C) Had at all times during the plan year 100 percent of the plan's 
assets held for investment purposes invested in assets that have a 
readily determinable fair market value. For purposes of this section, 
the following shall be treated as assets that have a readily 
determinable fair market value: Shares issued by an investment company 
registered under the Investment Company Act of 1940; investment and 
annuity contracts issued by any insurance company, qualified to do 
business under the laws of a State, that provides valuation information 
at least

[[Page 424]]

annually to the plan administrator; bank investment contracts issued by 
a bank or similar financial institution, as defined in Sec. 2550.408b-
4(c) of this chapter, that provides valuation information at least 
annually to the plan administrator; securities (except employer 
securities) traded on a public exchange; government securities issued by 
the United States or by a State; cash or cash equivalents held by a bank 
or similar financial institution, as defined in Sec. 2550.408b-4(c) of 
this chapter, by an insurance company, qualified to do business under 
the law of a State, by an organization registered as a broker-dealer 
under the Securities Exchange Act of 1934, or by any other organization 
authorized to act as a trustee for individual retirement accounts under 
section 408 of the Internal Revenue Code; and any loan meeting the 
requirements of section 408(b)(1) of the Act and the regulations issued 
thereunder;
    (D) Is not a multiemployer plan; and
    (E) Is not a plan subject to the Form M-1 requirements under 
Sec. 2520.101-2 (Filing by Multiple Employer Welfare Arrangements and 
Certain Other Related Entities).
    (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) Plans subject to the Form M-1 filing requirements under 
Sec. 2520.101-2. The annual report of an employee welfare benefit plan 
that is subject to the Form M-1 requirements under Sec. 2520.101-2 
(Filing by Multiple Employer Welfare Arrangements and Certain Other 
Related Entities) during the plan year shall also include any statements 
or information required by the instructions to the Form 5500 relating to 
compliance with the Form M-1 filing requirements under Sec. 2520.101-2.
    (g) Electronic filing. See Sec. 2520.104a-2 and the instructions for 
the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for 
electronic filing requirements. The plan administrator must maintain 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; 71 FR 41368, July 21, 2006; 72 FR 
64727, Nov. 16, 2007; 78 FR 13796, Mar. 1, 2013]



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

[[Page 425]]

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.
    (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

[[Page 426]]

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 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. See Sec. 2520.104a-2 and the instructions for 
the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for 
electronic filing requirements. The trust or other entity described in 
Sec. 2520.104-43(b) filing under this section must maintain an original 
copy, with all required signatures, as part of its records.

[43 FR 10140, Mar. 10, 1978, as amended at 54 FR 8627, Mar. 1, 1989; 65 
FR 21080, Apr. 19, 2000; 71 FR 41368, July 21, 2006]



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

[[Page 427]]

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, 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

[[Page 428]]

pooled separate account and the 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 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 429]]

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 Sec. 2520.104a-5 or Sec. 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 Sec. 2520.104a-5 or Sec. 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 430]]

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 431]]

    (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 432]]

    (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 433]]

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 434]]

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) Electronic filing. See Sec. 2520.104a-2 and the instructions for 
the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for 
electronic filing requirements. The bank or insurance company which 
maintains the common or collective trust or pooled separate account must 
maintain an original copy, with all required signatures, as part of its 
records.

[65 FR 21082, Apr. 19, 2000, as amended at 71 FR 41368, July 21, 2006]



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 435]]

    (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 436]]

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 437]]

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) Electronic filing. See Sec. 2520.104a-2 and the instructions for 
the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' for 
electronic filing requirements. The entity described in paragraph (c) of 
this section must maintain 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; 
71 FR 41368, July 21, 2006]



Sec. 2520.103-13  Special terminal report for abandoned plans.

    (a) General. The terminal report required to be filed by the 
qualified termination administrator pursuant to Sec. 2578.1(d)(2)(viii) 
of this chapter shall consist of the items set forth in paragraph (b) of 
this section. Such report shall be filed in accordance with the method 
of filing set forth in paragraph (c) of this section and at the time set 
forth in paragraph (d) of this section.
    (b) Contents. The terminal report described in paragraph (a) of this 
section shall contain:
    (1) Identification information concerning the qualified termination 
administrator and the plan being terminated.
    (2) The total assets of the plan as of the date the plan was deemed 
terminated under Sec. 2578.1(c) of this chapter, prior to any reduction 
for termination expenses and distributions to participants and 
beneficiaries.
    (3) The total termination expenses paid by the plan and a separate 
schedule identifying each service provider and amount received, itemized 
by expense.
    (4) The total distributions made pursuant to Sec. 2578.1(d)(2)(vii) 
of this chapter and a statement regarding whether any such distributions 
were transfers under Sec. 2578.1(d)(2)(vii)(B) of this chapter.
    (5) The identification, fair market value and method of valuation of 
any assets with respect to which there is no readily ascertainable fair 
market value.
    (c) Method of filing. The terminal report described in paragraph (a) 
shall be filed:
    (1) On the most recent Form 5500 available as of the date the 
qualified termination administrator satisfies the requirements in 
Sec. 2578.1(d)(2)(i) through Sec. 2578.1(d)(2)(vii) of this chapter; and
    (2) In accordance with the Form's instructions pertaining to 
terminal reports of qualified termination administrators.
    (d) When to file. The qualified termination administrator shall file 
the terminal report described in paragraph (a) within two months after 
the end of the month in which the qualified termination administrator 
satisfies the requirements in Sec. 2578.1(d)(2)(i) through 
Sec. 2578.1(d)(2)(vii) of this chapter.
    (e) Limitation. (1) Except as provided in this section, no report 
shall be required to be filed by the qualified termination administrator 
under part 1 of

[[Page 438]]

title I of ERISA for a plan being terminated pursuant to Sec. 2578.1 of 
this chapter.
    (2) Filing of a report under this section by the qualified 
termination administrator shall not relieve any other person from any 
obligation under part 1 of title I of ERISA.

[71 FR 20853, Apr. 21, 2006]



    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]



Secs. 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:
    (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]

[[Page 439]]



Secs. 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;
    (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; and
    (4) Which are not subject to the Form M-1 requirements under 
Sec. 2520.101-2 (Filing by Multiple Employer Welfare Arrangements and 
Certain Other Related Entities).
    (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

[[Page 440]]

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; 78 FR 13796, Mar. 1, 2013]



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 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

[[Page 441]]

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;
    (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

[[Page 442]]

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 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

[[Page 443]]

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 (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

[[Page 444]]

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 described in Sec. 2520.104a-5, a completed Form 5500 ``Annual 
Return/Report of Employee Benefit Plan'' including, if applicable, the 
information described in Sec. 2520.103-1(f) or, to the extent eligible, 
a completed Form 5500-SF ``Short Form Annual Return/Report of Small 
Employee Benefit Plan,'' and any required schedules or statements 
prescribed by the instructions to the applicable form, and, unless 
waived by Sec. 2520.104-44 or Sec. 2520.104-46, a report of an 
independent qualified public 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; 78 FR 13796, Mar. 1, 2013]



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]

[[Page 445]]



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 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; and
    (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,

[[Page 446]]

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.
    (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; 72 FR 64728, Nov. 16, 2007]



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 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) or, 
in the case of plans subject to section 101(f) of the Act, the annual 
funding notice (described in Sec. 2520.101-5), includes, in addition to 
any other required information:
    (1) Except for qualifying plan assets described in paragraph 
(b)(1)(ii)(A), (B)

[[Page 447]]

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 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

[[Page 448]]

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.
    (e) Model notice. The appendix to this section contains model 
language for inclusion in the summary annual report to assist plan 
administrators in complying with the requirements of paragraph 
(b)(1)(i)(B) of this section to avail themselves of the waiver of 
examination and report of the independent qualified public accountant 
for employee benefit plans with fewer than 100 participants. Use of the 
model language is not mandatory. In order to use the model language in 
the plan's summary annual report, administrators must, in addition to 
any other information required to be in the summary annual report, 
select among alternative language and add relevant information where 
appropriate in the model language. Items of information that are not 
applicable to a particular plan may be deleted. Use of the model 
language, appropriately modified and supplemented, will be deemed to 
satisfy the notice content requirements of paragraph (b)(1)(i)(B) of 
this section.

 Appendix to Sec. 2520.104-46--Model Summary Annual Report Notice (Plan 
Administrators Will Need to Modify the Model to Omit Information That Is 
                       Not Applicable to the Plan)

    The U.S. Department of Labor's regulations require that an 
independent qualified public accountant audit the plan's financial 
statements unless certain conditions are met for the audit requirement 
to be waived. This plan met the audit waiver conditions for the plan 
year beginning (insert year) and therefore has not had an audit 
performed. Instead, the following information is provided to assist you 
in verifying that the assets reported on the (Form 5500 or Form 5500-
SF--select as applicable) were actually held by the plan.
    At the end of the (insert year) plan year, the plan had (include 
separate entries for

[[Page 449]]

each regulated financial institution holding or issuing qualifying plan 
assets):
    [Set forth amounts and names of institutions as applicable where 
indicated], [(insert $ amount) in assets held by (insert name of bank)], 
[(insert $ amount) in securities held by (insert name of registered 
broker-dealer)], [(insert $ amount) in shares issued by (insert name of 
registered investment company)], [(insert $ amount) in investment or 
annuity contract issued by (insert name of insurance company)].
    The plan receives year-end statements from these regulated financial 
institutions that confirm the above information. [Insert as applicable--
The remainder of the plan's assets were (1) qualifying employer 
securities, (2) loans to participants, (3) held in individual 
participant accounts with investments directed by participants and 
beneficiaries and with account statements from regulated financial 
institutions furnished to the participant or beneficiary at least 
annually, or (4) other assets covered by a fidelity bond at least equal 
to the value of the assets and issued by an approved surety company.]
    Plan participants and beneficiaries have a right, on request and 
free of charge, to get copies of the financial institution year-end 
statements and evidence of the fidelity bond. If you want to examine or 
get copies of the financial institution year-end statements or evidence 
of the fidelity bond, please contact [insert mailing address and any 
other available way to request copies such as e-mail and phone number].
    If you are unable to obtain or examine copies of the regulated 
financial institution statements or evidence of the fidelity bond, you 
may contact the regional office of the U.S. Department of Labor's 
Employee Benefits Security Administration (EBSA) for assistance by 
calling toll-free 1.866.444.EBSA (3272). A listing of EBSA regional 
offices can be found at http://www.dol.gov/ebsa.
    General information regarding the audit waiver conditions applicable 
to the plan can be found on the U.S. Department of Labor Web site at 
http://www.dol.gov/ebsa under the heading ``Frequently Asked 
Questions.''

[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; 72 FR 64728, Nov. 16, 2007; 80 FR 
5663, Feb. 2, 2015]



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

[[Page 450]]

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:
    (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

[[Page 451]]

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 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

[[Page 452]]

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 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]



Sec. 2520.104a-2  Electronic filing of annual reports.

    (a) Any annual report (including any accompanying statements or 
schedules) filed with the Secretary under part 1 of title I of the Act 
for any plan year (reporting year, in the case of common or collective 
trusts, pooled separate accounts, and similar non-plan entities) 
beginning on or after January 1, 2009, shall be filed electronically in 
accordance with the instructions applicable to such report, and such 
other guidance as the Secretary may provide.
    (b) Nothing in paragraph (a) of this section is intended to alter or 
affect the duties of any person to retain records or to disclose 
information to participants, beneficiaries, or the Secretary.

[71 FR 41368, July 21, 2006, as amended at 72 FR 64729, Nov. 16, 2007]

[[Page 453]]



Secs. 2520.104a-3--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 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.

[[Page 454]]

    (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 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

[[Page 455]]

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 
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

[[Page 456]]

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 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;

[[Page 457]]

    (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, 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.

[[Page 458]]

    (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.
    (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

[[Page 459]]

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 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

[[Page 460]]

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 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

[[Page 461]]

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 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

[[Page 462]]

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 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

[[Page 463]]

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 $  
  ).

                  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 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:]

[[Page 464]]

                          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 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

[[Page 465]]

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;
    (8) A dues financed pension plan which meets the requirements of 29 
CFR 2520.104-27; and
    (9) A plan to which title IV of the Act applies.

  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   Form 5500-SF filer line
               SAR item                    filer line items         filer line items              items
----------------------------------------------------------------------------------------------------------------
A. PENSION PLAN:
    1. Funding arrangement...........  Form 5500-9a...........  Same...................  Not applicable.
    2. Total plan expenses...........  Sch. H-2j..............  Sch. I-2j..............  Line 8h.
    3. Administrative expenses.......  Sch. H-2i(5)...........  Sch. I-2h..............  Line 8f.
    4. Benefits paid.................  Sch. H-2e(4)...........  Sch. I-2e..............  Line 8d.
    5. Other expenses................  Sch. H-Subtract the sum  Sch. I-2i..............  Line 8g.
                                        of 2e(4) & 2i(5) from
                                        2j.
    6. Total participants............  Form 5500-6f...........  Same...................  Line 5b.
    7. Value of plan assets (net):...  Sch. H-1l [Col. (b)]...  Sch. I-1c [Col. (b)]...  Line 7c [Col. (b)].
        a. End of plan year..........
        b. Beginning of plan year....  Sch. H-1l [Col. (a)]...  Sch. I-1c [Col. (a)]...  Line 7c [Col. (a)].
    8. Change in net assets..........  Sch. H-Subtract 1l       Sch. I-Subtract 1c       Line 7c-Subtract Col.
                                        [Col. (a)] from 1l       [Col. (a) from Col.      (a) from Col. (b).
                                        [Col. (b)].              (b)].
    9. Total income..................  Sch. H-2d..............  Sch. I-2d..............  Line 8c.
        a. Employer contributions....  Sch. H-2a(1)(A) & 2a(2)  Sch. I-2a(1) & 2b if     Line 8a(1) if
                                        if applicable.           applicable.              applicable.
        b. Employee contributions....  Sch. H-2a(1)(B) & 2a(2)  Sch. I-2a(2) & 2b if     Line 8a(2) & 8a(3) if
                                        if applicable.           applicable.              applicable.
        c. Gains (losses) from sale    Sch. H-2b(4)(C)........  Not applicable.........  Not applicable.
         of assets.
        d. Earnings from investments.  Sch. H-Subtract the sum  Sch. I-2c..............  Line 8b.
                                        of 2a(3), 2b(4)(C) and
                                        2c from 2d.
    10. Total insurance premiums.....  Total of all Schs. A-6b  Total of all Schs. A-6b  Not applicable.
    11. Unpaid minimum required        Sch. SB-39.............  Same...................  Same.
     contribution (S-E plans) or
     Funding deficiency (ME plans):.
        a. S-E Defined benefit plans.
        b. ME Defined benefit plans..  Sch. MB-10.............  Same...................  Not applicable.
        c. Defined contribution plans  Sch. R-6c, if more than  Same...................  Line 12d.
                                        zero.
B. WELFARE PLAN
    1. Name of insurance carrier.....  All Schs. A-1(a).......  Same...................  Not applicable.

[[Page 466]]

 
    2. Total (experience rated and     All Schs. A-Sum of       Same...................  Not applicable.
     non-experienced rated) insurance   9a(1) and 10a.
     premiums.
    3. Experience rated premiums.....  All Schs. A-9a(1)......  Same...................  Not applicable.
    4. Experience rated claims.......  All Schs. A-9b(4)......  Same...................  Not applicable.
    5. Value of plan assets (net):...  Sch. H-1l [Col. (b)]...  Sch. I-1c [Col. (b)]...  Line 7c [Col. (b)].
        a. End of plan year..........
        b. Beginning of plan year....  Sch. H-1l [Col. (a)]...  Sch. I-1c [Col. (a)]...  Line 7c [Col. (a)].
    6. Change in net assets..........  Sch. H-Subtract 1l       Sch. I-Subtract 1c       Line 7c-Subtract [Col.
                                        [Col. (a)] from 1l       [Col. (a)] from 1c       (a)] from 7c [Col.
                                        [Col. (b)].              [Col. (b)].              (b)].
    7. Total income..................  Sch. H-2d..............  Sch. I-2d..............  Line 8c
        a. Employer contributions....  Sch. H-2a(1)(A) & 2a(2)  Sch. I-2a(1) & 2b if     Line 8a(1) if
                                        if applicable.           applicable.              applicable.
        b. Employee contributions....  Sch. H-2a(1)(B) & 2a(2)  Sch. I-2a(2) & 2b if     Line 8a(2) if
                                        if applicable.           applicable.              applicable.
        c. Gains (losses) from sale    Sch. H-2b(4)(C)........  Not applicable.........  Not applicable.
         of assets.
        d. Earnings from investments.  Sch. H-Subtract the sum  Sch. I-2c..............  Line 8b.
                                        of 2a(3), 2b(4)(C) and
                                        2c from 2d.
    8. Total plan expenses...........  Sch. H-2j..............  Sch. I-2j..............  Line 8h.
    9. Administrative expenses.......  Sch. H-2i(5)...........  Sch. I-2h..............  Line 8f.
    10. Benefits paid................  Sch. H-2e(4)...........  Sch. I-2e..............  Line 8d.
    11. Other expenses...............  Sch. H-Subtract the sum  Sch. I-2i..............  Line 8g.
                                        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; 72 FR 64729, 
Nov. 16, 2007; 80 FR 5663, Feb. 2, 2015]



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. Except where explicitly permitted 
under the Act, 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

[[Page 467]]

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 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; 
75 FR 9342, Mar. 2, 2010]



                  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 468]]



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  [Reserved]
2530.206  Time and order of issuance of domestic relations orders.

          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. Section 2530.206 also issued under sec. 
1001, Pub. L. 109-280, 120 Stat. 780.

    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

[[Page 469]]

of the Act and Secs. 2510.3-2, 2510.3-3, 2530.201-1 and 2530.201-2.



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

[[Page 470]]

equivalencies which a plan may use under Sec. 2530.200b-3 to determine 
the 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 471]]

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 472]]

    (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 classifications, 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 473]]

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 474]]

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 475]]

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 476]]

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 477]]

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 478]]

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 479]]

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 480]]

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 481]]

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 482]]

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 483]]

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 484]]

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 485]]

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 486]]

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 487]]

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 488]]

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 489]]

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 490]]

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 491]]

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 492]]

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 493]]

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 494]]

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 495]]

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 496]]

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 497]]

--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 498]]

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 499]]

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 500]]

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 501]]

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 502]]

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  .02  x  20 
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  .02  x  20 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  .02  x  10 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  .02  x  10 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 503]]

    (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



Sec. 2530.205  [Reserved]



Sec. 2530.206  Time and order of issuance of domestic relations orders.

    (a) Scope. This section implements section 1001 of the Pension 
Protection Act of 2006 by clarifying certain timing issues with respect 
to domestic relations orders and qualified domestic relations orders 
under the Employee Retirement Income Security Act of 1974, as amended 
(ERISA), 29 U.S.C. 1001 et seq. The examples herein illustrate the

[[Page 504]]

application of this section in certain circumstances. This section also 
applies in circumstances not described in the examples.
    (b) Subsequent domestic relations orders. (1) Subject to paragraph 
(d)(1) of this section, a domestic relations order shall not fail to be 
treated as a qualified domestic relations order solely because the order 
is issued after, or revises, another domestic relations order or 
qualified domestic relations order.
    (2) The rule described in paragraph (b)(1) of this section is 
illustrated by the following examples:

    Example (1). Subsequent domestic relations order between the same 
parties. Participant and Spouse divorce, and the administrator of 
Participant's 401(k) plan receives a domestic relations order. The 
administrator determines that the order is a QDRO. The QDRO allocates a 
portion of Participant's benefits to Spouse as the alternate payee. 
Subsequently, before benefit payments have commenced, Participant and 
Spouse seek and receive a second domestic relations order. The second 
order reduces the portion of Participant's benefits that Spouse was to 
receive under the QDRO. The second order does not fail to be treated as 
a QDRO solely because the second order is issued after, and reduces the 
prior assignment contained in, the first order. The result would be the 
same if the order were instead to increase the prior assignment 
contained in the first order.
    Example (2). Subsequent domestic relations order between different 
parties. Participant and Spouse 1 divorce and the administrator of 
Participant's 401(k) plan receives a domestic relations order. The 
administrator determines that the order is a QDRO. The QDRO allocates a 
portion of Participant's benefits to Spouse 1 as the alternate payee. 
Participant marries Spouse 2, and then they divorce. Participant's 
401(k) plan administrator subsequently receives a domestic relations 
order pertaining to Spouse 2. The order assigns to Spouse 2 a portion of 
Participant's 401(k) benefits not already allocated to Spouse 1. The 
second order does not fail to be a QDRO solely because the second order 
is issued after the plan administrator has determined that an earlier 
order pertaining to Spouse 1 is a QDRO.

    (c) Timing. (1) Subject to paragraph (d)(1) of this section, a 
domestic relations order shall not fail to be treated as a qualified 
domestic relations order solely because of the time at which it is 
issued.
    (2) The rule described in paragraph (c)(1) of this section is 
illustrated by the following examples:

    Example (1). Orders issued after death. Participant and Spouse 
divorce, and the administrator of Participant's plan receives a domestic 
relations order, but the administrator finds the order deficient and 
determines that it is not a QDRO. Shortly thereafter, Participant dies 
while actively employed. A second domestic relations order correcting 
the defects in the first order is subsequently submitted to the plan. 
The second order does not fail to be treated as a QDRO solely because it 
is issued after the death of the Participant. The result would be the 
same even if no order had been issued before the Participant's death, in 
other words, the order issued after death were the only order.
    Example (2). Orders issued after divorce. Participant and Spouse 
divorce. As a result, Spouse no longer meets the definition of 
``surviving spouse'' under the terms of the plan. Subsequently, the plan 
administrator receives a domestic relations order requiring that Spouse 
be treated as the Participant's surviving spouse for purposes of 
receiving a death benefit payable under the terms of the plan only to a 
participant's surviving spouse. The order does not fail to be treated as 
a QDRO solely because, at the time it is issued, Spouse no longer meets 
the definition of a ``surviving spouse'' under the terms of the plan.
    Example (3). Orders issued after annuity starting date. Participant 
retires and begins receipt of benefits in the form of a straight life 
annuity, equal to $1,000 per month, and with respect to which Spouse has 
consented to the waiver of the surviving spousal rights provided under 
the plan and section 205 of ERISA. Subsequent to the commencement of 
benefits (in other words, subsequent to the annuity starting date as 
defined in section 205(h)(2) of ERISA and as further explained in 26 CFR 
1.401(a)-20, Q&A-10(b)), Participant and Spouse divorce and present the 
plan with a domestic relations order requiring 50 percent ($500) of 
Participant's future monthly annuity payments under the plan to be paid 
instead to Spouse, as an alternate payee (so that monthly payments of 
$500 are to be made to Spouse during Participant's lifetime). Pursuant 
to paragraph (c)(1) of this section, the order does not fail to be a 
QDRO solely because it is issued after the annuity starting date. If the 
order instead had required payments to Spouse for the lifetime of 
Spouse, this would constitute a reannuitization with a new annuity 
starting date, rather than merely allocating to Spouse a part of the 
determined annuity payments due to Participant, so that the order, while 
not failing to be a QDRO because of the timing of the order, would fail 
to meet the requirements of section 206(d)(3)(D)(i) of ERISA (unless the 
plan otherwise permits such a change after the participant's annuity 
starting date). See 29 CFR 2530.206(d)(2), Example (4).


[[Page 505]]


    (d) Requirements and protections. (1) Any domestic relations order 
described in this section shall be a qualified domestic relations order 
only if the order satisfies the same requirements and protections that 
apply under section 206(d)(3) of ERISA.
    (2) The rule described in paragraph (d)(1) of this section is 
illustrated by the following examples:

    Example (1). Type or form of benefit. Participant and Spouse 
divorce, and their divorce decree provides that the parties will prepare 
a domestic relations order assigning 50 percent of Participant's 
benefits under a 401(k) plan to Spouse to be paid in monthly 
installments over a 10-year period. Shortly thereafter, Participant dies 
while actively employed. A domestic relations order consistent with the 
divorce decree is subsequently submitted to the 401(k) plan; however, 
the plan does not provide for 10-year installment payments of the type 
described in the order. Pursuant to paragraph (c)(1) of this section, 
the order does not fail to be treated as a QDRO solely because it is 
issued after the death of Participant, but the order would fail to be a 
QDRO under section 206(d)(3)(D)(i) and paragraph (d)(1) of this section 
because the order requires the plan to provide a type or form of 
benefit, or any option, not otherwise provided under the plan.
    Example (2). Segregation of payable benefits. Participant and Spouse 
divorce, and the administrator of Participant's plan receives a domestic 
relations order under which Spouse would begin to receive benefits 
immediately if the order is determined to be a QDRO. The plan 
administrator separately accounts for the amounts covered by the 
domestic relations order as is required under section 206(d)(3)(H)(v) of 
ERISA. The plan administrator finds the order deficient and determines 
that it is not a QDRO. Subsequently, after the expiration of the 
segregation period pertaining to that order, the plan administrator 
receives a second domestic relations order relating to the same parties 
under which Spouse would begin to receive benefits immediately if the 
second order is determined to be a QDRO. Notwithstanding the expiration 
of the first segregation period, the amounts covered by the second order 
must be separately accounted for by the plan administrator for an 18-
month period, in accordance with section 206(d)(3)(H) of ERISA and 
paragraph (d)(1) of this section.
    Example (3). Previously assigned benefits. Participant and Spouse 1 
divorce, and the administrator of Participant's 401(k) plan receives a 
domestic relations order. The administrator determines that the order is 
a QDRO. The QDRO assigns a portion of Participant's benefits to Spouse 1 
as the alternate payee. Participant marries Spouse 2, and then they 
divorce. Participant's 401(k) plan administrator subsequently receives a 
domestic relations order pertaining to Spouse 2. The order assigns to 
Spouse 2 a portion of Participant's 401(k) benefits already assigned to 
Spouse 1. The second order does not fail to be treated as a QDRO solely 
because the second order is issued after the plan administrator has 
determined that an earlier order pertaining to Spouse 1 is a QDRO. The 
second order, however, would fail to be a QDRO under section 
206(d)(3)(D)(iii) and paragraph (d)(1) of this section because it 
assigns to Spouse 2 all or a portion of Participant's benefits that are 
already assigned to Spouse 1 by the prior QDRO.
    Example (4). Type or form of benefit. Participant retires and 
commences benefit payments in the form of a straight life annuity based 
on the life of Participant, with respect to which Spouse consents to the 
waiver of the surviving spousal rights provided under the plan and 
section 205 of ERISA. Participant and Spouse divorce after the annuity 
starting date and present the plan with a domestic relations order that 
eliminates the straight life annuity based on Participant's life and 
provides for Spouse, as alternate payee, to receive all future benefits 
in the form of a straight life annuity based on the life of Spouse. The 
plan does not allow reannuitization with a new annuity starting date, as 
defined in section 205(h)(2) of ERISA (and as further explained in 26 
CFR 1.401(a)-20, Q&A-10(b)). Pursuant to paragraph (c)(1) of this 
section, the order does not fail to be a QDRO solely because it is 
issued after the annuity starting date, but the order would fail to be a 
QDRO under section 206(d)(3)(D)(i) and paragraph (d)(1) of this section 
because the order requires the plan to provide a type or form of 
benefit, or any option, not otherwise provided under the plan. However, 
the order would not fail to be a QDRO under section 206(d)(3)(D)(i) and 
paragraph (d)(1) of this section if instead it were to require all of 
Participant's future payments under the plan to be paid instead to 
Spouse, as an alternate payee (so that payments that would otherwise be 
paid to the Participant during the Participant's lifetime are instead to 
be made to the Spouse during the Participant's lifetime).

[75 FR 32850, June 10, 2010]

[[Page 506]]



          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 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

[[Page 507]]

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 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.


[[Page 508]]


    (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 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.

[[Page 509]]

                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.
    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

[[Page 510]]

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.
                   (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 511]]



  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.
2550.404a-2  Safe harbor for automatic rollovers to individual 
          retirement plans.
2550.404a-3  Safe harbor for distributions from terminated individual 
          account plans.
2550.404a-4  Selection of annuity providers--safe harbor for individual 
          account plans.
2550.404a-5  Fiduciary requirements for disclosure in participant-
          directed individual account plans.
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.
2550.404c-5  Fiduciary relief for investments in qualified default 
          investment alternatives.
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.
2550.408b-19  Statutory exemption for cross-trading of securities.
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.
2550.408g-1  Investment advice--participants and beneficiaries.
2550.408g-2  Investment advice--fiduciary election.
2550.412-1  Temporary bonding requirements.

    Authority: 29 U.S.C. 1135 and Secretary of Labor's Order No. 1-2011, 
77 FR 1088 (January 9, 2012). Sec. 102, Reorganization Plan No. 4 of 
1978, 5 U.S.C. App. at 727 (2012). Sec. 2550.401c-1 also issued under 29 
U.S.C. 1101. Sec. 2550.404a-1 also issued under sec. 657, Pub. L. 107-
16, 115 Stat 38. Sec. 2550.404a-2 also issued under sec. 657 of Pub. L. 
107-16, 115 Stat. 38. Sections 2550.404c-1 and 2550.404c-5 also issued 
under 29 U.S.C. 1104. Sec. 2550.408b-1 also issued under 29 U.S.C. 
1108(b)(1). Sec. 2550.408b-19 also issued under sec. 611, Pub. L. 109-
280, 120 Stat. 780, 972. 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

[[Page 512]]

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.
    (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

[[Page 513]]

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 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

[[Page 514]]

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 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,

[[Page 515]]

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 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

[[Page 516]]

(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.
    (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.

[[Page 517]]

    (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.
    (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

[[Page 518]]

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 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

[[Page 519]]

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
    (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

[[Page 520]]

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
    (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 investment 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

[[Page 521]]

    (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.
    (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. 2550.404a-2  Safe harbor for automatic rollovers to individual 
retirement plans.

    (a) In general. (1) Pursuant to section 657(c) of the Economic 
Growth and Tax Relief Reconciliation Act of 2001, Public Law 107-16, 
June 7, 2001, 115 Stat. 38, this section provides a safe harbor under 
which a fiduciary of an employee pension benefit plan subject to Title I 
of the Employee Retirement Income Security Act of 1974, as amended (the 
Act), 29 U.S.C. 1001 et seq., will be deemed to have satisfied his or 
her fiduciary duties under section 404(a) of the Act in connection with 
an automatic rollover of a mandatory distribution described in section 
401(a)(31)(B) of the Internal Revenue Code of 1986, as amended (the 
Code). This section also provides a safe harbor for certain other 
mandatory distributions not described in section 401(a)(31)(B) of the 
Code.
    (2) The standards set forth in this section apply solely for 
purposes of determining whether a fiduciary meets the requirements of 
this safe harbor. Such standards are not intended to be the exclusive 
means by which a fiduciary might satisfy his or her responsibilities 
under the Act with respect to rollovers of mandatory distributions 
described in paragraphs (c) and (d) of this section.
    (b) Safe harbor. A fiduciary that meets the conditions of paragraph 
(c) or paragraph (d) of this section is deemed to have satisfied his or 
her duties under section 404(a) of the Act with respect to both the 
selection of an individual retirement plan provider and the investment 
of funds in connection with the rollover of mandatory distributions 
described in those paragraphs to an individual retirement plan, within 
the meaning of section 7701(a)(37) of the Code.
    (c) Conditions. With respect to an automatic rollover of a mandatory 
distribution described in section 401(a)(31)(B) of the Code, a fiduciary 
shall qualify for the safe harbor described in paragraph (b) of this 
section if:
    (1) The present value of the nonforfeitable accrued benefit, as 
determined under section 411(a)(11) of the Code, does not exceed the 
maximum amount under section 401(a)(31)(B) of the Code;
    (2) The mandatory distribution is to an individual retirement plan 
within the meaning of section 7701(a)(37) of the Code;
    (3) In connection with the distribution of rolled-over funds to an 
individual retirement plan, the fiduciary

[[Page 522]]

enters into a written agreement with an individual retirement plan 
provider that provides:
    (i) The rolled-over funds shall be invested in an investment product 
designed to preserve principal and provide a reasonable rate of return, 
whether or not such return is guaranteed, consistent with liquidity;
    (ii) For purposes of paragraph (c)(3)(i) of this section, the 
investment product selected for the rolled-over funds shall seek to 
maintain, over the term of the investment, the dollar value that is 
equal to the amount invested in the product by the individual retirement 
plan;
    (iii) The investment product selected for the rolled-over funds 
shall be offered by a state or federally regulated financial 
institution, which shall be: A bank or savings association, the deposits 
of which are insured by the Federal Deposit Insurance Corporation; a 
credit union, the member accounts of which are insured within the 
meaning of section 101(7) of the Federal Credit Union Act; an insurance 
company, the products of which are protected by State guaranty 
associations; or an investment company registered under the Investment 
Company Act of 1940;
    (iv) All fees and expenses attendant to an individual retirement 
plan, including investments of such plan, (e.g., establishment charges, 
maintenance fees, investment expenses, termination costs and surrender 
charges) shall not exceed the fees and expenses charged by the 
individual retirement plan provider for comparable individual retirement 
plans established for reasons other than the receipt of a rollover 
distribution subject to the provisions of section 401(a)(31)(B) of the 
Code; and
    (v) The participant on whose behalf the fiduciary makes an automatic 
rollover shall have the right to enforce the terms of the contractual 
agreement establishing the individual retirement plan, with regard to 
his or her rolled-over funds, against the individual retirement plan 
provider.
    (4) Participants have been furnished a summary plan description, or 
a summary of material modifications, that describes the plan's automatic 
rollover provisions effectuating the requirements of section 
401(a)(31)(B) of the Code, including an explanation that the mandatory 
distribution will be invested in an investment product designed to 
preserve principal and provide a reasonable rate of return and 
liquidity, a statement indicating how fees and expenses attendant to the 
individual retirement plan will be allocated (i.e., the extent to which 
expenses will be borne by the account holder alone or shared with the 
distributing plan or plan sponsor), and the name, address and phone 
number of a plan contact (to the extent not otherwise provided in the 
summary plan description or summary of material modifications) for 
further information concerning the plan's automatic rollover provisions, 
the individual retirement plan provider and the fees and expenses 
attendant to the individual retirement plan; and
    (5) Both the fiduciary's selection of an individual retirement plan 
and the investment of funds would not result in a prohibited transaction 
under section 406 of the Act, unless such actions are exempted from the 
prohibited transaction provisions by a prohibited transaction exemption 
issued pursuant to section 408(a) of the Act.
    (d) Mandatory distributions of $1,000 or less. A fiduciary shall 
qualify for the protection afforded by the safe harbor described in 
paragraph (b) of this section with respect to a mandatory distribution 
of one thousand dollars ($1,000) or less described in section 411(a)(11) 
of the Code, provided there is no affirmative distribution election by 
the participant and the fiduciary makes a rollover distribution of such 
amount into an individual retirement plan on behalf of such participant 
in accordance with the conditions described in paragraph (c) of this 
section, without regard to the fact that such rollover is not described 
in section 401(a)(31)(B) of the Code.
    (e) Effective date. This section shall be effective and shall apply 
to any rollover of a mandatory distribution made on or after March 28, 
2005.

[69 FR 58028, Sept. 28, 2004]

[[Page 523]]



Sec. 2550.404a-3  Safe harbor for distributions from terminated 
individual account plans.

    (a) General. (1) This section provides a safe harbor under which a 
fiduciary (including a qualified termination administrator, within the 
meaning of Sec. 2578.1(g) of this chapter) of a terminated individual 
account plan, as described in paragraph (a)(2) of this section, will be 
deemed to have satisfied its duties under section 404(a) of the Employee 
Retirement Income Security Act of 1974, as amended (the Act)), 29 U.S.C. 
1001 et seq., in connection with a distribution described in paragraph 
(b) of this section.
    (2) This section shall apply to an individual account plan only if--
    (i) In the case of an individual account plan that is an abandoned 
plan within the meaning of Sec. 2578.1 of this chapter, such plan was 
intended to be maintained as a tax-qualified plan in accordance with the 
requirements of section 401(a), 403(a), or 403(b) of the Internal 
Revenue Code of 1986 (Code); or
    (ii) In the case of any other individual account plan, such plan is 
maintained in accordance with the requirements of section 401(a), 
403(a), or 403 (b) of the Code at the time of the distribution.
    (3) The standards set forth in this section apply solely for 
purposes of determining whether a fiduciary meets the requirements of 
this safe harbor. Such standards are not intended to be the exclusive 
means by which a fiduciary might satisfy his or her responsibilities 
under the Act with respect to making distributions described in this 
section.
    (b) Distributions. This section shall apply to a distribution from a 
terminated individual account plan if, in connection with such 
distribution:
    (1) The participant or beneficiary, on whose behalf the distribution 
will be made, was furnished notice in accordance with paragraph (e) of 
this section or, in the case of an abandoned plan, Sec. 2578.1(d)(2)(vi) 
of this chapter, and
    (2) The participant or beneficiary failed to elect a form of 
distribution within 30 days of the furnishing of the notice described 
paragraph (b)(1) of this section.
    (c) Safe harbor. A fiduciary that meets the conditions of paragraph 
(d) of this section shall, with respect to a distribution described in 
paragraph (b) of this section, be deemed to have satisfied its duties 
under section 404(a) of the Act with respect to the distribution of 
benefits, selection of a transferee entity described in paragraph 
(d)(1)(i) through (iii) of this section, and the investment of funds in 
connection with the distribution.
    (d) Conditions. A fiduciary shall qualify for the safe harbor 
described in paragraph (c) of this section if:
    (1) The distribution described in paragraph (b) of this section is 
made--
    (i) To an individual retirement plan within the meaning of section 
7701(a)(37) of the Code;
    (ii) In the case of a distribution on behalf of a designated 
beneficiary (as defined by section 401(a)(9)(E) of the Code) who is not 
the surviving spouse of the deceased participant, to an inherited 
individual retirement plan (within the meaning of section 402(c)(11) of 
the Code) established to receive the distribution on behalf of the 
nonspouse beneficiary; or
    (iii) In the case of a distribution by a qualified termination 
administrator with respect to which the amount to be distributed is 
$1000 or less and that amount is less than the minimum amount required 
to be invested in an individual retirement plan product offered by the 
qualified termination administrator to the public at the time of the 
distribution, to:
    (A) An interest-bearing federally insured bank or savings 
association account in the name of the participant or beneficiary,
    (B) The unclaimed property fund of the State in which the 
participant's or beneficiary's last known address is located, or
    (C) An individual retirement plan (described in paragraph (d)(1)(i) 
or (d)(1)(ii) of this section) offered by a financial institution other 
than the qualified termination administrator to the public at the time 
of the distribution.
    (2) Except with respect to distributions to State unclaimed property 
funds (described in paragraph

[[Page 524]]

(d)(1)(iii)(B) of this section), the fiduciary enters into a written 
agreement with the transferee entity which provides:
    (i) The distributed funds shall be invested in an investment product 
designed to preserve principal and provide a reasonable rate of return, 
whether or not such return is guaranteed, consistent with liquidity 
(except that distributions under paragraph (d)(1)(iii)(A) of this 
section to a bank or savings account are not required to be invested in 
such a product);
    (ii) For purposes of paragraph (d)(2)(i) of this section, the 
investment product shall--
    (A) Seek to maintain, over the term of the investment, the dollar 
value that is equal to the amount invested in the product by the 
individual retirement plan (described in paragraph (d)(1)(i) or 
(d)(1)(ii) of this section), and
    (B) Be offered by a State or federally regulated financial 
institution, which shall be: a bank or savings association, the deposits 
of which are insured by the Federal Deposit Insurance Corporation; a 
credit union, the member accounts of which are insured within the 
meaning of section 101(7) of the Federal Credit Union Act; an insurance 
company, the products of which are protected by State guaranty 
associations; or an investment company registered under the Investment 
Company Act of 1940;
    (iii) All fees and expenses attendant to the transferee plan 
(described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or 
account (described in paragraph (d)(1)(iii)(A) of this section), 
including investments of such plan, (e.g., establishment charges, 
maintenance fees, investment expenses, termination costs and surrender 
charges), shall not exceed the fees and expenses charged by the provider 
of the plan or account for comparable plans or accounts established for 
reasons other than the receipt of a distribution under this section; and
    (iv) The participant or beneficiary on whose behalf the fiduciary 
makes a distribution shall have the right to enforce the terms of the 
contractual agreement establishing the plan (described in paragraph 
(d)(1)(i) or (d)(1)(ii) of this section) or account (described in 
paragraph (d)(1)(iii)(A) of this section), with regard to his or her 
transferred account balance, against the plan or account provider.
    (3) Both the fiduciary's selection of a transferee plan (described 
in paragraph (d)(1)(i) or (d)(1)(ii) of this section) or account 
(described in paragraph (d)(1)(iii)(A) of this section) and the 
investment of funds would not result in a prohibited transaction under 
section 406 of the Act, unless such actions are exempted from the 
prohibited transaction provisions by a prohibited transaction exemption 
issued pursuant to section 408(a) of the Act.
    (e) Notice to participants and beneficiaries--(1) Content. Each 
participant or beneficiary of the plan shall be furnished a notice 
written in a manner calculated to be understood by the average plan 
participant and containing the following:
    (i) The name of the plan;
    (ii) A statement of the account balance, the date on which the 
amount was calculated, and, if relevant, an indication that the amount 
to be distributed may be more or less than the amount stated in the 
notice, depending on investment gains or losses and the administrative 
cost of terminating the plan and distributing benefits;
    (iii) A description of the distribution options available under the 
plan and a request that the participant or beneficiary elect a form of 
distribution and inform the plan administrator (or other fiduciary) 
identified in paragraph (e)(1)(vii) of this section of that election;
    (iv) A statement explaining that, if a participant or beneficiary 
fails to make an election within 30 days from receipt of the notice, the 
plan will distribute the account balance of the participant or 
beneficiary to an individual retirement plan (i.e., individual 
retirement account or annuity described in paragraph (d)(1)(i) or 
(d)(1)(ii) of this section) and the account balance will be invested in 
an investment product designed to preserve principal and provide a 
reasonable rate of return and liquidity;
    (v) A statement explaining what fees, if any, will be paid from the 
participant or beneficiary's individual retirement plan (described in 
paragraph

[[Page 525]]

(d)(1)(i) or (d)(1)(ii) of this section), if such information is known 
at the time of the furnishing of this notice;
    (vi) The name, address and phone number of the individual retirement 
plan (described in paragraph (d)(1)(i) or (d)(1)(ii) of this section) 
provider, if such information is known at the time of the furnishing of 
this notice; and
    (vii) The name, address, and telephone number of the plan 
administrator (or other fiduciary) from whom a participant or 
beneficiary may obtain additional information concerning the 
termination.
    (2) Manner of furnishing notice. (i) For purposes of paragraph 
(e)(1) of this section, a notice shall be furnished to each participant 
or beneficiary in accordance with the requirements of Sec. 2520.104b-
1(b)(1) of this chapter to the last known address of the participant or 
beneficiary; and
    (ii) In the case of a notice that is returned to the plan as 
undeliverable, the plan fiduciary shall, consistent with its duties 
under section 404(a)(1) of ERISA, take steps to locate the participant 
or beneficiary and provide notice prior to making the distribution. If, 
after such steps, the fiduciary is unsuccessful in locating and 
furnishing notice to a participant or beneficiary, the participant or 
beneficiary shall be deemed to have been furnished the notice and to 
have failed to make an election within 30 days for purposes of paragraph 
(b)(2) of this section.
    (f) Model notice. The appendix to this section contains a model 
notice that may be used to discharge the notification requirements under 
this section. Use of the model notice is not mandatory. However, use of 
an appropriately completed model notice will be deemed to satisfy the 
requirements of paragraph (e)(1) of this section.

[[Page 526]]

[GRAPHIC] [TIFF OMITTED] TR07OC08.034


[[Page 527]]



[71 FR 20850, Apr. 21, 2006; 71 FR 29219, May 19, 2006; 72 FR 7520, Feb. 
15, 2007; 73 FR 58463, Oct. 7, 2008]



Sec. 2550.404a-4  Selection of annuity providers--safe harbor for
individual account plans.

    (a) Scope. (1) This section establishes a safe harbor for satisfying 
the fiduciary duties under section 404(a)(1)(B) of the Employee 
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1104-1114, in 
selecting an annuity provider and contract for benefit distributions 
from an individual account plan. For guidance concerning the selection 
of an annuity provider for defined benefit plans see 29 CFR 2509.95-1.
    (2) This section sets forth an optional means for satisfying the 
fiduciary responsibilities under section 404(a)(1)(B) of ERISA with 
respect to the selection of an annuity provider or contract for benefit 
distributions. This section does not establish minimum requirements or 
the exclusive means for satisfying these responsibilities.
    (b) Safe harbor. The selection of an annuity provider for benefit 
distributions from an individual account plan satisfies the requirements 
of section 404(a)(1)(B) of ERISA if the fiduciary:
    (1) Engages in an objective, thorough and analytical search for the 
purpose of identifying and selecting providers from which to purchase 
annuities;
    (2) Appropriately considers information sufficient to assess the 
ability of the annuity provider to make all future payments under the 
annuity contract;
    (3) Appropriately considers the cost (including fees and 
commissions) of the annuity contract in relation to the benefits and 
administrative services to be provided under such contract;
    (4) Appropriately concludes that, at the time of the selection, the 
annuity provider is financially able to make all future payments under 
the annuity contract and the cost of the annuity contract is reasonable 
in relation to the benefits and services to be provided under the 
contract; and
    (5) If necessary, consults with an appropriate expert or experts for 
purposes of compliance with the provisions of this paragraph (b).
    (c) Time of selection. For purposes of paragraph (b) of this 
section, the ``time of selection'' may be either:
    (1) The time that the annuity provider and contract are selected for 
distribution of benefits to a specific participant or beneficiary; or
    (2) The time that the annuity provider is selected to provide 
annuity contracts at future dates to participants or beneficiaries, 
provided that the selecting fiduciary periodically reviews the 
continuing appropriateness of the conclusion described in paragraph 
(b)(4) of this section, taking into account the factors described in 
paragraphs (b)(2), (3) and (5) of this section. For purposes of this 
paragraph (c)(2), a fiduciary is not required to review the 
appropriateness of this conclusion with respect to any annuity contract 
purchased for any specific participant or beneficiary.

[73 FR 58449, Oct. 7, 2008]



Sec. 2550.404a-5  Fiduciary requirements for disclosure in participant
-directed individual account plans.

    (a) General. The investment of plan assets is a fiduciary act 
governed by the fiduciary standards of section 404(a)(1)(A) and (B) of 
the Employee Retirement Income Security Act of 1974, as amended (ERISA), 
29 U.S.C. 1001 et seq. (all section references herein are references to 
ERISA unless otherwise indicated). Pursuant to section 404(a)(1)(A) and 
(B), fiduciaries must discharge their duties with respect to the plan 
prudently and solely in the interest of participants and beneficiaries. 
When the documents and instruments governing an individual account plan, 
described in paragraph (b)(2) of this section, provide for the 
allocation of investment responsibilities to participants or 
beneficiaries, the plan administrator, as defined in section 3(16), must 
take steps to ensure, consistent with section 404(a)(1)(A) and (B), that 
such participants and beneficiaries, on a regular and periodic basis, 
are made aware of their rights and responsibilities with respect to the 
investment of assets held in, or contributed to, their accounts and are 
provided sufficient information regarding the plan, including fees and 
expenses, and regarding

[[Page 528]]

designated investment alternatives, including fees and expenses 
attendant thereto, to make informed decisions with regard to the 
management of their individual accounts.
    (b) Satisfaction of duty to disclose. (1) In general. The plan 
administrator of a covered individual account plan must comply with the 
disclosure requirements set forth in paragraphs (c) and (d) of this 
section with respect to each participant or beneficiary that, pursuant 
to the terms of the plan, has the right to direct the investment of 
assets held in, or contributed to, his or her individual account. 
Compliance with paragraphs (c) and (d) of this section will satisfy the 
duty to make the regular and periodic disclosures described in paragraph 
(a) of this section, provided that the information contained in such 
disclosures is complete and accurate. A plan administrator will not be 
liable for the completeness and accuracy of information used to satisfy 
these disclosure requirements when the plan administrator reasonably and 
in good faith relies on information received from or provided by a plan 
service provider or the issuer of a designated investment alternative.
    (2) Covered individual account plan. For purposes of paragraph 
(b)(1) of this section, a ``covered individual account plan'' is any 
participant-directed individual account plan as defined in section 3(34) 
of ERISA, except that such term shall not include plans involving 
individual retirement accounts or individual retirement annuities 
described in sections 408(k) (``simplified employee pension'') or 408(p) 
(``simple retirement account'') of the Internal Revenue Code of 1986.
    (c) Disclosure of plan-related information. A plan administrator (or 
person designated by the plan administrator to act on its behalf) shall 
provide to each participant or beneficiary the plan-related information 
described in paragraphs (c)(1) through (4) of this section, based on the 
latest information available to the plan.
    (1) General. (i) On or before the date on which a participant or 
beneficiary can first direct his or her investments and at least 
annually thereafter:
    (A) An explanation of the circumstances under which participants and 
beneficiaries may give investment instructions;
    (B) An explanation of any specified limitations on such instructions 
under the terms of the plan, including any restrictions on transfer to 
or from a designated investment alternative;
    (C) A description of or reference to plan provisions relating to the 
exercise of voting, tender and similar rights appurtenant to an 
investment in a designated investment alternative as well as any 
restrictions on such rights;
    (D) An identification of any designated investment alternatives 
offered under the plan;
    (E) An identification of any designated investment managers; and
    (F) A description of any ``brokerage windows,'' ``self-directed 
brokerage accounts,'' or similar plan arrangements that enable 
participants and beneficiaries to select investments beyond those 
designated by the plan.
    (ii) If there is a change to the information described in paragraph 
(c)(1)(i)(A) through (F) of this section, each participant and 
beneficiary must be furnished a description of such change at least 30 
days, but not more than 90 days, in advance of the effective date of 
such change, unless the inability to provide such advance notice is due 
to events that were unforeseeable or circumstances beyond the control of 
the plan administrator, in which case notice of such change must be 
furnished as soon as reasonably practicable.
    (2) Administrative expenses. (i)(A) On or before the date on which a 
participant or beneficiary can first direct his or her investments and 
at least annually thereafter, an explanation of any fees and expenses 
for general plan administrative services (e.g., legal, accounting, 
recordkeeping), which may be charged against the individual accounts of 
participants and beneficiaries and are not reflected in the total annual 
operating expenses of any designated investment alternative, as well as 
the basis on which such charges will be allocated (e.g., pro rata, per 
capita) to, or affect the balance of, each individual account.
    (B) If there is a change to the information described in paragraph

[[Page 529]]

(c)(2)(i)(A) of this section, each participant and beneficiary must be 
furnished a description of such change at least 30 days, but not more 
than 90 days, in advance of the effective date of such change, unless 
the inability to provide such advance notice is due to events that were 
unforeseeable or circumstances beyond the control of the plan 
administrator, in which case notice of such change must be furnished as 
soon as reasonably practicable.
    (ii) At least quarterly, a statement that includes:
    (A) The dollar amount of the fees and expenses described in 
paragraph (c)(2)(i)(A) of this section that are actually charged 
(whether by liquidating shares or deducting dollars) during the 
preceding quarter to the participant's or beneficiary's account for such 
services;
    (B) A description of the services to which the charges relate (e.g., 
plan administration, including recordkeeping, legal, accounting 
services); and
    (C) If applicable, an explanation that, in addition to the fees and 
expenses disclosed pursuant to paragraph (c)(2)(ii) of this section, 
some of the plan's administrative expenses for the preceding quarter 
were paid from the total annual operating expenses of one or more of the 
plan's designated investment alternatives (e.g., through revenue sharing 
arrangements, Rule 12b-1 fees, sub-transfer agent fees).
    (3) Individual expenses. (i)(A) On or before the date on which a 
participant or beneficiary can first direct his or her investments and 
at least annually thereafter, an explanation of any fees and expenses 
that may be charged against the individual account of a participant or 
beneficiary on an individual, rather than on a plan-wide, basis (e.g., 
fees attendant to processing plan loans or qualified domestic relations 
orders, fees for investment advice, fees for brokerage windows, 
commissions, front- or back-end loads or sales charges, redemption fees, 
transfer fees and similar expenses, and optional rider charges in 
annuity contracts) and which are not reflected in the total annual 
operating expenses of any designated investment alternative.
    (B) If there is a change to the information described in paragraph 
(c)(3)(i)(A) of this section, each participant and beneficiary must be 
furnished a description of such change at least 30 days, but not more 
than 90 days, in advance of the effective date of such change, unless 
the inability to provide such advance notice is due to events that were 
unforeseeable or circumstances beyond the control of the plan 
administrator, in which case notice of such change must be furnished as 
soon as reasonably practicable.
    (ii) At least quarterly, a statement that includes:
    (A) The dollar amount of the fees and expenses described in 
paragraph (c)(3)(i)(A) of this section that are actually charged 
(whether by liquidating shares or deducting dollars) during the 
preceding quarter to the participant's or beneficiary's account for 
individual services; and
    (B) A description of the services to which the charges relate (e.g., 
loan processing fee).
    (4) Disclosures on or before first investment. The requirements of 
paragraphs (c)(1)(i), (c)(2)(i)(A), (c)(3)(i)(A) of this section to 
furnish information on or before the date on which a participant or 
beneficiary can first direct his or her investments may be satisfied by 
furnishing to the participant or beneficiary the most recent annual 
disclosure furnished to participants and beneficiaries pursuant those 
paragraphs and any updates to the information furnished to participants 
and beneficiaries pursuant to paragraphs (c)(1)(ii), (c)(2)(i)(B) and 
(c)(3)(i)(B) of this section.
    (d) Disclosure of investment-related information. The plan 
administrator (or person designated by the plan administrator to act on 
its behalf), based on the latest information available to the plan, 
shall:
    (1) Information to be provided automatically. Except as provided in 
paragraph (i) of this section, furnish to each participant or 
beneficiary on or before the date on which he or she can first direct 
his or her investments and at least annually thereafter, the following 
information with respect to each designated investment alternative 
offered under the plan--
    (i) Identifying information. Such information shall include:

[[Page 530]]

    (A) The name of each designated investment alternative; and
    (B) The type or category of the investment (e.g., money market fund, 
balanced fund (stocks and bonds), large-cap stock fund, employer stock 
fund, employer securities).
    (ii) Performance data. (A) For designated investment alternatives 
with respect to which the return is not fixed, the average annual total 
return of the investment for 1-, 5-, and 10-calendar year periods (or 
for the life of the alternative, if shorter) ending on the date of the 
most recently completed calendar year; as well as a statement indicating 
that an investment's past performance is not necessarily an indication 
of how the investment will perform in the future; and
    (B) For designated investment alternatives with respect to which the 
return is fixed or stated for the term of the investment, both the fixed 
or stated annual rate of return and the term of the investment. If, with 
respect to such a designated investment alternative, the issuer reserves 
the right to adjust the fixed or stated rate of return prospectively 
during the term of the contract or agreement, the current rate of 
return, the minimum rate guaranteed under the contract, if any, and a 
statement advising participants and beneficiaries that the issuer may 
adjust the rate of return prospectively and how to obtain (e.g., 
telephone or Web site) the most recent rate of return required under 
this section.
    (iii) Benchmarks. For designated investment alternatives with 
respect to which the return is not fixed, the name and returns of an 
appropriate broad-based securities market index over the 1-, 5-, and 10-
calendar year periods (or for the life of the alternative, if shorter) 
comparable to the performance data periods provided under paragraph 
(d)(1)(ii)(A) of this section, and which is not administered by an 
affiliate of the investment issuer, its investment adviser, or a 
principal underwriter, unless the index is widely recognized and used.
    (iv) Fee and expense information. (A) For designated investment 
alternatives with respect to which the return is not fixed:
    (1) The amount and a description of each shareholder-type fee (fees 
charged directly against a participant's or beneficiary's investment, 
such as commissions, sales loads, sales charges, deferred sales charges, 
redemption fees, surrender charges, exchange fees, account fees, and 
purchase fees, which are not included in the total annual operating 
expenses of any designated investment alternative) and a description of 
any restriction or limitation that may be applicable to a purchase, 
transfer, or withdrawal of the investment in whole or in part (such as 
round trip, equity wash, or other restrictions);
    (2) The total annual operating expenses of the investment expressed 
as a percentage (i.e., expense ratio), calculated in accordance with 
paragraph (h)(5) of this section;
    (3) The total annual operating expenses of the investment for a one-
year period expressed as a dollar amount for a $1,000 investment 
(assuming no returns and based on the percentage described in paragraph 
(d)(1)(iv)(A)(2) of this section);
    (4) A statement indicating that fees and expenses are only one of 
several factors that participants and beneficiaries should consider when 
making investment decisions; and
    (5) A statement that the cumulative effect of fees and expenses can 
substantially reduce the growth of a participant's or beneficiary's 
retirement account and that participants and beneficiaries can visit the 
Employee Benefit Security Administration's Web site for an example 
demonstrating the long-term effect of fees and expenses.
    (B) For designated investment alternatives with respect to which the 
return is fixed for the term of the investment, the amount and a 
description of any shareholder-type fees and a description of any 
restriction or limitation that may be applicable to a purchase, transfer 
or withdrawal of the investment in whole or in part.
    (v) Internet Web site address. An Internet Web site address that is 
sufficiently specific to provide participants and beneficiaries access 
to the following information regarding the designated investment 
alternative:

[[Page 531]]

    (A) The name of the alternative's issuer;
    (B) The alternative's objectives or goals in a manner consistent 
with Securities and Exchange Commission Form N-1A or N-3, as 
appropriate;
    (C) The alternative's principal strategies (including a general 
description of the types of assets held by the investment) and principal 
risks in a manner consistent with Securities and Exchange Commission 
Form N-1A or N-3, as appropriate;
    (D) The alternative's portfolio turnover rate in a manner consistent 
with Securities and Exchange Commission Form N-1A or N-3, as 
appropriate;
    (E) The alternative's performance data described in paragraph 
(d)(1)(ii) of this section updated on at least a quarterly basis, or 
more frequently if required by other applicable law; and
    (F) The alternative's fee and expense information described in 
paragraph (d)(1)(iv) of this section.
    (vi) Glossary. A general glossary of terms to assist participants 
and beneficiaries in understanding the designated investment 
alternatives, or an Internet Web site address that is sufficiently 
specific to provide access to such a glossary along with a general 
explanation of the purpose of the address.
    (vii) Annuity options. If a designated investment alternative is 
part of a contract, fund or product that permits participants or 
beneficiaries to allocate contributions toward the future purchase of a 
stream of retirement income payments guaranteed by an insurance company, 
the information set forth in paragraph (i)(2)(i) through (i)(2)(vii) of 
this section with respect to the annuity option, to the extent such 
information is not otherwise included in investment-related fees and 
expenses described in paragraph (d)(1)(iv).
    (viii) Disclosures on or before first investment. The requirement in 
paragraph (d)(1) of this section to provide information to a participant 
or beneficiary on or before the date on which the participant or 
beneficiary can first direct his or her investments may be satisfied by 
furnishing to the participant or beneficiary the most recent annual 
disclosure furnished to participants and beneficiaries pursuant to 
paragraph (d)(1) of this section.
    (2) Comparative format. (i) Furnish the information described in 
paragraph (d)(1) and, if applicable, paragraph (i) of this section in a 
chart or similar format that is designed to facilitate a comparison of 
such information for each designated investment alternative available 
under the plan and prominently displays the date, and that includes:
    (A) A statement indicating the name, address, and telephone number 
of the plan administrator (or a person or persons designated by the plan 
administrator to act on its behalf) to contact for the provision of the 
information required by paragraph (d)(4) of this section;
    (B) A statement that additional investment-related information 
(including more current performance information) is available at the 
listed Internet Web site addresses (see paragraph (d)(1)(v) of this 
section); and
    (C) A statement explaining how to request and obtain, free of 
charge, paper copies of the information required to be made available on 
a Web site pursuant to paragraph (d)(1)(v), paragraph (i)(2)(vi), 
relating to annuity options, or paragraph (i)(3), relating to fixed-
return investments, of this section.
    (ii) Nothing in this section shall preclude a plan administrator 
from including additional information that the plan administrator 
determines appropriate for such comparisons, provided such information 
is not inaccurate or misleading.
    (3) Information to be provided subsequent to investment. Furnish to 
each investing participant or beneficiary, subsequent to an investment 
in a designated investment alternative, any materials provided to the 
plan relating to the exercise of voting, tender and similar rights 
appurtenant to the investment, to the extent that such rights are passed 
through to such participant or beneficiary under the terms of the plan.
    (4) Information to be provided upon request. Furnish to each 
participant or

[[Page 532]]

beneficiary, either at the times specified in paragraph (d)(1), or upon 
request, the following information relating to designated investment 
alternatives--
    (i) Copies of prospectuses (or, alternatively, any short-form or 
summary prospectus, the form of which has been approved by the 
Securities and Exchange Commission) for the disclosure of information to 
investors by entities registered under either the Securities Act of 1933 
or the Investment Company Act of 1940, or similar documents relating to 
designated investment alternatives that are provided by entities that 
are not registered under either of these Acts;
    (ii) Copies of any financial statements or reports, such as 
statements of additional information and shareholder reports, and of any 
other similar materials relating to the plan's designated investment 
alternatives, to the extent such materials are provided to the plan;
    (iii) A statement of the value of a share or unit of each designated 
investment alternative as well as the date of the valuation; and
    (iv) A list of the assets comprising the portfolio of each 
designated investment alternative which constitute plan assets within 
the meaning of 29 CFR 2510.3-101 and the value of each such asset (or 
the proportion of the investment which it comprises).
    (e) Form of disclosure. (1) The information required to be disclosed 
pursuant to paragraphs (c)(1)(i), (c)(2)(i)(A), and (c)(3)(i)(A) of this 
section may be provided as part of the plan's summary plan description 
furnished pursuant to ERISA section 102 or as part of a pension benefit 
statement furnished pursuant to ERISA section 105(a)(1)(A)(i), if such 
summary plan description or pension benefit statement is furnished at a 
frequency that comports with paragraph (c)(1)(i) of this section.
    (2) The information required to be disclosed pursuant to paragraphs 
(c)(2)(ii) and (c)(3)(ii) of this section may be included as part of a 
pension benefit statement furnished pursuant to ERISA section 
105(a)(1)(A)(i).
    (3) A plan administrator that uses and accurately completes the 
model in the Appendix, taking into account each designated investment 
alternative offered under the plan, will be deemed to have satisfied the 
requirements of paragraph (d)(2) of this section.
    (4) Except as otherwise explicitly required herein, fees and 
expenses may be expressed in terms of a monetary amount, formula, 
percentage of assets, or per capita charge.
    (5) The information required to be prepared by the plan 
administrator for disclosure under this section shall be written in a 
manner calculated to be understood by the average plan participant.
    (f) Selection and monitoring. Nothing herein is intended to relieve 
a fiduciary from its duty to prudently select and monitor providers of 
services to the plan or designated investment alternatives offered under 
the plan.
    (g) Manner of furnishing. Reserved.
    (h) Definitions. For purposes of this section, the term--
    (1) At least annually thereafter means at least once in any 14-month 
period, without regard to whether the plan operates on a calendar year 
or fiscal year basis.
    (2) At least quarterly means at least once in any 3-month period, 
without regard to whether the plan operates on a calendar or fiscal year 
basis.
    (3) Average annual total return means the average annual compounded 
rate of return that would equate an initial investment in a designated 
investment alternative to the ending redeemable value of that investment 
calculated with the before tax methods of computation prescribed in 
Securities and Exchange Commission Form N-1A, N-3, or N-4, as 
appropriate, except that such method of computation may exclude any 
front-end, deferred or other sales loads that are waived for the 
participants and beneficiaries of the covered individual account plan.
    (4) Designated investment alternative means any investment 
alternative designated by the plan into which participants and 
beneficiaries may direct the investment of assets held in, or 
contributed to, their individual accounts. The term ``designated 
investment alternative'' shall not include ``brokerage windows,'' 
``self-directed brokerage accounts,'' or similar plan arrangements that 
enable participants and

[[Page 533]]

beneficiaries to select investments beyond those designated by the plan.
    (5) Total annual operating expenses means:
    (i) In the case of a designated investment alternative that is 
registered under the Investment Company Act of 1940, the annual 
operating expenses and other asset-based charges before waivers and 
reimbursements (e.g., investment management fees, distribution fees, 
service fees, administrative expenses, separate account expenses, 
mortality and expense risk fees) that reduce the alternative's rate of 
return, expressed as a percentage, calculated in accordance with the 
required Securities and Exchange Commission form, e.g., Form N-1A (open-
end management investment companies) or Form N-3 or N-4 (separate 
accounts offering variable annuity contracts); or
    (ii) In the case of a designated investment alternative that is not 
registered under the Investment Company Act of 1940, the sum of the fees 
and expenses described in paragraphs (h)(5)(ii)(A) through (C) of this 
section before waivers and reimbursements, for the alternative's most 
recently completed fiscal year, expressed as a percentage of the 
alternative's average net asset value for that year--
    (A) Management fees as described in the Securities and Exchange 
Commission Form N-1A that reduce the alternative's rate of return,
    (B) Distribution and/or servicing fees as described in the 
Securities and Exchange Commission Form N-1A that reduce the 
alternative's rate of return, and
    (C) Any other fees or expenses not included in paragraphs 
(h)(5)(ii)(A) or (B) of this section that reduce the alternative's rate 
of return (e.g., externally negotiated fees, custodial expenses, legal 
expenses, accounting expenses, transfer agent expenses, recordkeeping 
fees, administrative fees, separate account expenses, mortality and 
expense risk fees), excluding brokerage costs described in Item 21 of 
Securities and Exchange Commission Form N-1A.
    (i) Special rules. The rules set forth in this paragraph apply 
solely for purposes of paragraph (d)(1) of this section.
    (1) Qualifying employer securities. In the case of designated 
investment alternatives designed to invest in, or primarily in, 
qualifying employer securities, within the meaning of section 407 of 
ERISA, the following rules shall apply--
    (i) In lieu of the requirements of paragraph (d)(1)(v)(C) of this 
section (relating to principal strategies and principal risks), provide 
an explanation of the importance of a well-balanced and diversified 
investment portfolio.
    (ii) The requirements of paragraph (d)(1)(v)(D) of this section 
(relating to portfolio turnover rate) do not apply to such designated 
investment alternatives.
    (iii) The requirements of paragraph (d)(1)(v)(F) of this section 
(relating to fee and expense information) do not apply to such 
designated investment alternatives, unless the designated investment 
alternative is a fund with respect to which participants or 
beneficiaries acquire units of participation, rather than actual shares, 
in exchange for their investment.
    (iv) The requirements of paragraph (d)(1)(iv)(A)(2) of this section 
(relating to total annual operating expenses expressed as a percentage) 
do not apply to such designated investment alternatives, unless the 
designated investment alternative is a fund with respect to which 
participants or beneficiaries acquire units of participation, rather 
than actual shares, in exchange for their investment.
    (v) The requirements of paragraph (d)(1)(iv)(A)(3) of this section 
(relating to total annual operating expenses expressed as a dollar 
amount per $1,000 invested) do not apply to such designated investment 
alternatives, unless the designated investment alternative is a fund 
with respect to which participants or beneficiaries acquire units of 
participation, rather than actual shares, in exchange for their 
investment.
    (vi)(A) With respect to the requirement in paragraph (d)(1)(ii)(A) 
of this section (relating to performance data for 1-, 5-, and 10-year 
periods), the definition of ``average annual total return'' as defined 
in paragraph (i)(1)(vi)(B) of this section shall apply to such 
designated investment alternatives in lieu

[[Page 534]]

of the definition in paragraph (h)(3) of this section if the qualifying 
employer securities are publicly traded on a national exchange or 
generally recognized market and the designated investment alternative is 
not a fund with respect to which participants or beneficiaries acquire 
units of participation, rather than actual shares, in exchange for their 
investment.
    (B) The term ``average annual total return'' means the change in 
value of an investment in one share of stock on an annualized basis over 
a specified period, calculated by taking the sum of the dividends paid 
during the measurement period, assuming reinvestment, plus the 
difference between the stock price (consistent with ERISA section 3(18)) 
at the end and at the beginning of the measurement period, and dividing 
by the stock price at the beginning of the measurement period; 
reinvestment of dividends is assumed to be in stock at market prices at 
approximately the same time actual dividends are paid.
    (C) The definition of ``average annual total return'' in paragraph 
(i)(1)(vi)(B) of this section shall apply to such designated investment 
alternatives consisting of employer securities that are not publicly 
traded on a national exchange or generally recognized market, unless the 
designated investment alternative is a fund with respect to which 
participants or beneficiaries acquire units of participation, rather 
than actual shares, in exchange for their investment. Changes in value 
shall be calculated using principles similar to those set forth in 
paragraph (i)(1)(vi)(B) of this section.
    (2) Annuity options. In the case of a designated investment 
alternative that is a contract, fund or product that permits 
participants or beneficiaries to allocate contributions toward the 
current purchase of a stream of retirement income payments guaranteed by 
an insurance company, the plan administrator shall, in lieu of the 
information required by paragraphs (d)(1)(i) through (d)(1)(v), provide 
each participant or beneficiary the following information with respect 
to each such option:
    (i) The name of the contract, fund or product;
    (ii) The option's objectives or goals (e.g., to provide a stream of 
fixed retirement income payments for life);
    (iii) The benefits and factors that determine the price (e.g., age, 
interest rates, form of distribution) of the guaranteed income payments;
    (iv) Any limitations on the ability of a participant or beneficiary 
to withdraw or transfer amounts allocated to the option (e.g., lock-ups) 
and any fees or charges applicable to such withdrawals or transfers;
    (v) Any fees that will reduce the value of amounts allocated by 
participants or beneficiaries to the option, such as surrender charges, 
market value adjustments, and administrative fees;
    (vi) A statement that guarantees of an insurance company are subject 
to its long-term financial strength and claims-paying ability; and
    (vii) An Internet Web site address that is sufficiently specific to 
provide participants and beneficiaries access to the following 
information--
    (A) The name of the option's issuer and of the contract, fund or 
product;
    (B) Description of the option's objectives or goals;
    (C) Description of the option's distribution alternatives/guaranteed 
income payments (e.g., payments for life, payments for a specified term, 
joint and survivor payments, optional rider payments), including any 
limitations on the right of a participant or beneficiary to receive such 
payments;
    (D) Description of costs and/or factors taken into account in 
determining the price of benefits under an option's distribution 
alternatives/guaranteed income payments (e.g., age, interest rates, 
other annuitization assumptions);
    (E) Description of any limitations on the right of a participant or 
beneficiary to withdraw or transfer amounts allocated to the option and 
any fees or charges applicable to a withdrawal or transfer; and
    (F) Description of any fees that will reduce the value of amounts 
allocated by participants or beneficiaries to the option (e.g., 
surrender charges, market value adjustments, administrative fees).

[[Page 535]]

    (3) Fixed-return investments. In the case of a designated investment 
alternative with respect to which the return is fixed for the term of 
the investment, the plan administrator shall, in lieu of complying with 
the requirements of paragraph (d)(1)(v) of this section, provide an 
Internet Web site address that is sufficiently specific to provide 
participants and beneficiaries access to the following information--
    (i) The name of the alternative's issuer;
    (ii) The alternatives objectives or goals (e.g., to provide 
stability of principal and guarantee a minimum rate of return);
    (iii) The alternative's performance data described in paragraph 
(d)(1)(ii)(B) of this section updated on at least a quarterly basis, or 
more frequently if required by other applicable law;
    (iv) The alternative's fee and expense information described in 
paragraph (d)(1)(iv)(B) of this section.
    (4) Target date or similar funds. Reserved.
    (j) Dates. (1) Effective date. This section shall be effective on 
December 20, 2010.
    (2) Applicability date. This section shall apply to covered 
individual account plans for plan years beginning on or after November 
1, 2011.
    (3) Transitional rules.
    (i) (A) Notwithstanding paragraphs (b), (c) and (d) of this section, 
the initial disclosures required on or before the date on which a 
participant or beneficiary can first direct his or her investments must 
be furnished no later than the later of 60 days after such applicability 
date or 60 days after the effective date of 29 CFR 2550.408b-2(c).
    (B) Notwithstanding paragraphs (b) and (c) of this section, the 
initial disclosures required under paragraphs (c)(2)(ii) and (c)(3)(ii) 
of this section must be furnished no later than 45 days after the end of 
the quarter in which the disclosure referred to in paragraph 
(j)(3)(i)(A) of this section was required to be furnished to 
participants and beneficiaries.
    (ii) For plan years beginning before October 1, 2021, if a plan 
administrator reasonably and in good faith determines that it does not 
have the information on expenses attributable to the plan that is 
necessary to calculate, in accordance with paragraph (h)(3) of this 
section, the 5-year and 10-year average annual total returns for a 
designated investment alternative that is not registered under the 
Investment Company Act of 1940, the plan administrator may use a 
reasonable estimate of such expenses or the plan administrator may use 
the most recently reported total annual operating expenses of the 
designated investment alternative as a substitute for such expenses. 
When a plan administrator uses a reasonable estimate or the most 
recently reported total annual operating expenses as a substitute for 
actual expenses pursuant to this paragraph, the administrator shall 
inform participants of the basis on which the returns were determined. 
Nothing in this section requires disclosure of returns for periods 
before the inception of a designated investment alternative.

[[Page 536]]

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[[Page 537]]


[GRAPHIC] [TIFF OMITTED] TR20OC10.001


[[Page 538]]


[GRAPHIC] [TIFF OMITTED] TR20OC10.002


[[Page 539]]


[GRAPHIC] [TIFF OMITTED] TR20OC10.003


[75 FR 64937, Oct. 20, 2010, as amended at 76 FR 42542, July 19, 2011; 
80 FR 14304, Mar. 19, 2015]



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

[[Page 540]]

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 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

[[Page 541]]

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 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).

[[Page 542]]

    (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 investment 
decisions with regard to investment alternatives available under the 
plan, and incidents of ownership appurtenant to such investments. For 
purposes of this paragraph, a participant or beneficiary will be 
considered to have sufficient information if 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):
    (1) An explanation that the plan is intended to constitute a plan 
described in section 404(c) of the Employee Retirement Income Security 
Act, and 29 CFR 2550.404c-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;
    (2) The information required pursuant to 29 CFR 2550.404a-5; and
    (3) 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).
    (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

[[Page 543]]

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 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

[[Page 544]]

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 404(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 voting, tender 
or 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 29 CFR 2550.404a-5(d)(3); and the 
participant or beneficiary has not failed to exercise control by reason 
of 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),

[[Page 545]]

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
    (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

[[Page 546]]

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.
    (iv) Paragraph (d)(2)(i) does not serve to relieve a fiduciary from 
its duty to prudently select and monitor any service provider or 
designated investment alternative offered under the plan.
    (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;
    (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) of this 
section). 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

[[Page 547]]

administrator of Plan A provides each participant and beneficiary with 
the information described in paragraph (b)(2)(i)(B) of this section, 
including the information that must be provided on or before the date on 
which a participant or beneficiary can first direct his or her 
investments and at least annually thereafter pursuant to 29 CFR 
2550.404a-5, and provides updated information in the event of any change 
in the information provided. 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)(3) of this section and 29 CFR 2550.404a-5(d)(3)). Upon 
request, the plan administrator provides each participant or beneficiary 
with copies of any prospectuses (or similar documents relating to 
designated investment alternatives that are provided by entities that 
are not registered under the Securities Act of 1933 or the Investment 
Company Act of 1940), financial statements and reports, and any other 
materials relating to the designated investment alternatives available 
under the plan in accordance with 29 CFR 2550.404a-5(d)(4)(i) through 
(iv). Also upon request, the plan administrator provides each 
participant and beneficiary with other information required by 29 CFR 
2550.404a-5(d)(4) with respect to the equity fund, which is a designated 
investment alternative, including a statement of the value of a share or 
unit of the participant's or beneficiary's interest in the equity fund 
and the date of the valuation. Plan A meets the requirements of 
paragraph (b)(2)(i)(B) of this section regarding the provision of 
investment information.
    (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 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

[[Page 548]]

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 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, as amended at 75 FR 64946, Oct. 20, 2010]



Sec. 2550.404c-5  Fiduciary relief for investments in qualified 
default investment alternatives.

    (a) In general. (1) This section implements the fiduciary relief 
provided under section 404(c)(5) of the Employee Retirement Income 
Security Act of 1974, as amended (ERISA or the Act), 29 U.S.C. 1001 et 
seq., under which a participant or beneficiary in an individual account 
plan will be treated as exercising control over the assets in his or her 
account for purposes of ERISA section 404(c)(1) with respect to the 
amount of contributions and earnings that, in the absence of an 
investment election by the participant, are invested by the plan in 
accordance with this regulation. If a participant or beneficiary is 
treated as exercising control over the assets in his or her account in 
accordance with ERISA section 404(c)(1) no person who is otherwise a 
fiduciary shall be liable under part 4 of title I of ERISA for any loss 
or by reason of any breach which results from such participant's or 
beneficiary's exercise of control. Except as specifically provided in 
paragraph (c)(6) of this section, a plan need not meet the requirements 
for an ERISA section 404(c) plan

[[Page 549]]

under 29 CFR 2550.404c-1 in order for a plan fiduciary to obtain the 
relief under this section.
    (2) The standards set forth in this section apply solely for 
purposes of determining whether a fiduciary meets the requirements of 
this regulation. Such standards are not intended to be the exclusive 
means by which a fiduciary might satisfy his or her responsibilities 
under the Act with respect to the investment of assets in the individual 
account of a participant or beneficiary.
    (b) Fiduciary relief. (1) Except as provided in paragraphs (b)(2), 
(3), and (4) of this section, a fiduciary of an individual account plan 
that permits participants or beneficiaries to direct the investment of 
assets in their accounts and that meets the conditions of paragraph (c) 
of this section shall not be liable for any loss, or by reason of any 
breach under part 4 of title I of ERISA, that is the direct and 
necessary result of (i) investing all or part of a participant's or 
beneficiary's account in any qualified default investment alternative 
within the meaning of paragraph (e) of this section, or (ii) investment 
decisions made by the entity described in paragraph (e)(3) of this 
section in connection with the management of a qualified default 
investment alternative.
    (2) Nothing in this section shall relieve a fiduciary from his or 
her duties under part 4 of title I of ERISA to prudently select and 
monitor any qualified default investment alternative under the plan or 
from any liability that results from a failure to satisfy these duties, 
including liability for any resulting losses.
    (3) Nothing in this section shall relieve any fiduciary described in 
paragraph (e)(3)(i) of this section from its fiduciary duties under part 
4 of title I of ERISA or from any liability that results from a failure 
to satisfy these duties, including liability for any resulting losses.
    (4) Nothing in this section shall provide relief from the prohibited 
transaction provisions of section 406 of ERISA, or from any liability 
that results from a violation of those provisions, including liability 
for any resulting losses.
    (c) Conditions. With respect to the investment of assets in the 
individual account of a participant or beneficiary, a fiduciary shall 
qualify for the relief described in paragraph (b)(1) of this section if:
    (1) Assets are invested in a qualified default investment 
alternative within the meaning of paragraph (e) of this section;
    (2) The participant or beneficiary on whose behalf the investment is 
made had the opportunity to direct the investment of the assets in his 
or her account but did not direct the investment of the assets;
    (3) The participant or beneficiary on whose behalf an investment in 
a qualified default investment alternative may be made is furnished a 
notice that meets the requirements of paragraph (d) of this section:
    (i) (A) At least 30 days in advance of the date of plan eligibility, 
or at least 30 days in advance of the date of any first investment in a 
qualified default investment alternative on behalf of a participant or 
beneficiary described in paragraph (c)(2) of this section; or
    (B) On or before the date of plan eligibility provided the 
participant has the opportunity to make a permissible withdrawal (as 
determined under section 414(w) of the Internal Revenue Code of 1986, as 
amended (Code)); and
    (ii) Within a reasonable period of time of at least 30 days in 
advance of each subsequent plan year;
    (4) A fiduciary provides to a participant or beneficiary the 
material set forth in 29 CFR 2550.404c-1(b)(2)(i)(B)(1)(viii) and (ix) 
and 29 CFR 404c-1(b)(2)(i)(B)(2) relating to a participant's or 
beneficiary's investment in a qualified default investment alternative;
    (5)(i) Any participant or beneficiary on whose behalf assets are 
invested in a qualified default investment alternative may transfer, in 
whole or in part, such assets to any other investment alternative 
available under the plan with a frequency consistent with that afforded 
to a participant or beneficiary who elected to invest in the qualified 
default investment alternative, but not less frequently than once within 
any three month period;

[[Page 550]]

    (ii)(A) Except as provided in paragraph (c)(5)(ii)(B) of this 
section, any transfer described in paragraph (c)(5)(i), or any 
permissible withdrawal as determined under section 414(w)(2) of the 
Code, by a participant or beneficiary of assets invested in a qualified 
default investment alternative, in whole or in part, resulting from the 
participant's or beneficiary's election to make such a transfer or 
withdrawal during the 90-day period beginning on the date of the 
participant's first elective contribution as determined under section 
414(w)(2)(B) of the Code, or other first investment in a qualified 
default investment alternative on behalf of a participant or beneficiary 
described in paragraph (c)(2) of this section, shall not be subject to 
any restrictions, fees or expenses (including surrender charges, 
liquidation or exchange fees, redemption fees and similar expenses 
charged in connection with the liquidation of, or transfer from, the 
investment);
    (B) Paragraph (c)(5)(ii)(A) of this section shall not apply to fees 
and expenses that are charged on an ongoing basis for the operation of 
the investment itself (such as investment management fees, distribution 
and/or service fees, ``12b-1'' fees, or legal, accounting, transfer 
agent and similar administrative expenses), and are not imposed, or do 
not vary, based on a participant's or beneficiary's decision to 
withdraw, sell or transfer assets out of the qualified default 
investment alternative; and
    (iii) Following the end of the 90-day period described in paragraph 
(c)(5)(ii)(A) of this section, any transfer or permissible withdrawal 
described in this paragraph (c)(5) of this section shall not be subject 
to any restrictions, fees or expenses not otherwise applicable to a 
participant or beneficiary who elected to invest in that qualified 
default investment alternative; and
    (6) The plan offers a ``broad range of investment alternatives'' 
within the meaning of 29 CFR 2550.404c-1(b)(3).
    (d) Notice. The notice required by paragraph (c)(3) of this section 
shall be written in a manner calculated to be understood by the average 
plan participant and shall contain the following:
    (1) A description of the circumstances under which assets in the 
individual account of a participant or beneficiary may be invested on 
behalf of the participant or beneficiary in a qualified default 
investment alternative; and, if applicable, an explanation of the 
circumstances under which elective contributions will be made on behalf 
of a participant, the percentage of such contributions, and the right of 
the participant to elect not to have such contributions made on the 
participant's behalf (or to elect to have such contributions made at a 
different percentage);
    (2) An explanation of the right of participants and beneficiaries to 
direct the investment of assets in their individual accounts;
    (3) A description of the qualified default investment alternative, 
including a description of the investment objectives, risk and return 
characteristics (if applicable), and fees and expenses attendant to the 
investment alternative;
    (4) A description of the right of the participants and beneficiaries 
on whose behalf assets are invested in a qualified default investment 
alternative to direct the investment of those assets to any other 
investment alternative under the plan, including a description of any 
applicable restrictions, fees or expenses in connection with such 
transfer; and
    (5) An explanation of where the participants and beneficiaries can 
obtain investment information concerning the other investment 
alternatives available under the plan.
    (e) Qualified default investment alternative. For purposes of this 
section, a qualified default investment alternative means an investment 
alternative available to participants and beneficiaries that:
    (1)(i) Does not hold or permit the acquisition of employer 
securities, except as provided in paragraph (ii).
    (ii) Paragraph (e)(1)(i) of this section shall not apply to: (A) 
Employer securities held or acquired by an investment company registered 
under the Investment Company Act of 1940 or a similar pooled investment 
vehicle regulated and subject to periodic examination by a State or 
Federal agency and

[[Page 551]]

with respect to which investment in such securities is made in 
accordance with the stated investment objectives of the investment 
vehicle and independent of the plan sponsor or an affiliate thereof; or 
(B) with respect to a qualified default investment alternative described 
in paragraph (e)(4)(iii) of this section, employer securities acquired 
as a matching contribution from the employer/plan sponsor, or employer 
securities acquired prior to management by the investment management 
service to the extent the investment management service has 
discretionary authority over the disposition of such employer 
securities;
    (2) Satisfies the requirements of paragraph (c)(5) of this section 
regarding the ability of a participant or beneficiary to transfer, in 
whole or in part, his or her investment from the qualified default 
investment alternative to any other investment alternative available 
under the plan;
    (3) Is:
    (i) Managed by: (A) an investment manager, within the meaning of 
section 3(38) of the Act; (B) a trustee of the plan that meets the 
requirements of section 3(38)(A), (B) and (C) of the Act; or
    (C) the plan sponsor, or a committee comprised primarily of 
employees of the plan sponsor, which is a named fiduciary within the 
meaning of section 402(a)(2) of the Act;
    (ii) An investment company registered under the Investment Company 
Act of 1940; or
    (iii) An investment product or fund described in paragraph 
(e)(4)(iv) or (v) of this section; and
    (4) Constitutes one of the following:
    (i) An investment fund product or model portfolio that applies 
generally accepted investment theories, is diversified so as to minimize 
the risk of large losses and that is designed to provide varying degrees 
of long-term appreciation and capital preservation through a mix of 
equity and fixed income exposures based on the participant's age, target 
retirement date (such as normal retirement age under the plan) or life 
expectancy. Such products and portfolios change their asset allocations 
and associated risk levels over time with the objective of becoming more 
conservative (i.e., decreasing risk of losses) with increasing age. For 
purposes of this paragraph (e)(4)(i), asset allocation decisions for 
such products and portfolios are not required to take into account risk 
tolerances, investments or other preferences of an individual 
participant. An example of such a fund or portfolio may be a ``life-
cycle'' or ``targeted-retirement-date'' fund or account.
    (ii) An investment fund product or model portfolio that applies 
generally accepted investment theories, is diversified so as to minimize 
the risk of large losses and that is designed to provide long-term 
appreciation and capital preservation through a mix of equity and fixed 
income exposures consistent with a target level of risk appropriate for 
participants of the plan as a whole. For purposes of this paragraph 
(e)(4)(ii), asset allocation decisions for such products and portfolios 
are not required to take into account the age, risk tolerances, 
investments or other preferences of an individual participant. An 
example of such a fund or portfolio may be a ``balanced'' fund.
    (iii) An investment management service with respect to which a 
fiduciary, within the meaning of paragraph (e)(3)(i) of this section, 
applying generally accepted investment theories, allocates the assets of 
a participant's individual account to achieve varying degrees of long-
term appreciation and capital preservation through a mix of equity and 
fixed income exposures, offered through investment alternatives 
available under the plan, based on the participant's age, target 
retirement date (such as normal retirement age under the plan) or life 
expectancy. Such portfolios are diversified so as to minimize the risk 
of large losses and change their asset allocations and associated risk 
levels for an individual account over time with the objective of 
becoming more conservative (i.e., decreasing risk of losses) with 
increasing age. For purposes of this paragraph (e)(4)(iii), asset 
allocation decisions are not required to take into account risk 
tolerances, investments or other preferences of an individual 
participant. An example of such a service may be a ``managed account.''

[[Page 552]]

    (iv)(A) Subject to paragraph (e)(4)(iv)(B) of this section, an 
investment product or fund designed to preserve principal and provide a 
reasonable rate of return, whether or not such return is guaranteed, 
consistent with liquidity. Such investment product shall for purposes of 
this paragraph (e)(4)(iv):
    (1) Seek to maintain, over the term of the investment, the dollar 
value that is equal to the amount invested in the product; and
    (2) Be offered by a State or federally regulated financial 
institution.
    (B) An investment product described in this paragraph (e)(4)(iv) 
shall constitute a qualified default investment alternative for purposes 
of paragraph (e) of this section for not more than 120 days after the 
date of the participant's first elective contribution (as determined 
under section 414(w)(2)(B) of the Code).
    (v)(A) Subject to paragraph (e)(4)(v)(B) of this section, an 
investment product or fund designed to preserve principal; provide a 
rate of return generally consistent with that earned on intermediate 
investment grade bonds; and provide liquidity for withdrawals by 
participants and beneficiaries, including transfers to other investment 
alternatives. Such investment product or fund shall, for purposes of 
this paragraph (e)(4)(v), meet the following requirements:
    (1) There are no fees or surrender charges imposed in connection 
with withdrawals initiated by a participant or beneficiary; and
    (2) Such investment product or fund invests primarily in investment 
products that are backed by State or federally regulated financial 
institutions.
    (B) An investment product or fund described in this paragraph 
(e)(4)(v) shall constitute a qualified default investment alternative 
for purposes of paragraph (e) of this section solely for purposes of 
assets invested in such product or fund before December 24, 2007.
    (vi) An investment fund product or model portfolio that otherwise 
meets the requirements of this section shall not fail to constitute a 
product or portfolio for purposes of paragraph (e)(4)(i) or (ii) of this 
section solely because the product or portfolio is offered through 
variable annuity or similar contracts or through common or collective 
trust funds or pooled investment funds and without regard to whether 
such contracts or funds provide annuity purchase rights, investment 
guarantees, death benefit guarantees or other features ancillary to the 
investment fund product or model portfolio.
    (f) Preemption of State laws. (1) Section 514(e)(1) of the Act 
provides that title I of the Act supersedes any State law that would 
directly or indirectly prohibit or restrict the inclusion in any plan of 
an automatic contribution arrangement. For purposes of section 514(e) of 
the Act and this paragraph (f), an automatic contribution arrangement is 
an arrangement (or the provisions of a plan) under which:
    (i) A participant may elect to have the plan sponsor make payments 
as contributions under the plan on his or her behalf or receive such 
payments directly in cash;
    (ii) A participant is treated as having elected to have the plan 
sponsor make such contributions in an amount equal to a uniform 
percentage of compensation provided under the plan until the participant 
specifically elects not to have such contributions made (or specifically 
elects to have such contributions made at a different percentage); and
    (iii) Contributions are invested in accordance with paragraphs (a) 
through (e) of this section.
    (2) A State law that would directly or indirectly prohibit or 
restrict the inclusion in any pension plan of an automatic contribution 
arrangement is superseded as to any pension plan, regardless of whether 
such plan includes an automatic contribution arrangement as defined in 
paragraph (f)(1) of this section.
    (3) The administrator of an automatic contribution arrangement 
within the meaning of paragraph (f)(1) of this section shall be 
considered to have satisfied the notice requirements of section 
514(e)(3) of the Act if notices are furnished in accordance with 
paragraphs (c)(3) and (d) of this section.
    (4) Nothing in this paragraph (f) precludes a pension plan from 
including an automatic contribution arrangement

[[Page 553]]

that does not meet the conditions of paragraphs (a) through (e) of this 
section.

[72 FR 60478, Oct. 24, 2007; 73 FR 23350, Apr. 30, 2008]



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 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

[[Page 554]]

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 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

[[Page 555]]

    (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 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;

[[Page 556]]

    (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 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.

[[Page 557]]

    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 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

[[Page 558]]

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.
    (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

[[Page 559]]

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 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

[[Page 560]]

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 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

[[Page 561]]

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--(1) Pension plan 
disclosure--(i) General. No contract or arrangement for services between 
a covered plan and a covered service provider, nor any extension or 
renewal, is reasonable within the meaning of section 408(b)(2) of the 
Act and paragraph (a)(2) of this section unless the requirements of this 
paragraph (c)(1) are satisfied. The requirements of this paragraph 
(c)(1) are independent of fiduciary obligations under section 404 of the 
Act.
    (ii) Covered plan. For purposes of this paragraph (c)(1), a 
``covered plan'' is an ``employee pension benefit plan'' or a ``pension 
plan'' within the meaning of section 3(2)(A) (and not described in 
section 4(b)) of the Act, except that the term ``covered plan'' shall 
not include a ``simplified employee pension'' described in section 
408(k) of the Internal Revenue Code of 1986 (the Code); a ``simple 
retirement account'' described in section 408(p) of the Code; an 
individual retirement account described in section 408(a) of the Code; 
an individual retirement annuity described in section 408(b) of the 
Code; or annuity contracts and custodial accounts described in section 
403(b) of the Code issued to a current or former employee before January 
1, 2009, for which the employer ceased to have any obligation to make 
contributions (including employee salary reduction contributions), and 
in fact ceased making contributions to the contract or account for 
periods before January 1, 2009, and for which all of the rights and 
benefits under the contract or account are legally enforceable against 
the insurer or custodian by the individual owner of the contract or 
account without any involvement by the employer, and for which such 
individual owner is fully vested in the contract or account.
    (iii) Covered service provider. For purposes of this paragraph 
(c)(1), a ``covered service provider'' is a service provider that enters 
into a contract or arrangement with the covered plan and reasonably 
expects $1,000 or more in compensation, direct or indirect, to be 
received in connection with providing one or more of the services 
described in paragraphs (c)(1)(iii)(A), (B), or (C) of this section 
pursuant to the contract or arrangement, regardless of whether such 
services will be performed, or such compensation received, by the 
covered service provider, an affiliate, or a subcontractor.

[[Page 562]]

    (A) Services as a fiduciary or registered investment adviser. (1) 
Services provided directly to the covered plan as a fiduciary (unless 
otherwise specified, a ``fiduciary'' in this paragraph (c)(1) is a 
fiduciary within the meaning of section 3(21) of the Act);
    (2) Services provided as a fiduciary to an investment contract, 
product, or entity that holds plan assets (as determined pursuant to 
sections 3(42) and 401 of the Act and 29 CFR 2510.3-101) and in which 
the covered plan has a direct equity investment (a direct equity 
investment does not include investments made by the investment contract, 
product, or entity in which the covered plan invests); or
    (3) Services provided directly to the covered plan as an investment 
adviser registered under either the Investment Advisers Act of 1940 or 
any State law.
    (B) Certain recordkeeping or brokerage services. Recordkeeping 
services or brokerage services provided to a covered plan that is an 
individual account plan, as defined in section 3(34) of the Act, and 
that permits participants or beneficiaries to direct the investment of 
their accounts, if one or more designated investment alternatives will 
be made available (e.g., through a platform or similar mechanism) in 
connection with such recordkeeping services or brokerage services.
    (C) Other services for indirect compensation. Accounting, auditing, 
actuarial, appraisal, banking, consulting (i.e., consulting related to 
the development or implementation of investment policies or objectives, 
or the selection or monitoring of service providers or plan 
investments), custodial, insurance, investment advisory (for plan or 
participants), legal, recordkeeping, securities or other investment 
brokerage, third party administration, or valuation services provided to 
the covered plan, for which the covered service provider, an affiliate, 
or a subcontractor reasonably expects to receive indirect compensation 
(as defined in paragraph (c)(1)(viii)(B)(2) of this section or 
compensation described in paragraph (c)(1)(iv)(C)(3) of this section).
    (D) Limitations. Notwithstanding paragraphs (c)(1)(iii)(A), (B), or 
(C) of this section, no person or entity is a ``covered service 
provider'' solely by providing services--
    (1) As an affiliate or a subcontractor that is performing one or 
more of the services described in paragraphs (c)(1)(iii)(A), (B), or (C) 
of this section under the contract or arrangement with the covered plan; 
or
    (2) To an investment contract, product, or entity in which the 
covered plan invests, regardless of whether or not the investment 
contract, product, or entity holds assets of the covered plan, other 
than services as a fiduciary described in paragraph (c)(1)(iii)(A)(2) of 
this section.
    (iv) Initial disclosure requirements. The covered service provider 
must disclose the following information to a responsible plan fiduciary, 
in writing--
    (A) Services. A description of the services to be provided to the 
covered plan pursuant to the contract or arrangement (but not including 
non-fiduciary services described in paragraph (c)(1)(iii)(D)(2) of this 
section).
    (B) Status. If applicable, a statement that the covered service 
provider, an affiliate, or a subcontractor will provide, or reasonably 
expects to provide, services pursuant to the contract or arrangement 
directly to the covered plan (or to an investment contract, product or 
entity that holds plan assets and in which the covered plan has a direct 
equity investment) as a fiduciary (within the meaning of section 3(21) 
of the Act); and, if applicable, a statement that the covered service 
provider, an affiliate, or a subcontractor will provide, or reasonably 
expects to provide, services pursuant to the contract or arrangement 
directly to the covered plan as an investment adviser registered under 
either the Investment Advisers Act of 1940 or any State law.
    (C) Compensation--(1) Direct compensation. A description of all 
direct compensation (as defined in paragraph (c)(1)(viii)(B)(1) of this 
section), either in the aggregate or by service, that the covered 
service provider, an affiliate, or a subcontractor reasonably expects to 
receive in connection with the services described pursuant to paragraph 
(c)(1)(iv)(A) of this section.
    (2) Indirect compensation. A description of all indirect 
compensation (as defined in paragraph (c)(1)(viii)(B)(2) of

[[Page 563]]

this section) that the covered service provider, an affiliate, or a 
subcontractor reasonably expects to receive in connection with the 
services described pursuant to paragraph (c)(1)(iv)(A) of this section; 
including identification of the services for which the indirect 
compensation will be received, identification of the payer of the 
indirect compensation, and a description of the arrangement between the 
payer and the covered service provider, an affiliate, or a 
subcontractor, as applicable, pursuant to which such indirect 
compensation is paid.
    (3) Compensation paid among related parties. A description of any 
compensation that will be paid among the covered service provider, an 
affiliate, or a subcontractor, in connection with the services described 
pursuant to paragraph (c)(1)(iv)(A) of this section if it is set on a 
transaction basis (e.g., commissions, soft dollars, finder's fees or 
other similar incentive compensation based on business placed or 
retained) or is charged directly against the covered plan's investment 
and reflected in the net value of the investment (e.g., Rule 12b-1 
fees); including identification of the services for which such 
compensation will be paid and identification of the payers and 
recipients of such compensation (including the status of a payer or 
recipient as an affiliate or a subcontractor). Compensation must be 
disclosed pursuant to this paragraph (c)(1)(iv)(C)(3) regardless of 
whether such compensation also is disclosed pursuant to paragraph 
(c)(1)(iv)(C)(1) or (2), (c)(1)(iv)(E), or (c)(1)(iv)(F) of this 
section. This paragraph (c)(1)(iv)(C)(3) shall not apply to compensation 
received by an employee from his or her employer on account of work 
performed by the employee.
    (4) Compensation for termination of contract or arrangement. A 
description of any compensation that the covered service provider, an 
affiliate, or a subcontractor reasonably expects to receive in 
connection with termination of the contract or arrangement, and how any 
prepaid amounts will be calculated and refunded upon such termination.
    (D) Recordkeeping services. Without regard to the disclosure of 
compensation pursuant to paragraph (c)(1)(iv)(C), (c)(1)(iv)(E), or 
(c)(1)(iv)(F) of this section, if recordkeeping services will be 
provided to the covered plan--
    (1) A description of all direct and indirect compensation that the 
covered service provider, an affiliate, or a subcontractor reasonably 
expects to receive in connection with such recordkeeping services; and
    (2) If the covered service provider reasonably expects recordkeeping 
services to be provided, in whole or in part, without explicit 
compensation for such recordkeeping services, or when compensation for 
recordkeeping services is offset or rebated based on other compensation 
received by the covered service provider, an affiliate, or a 
subcontractor, a reasonable and good faith estimate of the cost to the 
covered plan of such recordkeeping services, including an explanation of 
the methodology and assumptions used to prepare the estimate and a 
detailed explanation of the recordkeeping services that will be provided 
to the covered plan. The estimate shall take into account, as 
applicable, the rates that the covered service provider, an affiliate, 
or a subcontractor would charge to, or be paid by, third parties, or the 
prevailing market rates charged, for similar recordkeeping services for 
a similar plan with a similar number of covered participants and 
beneficiaries.
    (E) Investment disclosure--fiduciary services. In the case of a 
covered service provider described in paragraph (c)(1)(iii)(A)(2) of 
this section, the following additional information with respect to each 
investment contract, product, or entity that holds plan assets and in 
which the covered plan has a direct equity investment, and for which 
fiduciary services will be provided pursuant to the contract or 
arrangement with the covered plan, unless such information is disclosed 
to the responsible plan fiduciary by a covered service provider 
providing recordkeeping services or brokerage services as described in 
paragraph (c)(1)(iii)(B) of this section--
    (1) A description of any compensation that will be charged directly 
against an investment, such as commissions, sales loads, sales charges, 
deferred sales charges, redemption fees, surrender charges, exchange 
fees, account fees,

[[Page 564]]

and purchase fees; and that is not included in the annual operating 
expenses of the investment contract, product, or entity;
    (2) A description of the annual operating expenses (e.g., expense 
ratio) if the return is not fixed and any ongoing expenses in addition 
to annual operating expenses (e.g., wrap fees, mortality and expense 
fees), or, for an investment contract, product, or entity that is a 
designated investment alternative, the total annual operating expenses 
expressed as a percentage and calculated in accordance with 29 CFR 
2550.404a-5(h)(5); and
    (3) For an investment contract, product, or entity that is a 
designated investment alternative, any other information or data about 
the designated investment alternative that is within the control of, or 
reasonably available to, the covered service provider and that is 
required for the covered plan administrator to comply with the 
disclosure obligations described in 29 CFR 2550.404a-5(d)(1).
    (F) Investment disclosure--recordkeeping and brokerage services. (1) 
In the case of a covered service provider described in paragraph 
(c)(1)(iii)(B) of this section, the additional information described in 
paragraph (c)(1)(iv)(E)(1) through (3) of this section with respect to 
each designated investment alternative for which recordkeeping services 
or brokerage services as described in paragraph (c)(1)(iii)(B) of this 
section will be provided pursuant to the contract or arrangement with 
the covered plan.
    (2) A covered service provider may comply with this paragraph 
(c)(1)(iv)(F) by providing current disclosure materials of the issuer of 
the designated investment alternative, or information replicated from 
such materials, that include the information described in such 
paragraph, provided that:
    (i) The issuer is not an affiliate;
    (ii) The issuer is a registered investment company, an insurance 
company qualified to do business in any State, an issuer of a publicly 
traded security, or a financial institution supervised by a State or 
federal agency; and
    (iii) The covered service provider acts in good faith and does not 
know that the materials are incomplete or inaccurate, and furnishes the 
responsible plan fiduciary with a statement that the covered service 
provider is making no representations as to the completeness or accuracy 
of such materials.
    (G) Manner of receipt. A description of the manner in which the 
compensation described in paragraph (c)(1)(iv)(C) through (F) of this 
section, as applicable, will be received, such as whether the covered 
plan will be billed or the compensation will be deducted directly from 
the covered plan's account(s) or investments.
    (H) Guide to initial disclosures. [Reserved]
    (v) Timing of initial disclosure requirements; changes. (A) A 
covered service provider must disclose the information required by 
paragraph (c)(1)(iv) of this section to the responsible plan fiduciary 
reasonably in advance of the date the contract or arrangement is entered 
into, and extended or renewed, except that--
    (1) When an investment contract, product, or entity is determined 
not to hold plan assets upon the covered plan's direct equity 
investment, but subsequently is determined to hold plan assets while the 
covered plan's investment continues, the information required by 
paragraph (c)(1)(iv) of this section must be disclosed as soon as 
practicable, but not later than 30 days from the date on which the 
covered service provider knows that such investment contract, product, 
or entity holds plan assets; and
    (2) The information described in paragraph (c)(1)(iv)(F) of this 
section relating to any investment alternative that is not designated at 
the time the contract or arrangement is entered into must be disclosed 
as soon as practicable, but not later than the date the investment 
alternative is designated by the covered plan.
    (B)(1) A covered service provider must disclose a change to the 
information required by paragraph (c)(1)(iv)(A) through (D), and (G) of 
this section as soon as practicable, but not later than 60 days from the 
date on which the covered service provider is informed of such change, 
unless such disclosure is precluded due to extraordinary circumstances 
beyond the covered service

[[Page 565]]

provider's control, in which case the information must be disclosed as 
soon as practicable.
    (2) A covered service provider must, at least annually, disclose any 
changes to the information required by paragraph (c)(1)(iv)(E) and (F) 
of this section.
    (vi) Reporting and disclosure information; timing. (A) Upon the 
written request of the responsible plan fiduciary or covered plan 
administrator, the covered service provider must furnish any other 
information relating to the compensation received in connection with the 
contract or arrangement that is required for the covered plan to comply 
with the reporting and disclosure requirements of Title I of the Act and 
the regulations, forms and schedules issued thereunder.
    (B) The covered service provider must disclose the information 
required by paragraph (c)(1)(vi)(A) of this section reasonably in 
advance of the date upon which such responsible plan fiduciary or 
covered plan administrator states that it must comply with the 
applicable reporting or disclosure requirement, unless such disclosure 
is precluded due to extraordinary circumstances beyond the covered 
service provider's control, in which case the information must be 
disclosed as soon as practicable.
    (vii) Disclosure errors. No contract or arrangement will fail to be 
reasonable under this paragraph (c)(1) solely because the covered 
service provider, acting in good faith and with reasonable diligence, 
makes an error or omission in disclosing the information required 
pursuant to paragraph (c)(1)(iv) of this section (or a change to such 
information disclosed pursuant to paragraph (c)(1)(v)(B) of this 
section) or paragraph (c)(1)(vi) of this section, provided that the 
covered service provider discloses the correct information to the 
responsible plan fiduciary as soon as practicable, but not later than 30 
days from the date on which the covered service provider knows of such 
error or omission.
    (viii) Definitions. For purposes of paragraph (c)(1) of this 
section:
    (A) Affiliate. A person's or entity's ``affiliate'' directly or 
indirectly (through one or more intermediaries) controls, is controlled 
by, or is under common control with such person or entity; or is an 
officer, director, or employee of, or partner in, such person or entity. 
Unless otherwise specified, an ``affiliate'' in this paragraph (c)(1) 
refers to an affiliate of the covered service provider.
    (B) Compensation. Compensation is anything of monetary value (for 
example, money, gifts, awards, and trips), but does not include non-
monetary compensation valued at $250 or less, in the aggregate, during 
the term of the contract or arrangement.
    (1) ``Direct'' compensation is compensation received directly from 
the covered plan.
    (2) ``Indirect'' compensation is compensation received from any 
source other than the covered plan, the plan sponsor, the covered 
service provider, or an affiliate. Compensation received from a 
subcontractor is indirect compensation, unless it is received in 
connection with services performed under the subcontractor's contract or 
arrangement described in paragraph (c)(1)(viii)(F) of this section.
    (3) A description of compensation or cost may be expressed as a 
monetary amount, formula, percentage of the covered plan's assets, or a 
per capita charge for each participant or beneficiary or, if the 
compensation or cost cannot reasonably be expressed in such terms, by 
any other reasonable method. The description may include a reasonable 
and good faith estimate if the covered service provider cannot otherwise 
readily describe compensation or cost and the covered service provider 
explains the methodology and assumptions used to prepare such estimate. 
Any description, including any estimate of recordkeeping cost under 
paragraph (c)(1)(iv)(D), must contain sufficient information to permit 
evaluation of the reasonableness of the compensation or cost.
    (C) Designated investment alternative. A ``designated investment 
alternative'' is any investment alternative designated by the covered 
plan into which participants and beneficiaries may direct the investment 
of assets held in, or contributed to, their individual accounts. The 
term ``designated investment alternative'' shall not include

[[Page 566]]

brokerage windows, self-directed brokerage accounts, or similar plan 
arrangements that enable participants and beneficiaries to select 
investments beyond those designated by the covered plan.
    (D) Recordkeeping services. ``Recordkeeping services'' include 
services related to plan administration and monitoring of plan and 
participant and beneficiary transactions (e.g., enrollment, payroll 
deductions and contributions, offering designated investment 
alternatives and other covered plan investments, loans, withdrawals and 
distributions); and the maintenance of covered plan and participant and 
beneficiary accounts, records, and statements.
    (E) Responsible plan fiduciary. A ``responsible plan fiduciary'' is 
a fiduciary with authority to cause the covered plan to enter into, or 
extend or renew, the contract or arrangement.
    (F) Subcontractor. A ``subcontractor'' is any person or entity (or 
an affiliate of such person or entity) that is not an affiliate of the 
covered service provider and that, pursuant to a contract or arrangement 
with the covered service provider or an affiliate, reasonably expects to 
receive $1,000 or more in compensation for performing one or more 
services described pursuant to paragraph (c)(1)(iii)(A) through (C) of 
this section provided for by the contract or arrangement with the 
covered plan.
    (ix) Exemption for responsible plan fiduciary. Pursuant to section 
408(a) of the Act, the restrictions of section 406(a)(1)(C) and (D) of 
the Act shall not apply to a responsible plan fiduciary, notwithstanding 
any failure by a covered service provider to disclose information 
required by paragraph (c)(1)(iv) or (vi) of this section, if the 
following conditions are met:
    (A) The responsible plan fiduciary did not know that the covered 
service provider failed or would fail to make required disclosures and 
reasonably believed that the covered service provider disclosed the 
information required by paragraph (c)(1)(iv) or (vi) of this section;
    (B) The responsible plan fiduciary, upon discovering that the 
covered service provider failed to disclose the required information, 
requests in writing that the covered service provider furnish such 
information;
    (C) If the covered service provider fails to comply with such 
written request within 90 days of the request, then the responsible plan 
fiduciary notifies the Department of Labor of the covered service 
provider's failure, in accordance with paragraph (c)(1)(ix)(E) of this 
section;
    (D) The notice shall contain the following information--
    (1) The name of the covered plan;
    (2) The plan number used for the covered plan's Annual Report;
    (3) The plan sponsor's name, address, and EIN;
    (4) The name, address, and telephone number of the responsible plan 
fiduciary;
    (5) The name, address, phone number, and, if known, EIN of the 
covered service provider;
    (6) A description of the services provided to the covered plan;
    (7) A description of the information that the covered service 
provider failed to disclose;
    (8) The date on which such information was requested in writing from 
the covered service provider; and
    (9) A statement as to whether the covered service provider continues 
to provide services to the plan;
    (E) The notice shall be filed with the Department not later than 30 
days following the earlier of--
    (1) The covered service provider's refusal to furnish the 
information requested by the written request described in paragraph 
(c)(1)(ix)(B) of this section; or
    (2) 90 days after the written request referred to in paragraph 
(c)(1)(ix)(B) of this section is made;
    (F) The notice required by paragraph (c)(1)(ix)(C) of this section 
shall be furnished to the U.S. Department of Labor electronically in 
accordance with instructions published by the Department; or may be sent 
to the following address: U.S. Department of Labor, Employee Benefits 
Security Administration, Office of Enforcement, P.O. Box 75296, 
Washington, DC 20013; and
    (G) If the covered service provider fails to comply with the written 
request referred to in paragraph (c)(1)(ix)(C) of this section within 90

[[Page 567]]

days of such request, the responsible plan fiduciary shall determine 
whether to terminate or continue the contract or arrangement consistent 
with its duty of prudence under section 404 of the Act. If the requested 
information relates to future services and is not disclosed promptly 
after the end of the 90-day period, then the responsible plan fiduciary 
shall terminate the contract or arrangement as expeditiously as 
possible, consistent with such duty of prudence.
    (x) Preemption of State law. Nothing in this section shall be 
construed to supersede any provision of State law that governs 
disclosures by parties that provide the services described in this 
section, except to the extent that such law prevents the application of 
a requirement of this section.
    (xi) Internal Revenue Code. Section 4975(d)(2) of the Code contains 
provisions parallel to section 408(b)(2) of the Act. Effective December 
31, 1978, section 102 of the Reorganization Plan No. 4 of 1978, 5 U.S.C. 
App. 214 (2000 ed.), transferred the authority of the Secretary of the 
Treasury to promulgate regulations of the type published herein to the 
Secretary of Labor. All references herein to section 408(b)(2) of the 
Act and the regulations thereunder should be read to include reference 
to the parallel provisions of section 4975(d)(2) of the Code and 
regulations thereunder at 26 CFR 54.4975-6.
    (xii) Effective date. Paragraph (c) of this section shall be 
effective on July 1, 2012. Paragraph (c)(1) of this section shall apply 
to contracts or arrangements between covered plans and covered service 
providers as of the effective date, without regard to whether the 
contract or arrangement was entered into prior to such date; for 
contracts or arrangements entered into prior to the effective date, the 
information required to be disclosed pursuant to paragraph (c)(1)(iv) of 
this section must be furnished no later than the effective date.
    (2) Welfare plan disclosure. [Reserved]
    (3) Termination of contract or arrangement. No contract or 
arrangement is reasonable within the meaning of section 408(b)(2) of the 
Act and paragraph (a)(2) of this section 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. Similarly, 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.
    (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

[[Page 568]]

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 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

[[Page 569]]

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 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, as amended at 75 FR 41635, July 16, 2010; 
77 FR 5655, Feb. 3, 2012; 77 FR 41680, July 16, 2012]



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

[[Page 570]]

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 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,

[[Page 571]]

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 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

[[Page 572]]

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 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

[[Page 573]]

(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 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

[[Page 574]]

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 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

[[Page 575]]

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 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

[[Page 576]]

(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. 2550.408b-19  Statutory exemption for cross-trading of securities.

    (a) In general. (1) Section 408(b)(19) of the Employee Retirement 
Income Security Act of 1974 (the Act) exempts from the prohibitions of 
section 406(a)(1)(A) and 406(b)(2) of the Act any cross-trade of 
securities if certain conditions are satisfied. Among other conditions, 
the exemption requires that the investment manager adopt, and effect 
cross-trades in accordance with, written cross-trading policies and 
procedures that are fair and equitable to all accounts participating in 
the cross-trading program, and that include:
    (i) A description of the investment manager's pricing policies and 
procedures; and
    (ii) The investment manager's policies and procedures for allocating 
cross-trades in an objective manner among accounts participating in the 
cross-trading program.
    (2) Section 4975(d)(22) of the Internal Revenue Code of 1986 (the 
Code) contains parallel provisions to section 408(b)(19) of the Act. 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 
1978, 5 U.S.C. App. 214 (2000 ed.), 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)(19) of the Act should be read to include 
reference to the parallel provisions of section 4975(d)(22) of the Code.
    (3) Section 408(b)(19)(D) of the Act requires that a plan fiduciary 
for each plan participating in the cross-trades receive in advance of 
any cross-trades disclosure regarding the conditions under which the 
cross-trades may take place, including the written policies and 
procedures described in section

[[Page 577]]

408(b)(19)(H) of the Act. This disclosure must be in a document that is 
separate from any other agreement or disclosure involving the asset 
management relationship. For purposes of section 408(b)(19)(D) of the 
Act, the policies and procedures furnished to the authorizing fiduciary 
must conform with the requirements of this regulation.
    (4) The standards set forth in this section apply solely for 
purposes of determining whether an investment manager's written policies 
and procedures satisfy the content requirements of section 408(b)(19)(H) 
of the Act. Accordingly, such standards do not determine whether the 
investment manager satisfies the other requirements for relief under 
section 408(b)(19) of the Act.
    (b)(1) Policies and procedures. In general. This paragraph specifies 
the content of the written policies and procedures required to be 
adopted by an investment manager and disclosed to the plan fiduciary 
prior to authorizing cross-trading in order for transactions to qualify 
for relief under section 408(b)(19) of the Act.
    (2) Style and format. The content of the policies and procedures 
required by this paragraph must be clear and concise and written in a 
manner calculated to be understood by the plan fiduciary authorizing 
cross-trading. Although no specific format is required for the 
investment manager's written policies and procedures, the information 
contained in the policies and procedures must be sufficiently detailed 
to facilitate a periodic review by the compliance officer of the cross-
trades and a determination by such compliance officer that the cross-
trades comply with the investment manager's written cross-trading 
policies and procedures.
    (3) Content (i). An investment manager's policies and procedures 
must be fair and equitable to all accounts participating in its cross-
trading program and reasonably designed to ensure compliance with the 
requirements of section 408(b)(19)(H) of the Act. Such policies and 
procedures must include:
    (A) A statement of policy which describes the criteria that will be 
applied by the investment manager in determining that execution of a 
securities transaction as a cross-trade will be beneficial to both 
parties to the transaction;
    (B) A description of how the investment manager will determine that 
cross-trades are effected at the independent ``current market price'' of 
the security (within the meaning of section 270.17a-7(b) of Title 17, 
Code of Federal Regulations and SEC no-action and interpretative letters 
thereunder) as required by section 408(b)(19)(B) of the Act, including 
the identity of sources used to establish such price;
    (C) A description of the procedures for ensuring compliance with the 
$100,000,000 minimum asset size requirement of section 408(b)(19). A 
plan or master trust will satisfy the minimum asset size requirement as 
to a transaction if it satisfies the requirement upon its initial 
participation in the cross-trading program and on an annual basis 
thereafter;
    (D) A statement that any investment manager participating in a 
cross-trading program will have conflicting loyalties and 
responsibilities to the parties involved in any cross-trade transaction 
and a description of how the investment manager will mitigate such 
conflicts;
    (E) A requirement that the investment manager allocate cross-trades 
among accounts in an objective and equitable manner and a description of 
the allocation method(s) available to and used by the investment manager 
for assuring an objective allocation among accounts participating in the 
cross-trading program. If more than one allocation methodology may be 
used by the investment manager, a description of what circumstances will 
dictate the use of a particular methodology;
    (F) Identification of the compliance officer responsible for 
periodically reviewing the investment manager's compliance with section 
408(b)(19)(H) of the Act and a statement of the compliance officer's 
qualifications for this position;
    (G) A statement that the cross-trading statutory exemption under 
section 408(b)(19) of the Act requires satisfaction of several objective 
conditions in addition to the requirements that the investment manager 
adopt and effect cross-trades in accordance with written

[[Page 578]]

cross-trading policies and procedures; and
    (H) A statement which specifically describes the scope of the annual 
review conducted by the compliance officer.
    (ii) Nothing herein is intended to preclude an investment manager 
from including such other policies and procedures not required by this 
regulation as the investment manager may determine appropriate to comply 
with the requirements of section 408(b)(19).
    (c) Definitions. For purposes of this section:
    (1) The term ``account'' includes any single customer or pooled fund 
or account.
    (2) The term ``compliance officer'' means an individual designated 
by the investment manager who is responsible for periodically reviewing 
the cross-trades made for the plan to ensure compliance with the 
investment manager's written cross-trading policies and procedures and 
the requirements of section 408(b)(19)(H) of the Act.
    (3) The term ``plan fiduciary'' means a person described in section 
3(21)(A) of the Act with respect to a plan (other than the investment 
manager engaging in the cross-trades or an affiliate) who has the 
authority to authorize a plan's participation in an investment manager's 
cross-trading program.
    (4) The term ``investment manager'' means a person described in 
section 3(38) of the Act.
    (5) The term ``plan'' means any employee benefit plan as described 
in section 3(3) of the Act to which Title I of the Act applies or any 
plan defined in section 4975(e)(1) of the Code.
    (6) The term ``cross-trade'' means the purchase and sale of a 
security between a plan and any other account managed by the same 
investment manager.

[73 FR 58458, Oct. 7, 2008]



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 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

[[Page 579]]

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.
    (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. 2550.408g-1  Investment advice--participants and beneficiaries.

    (a) In general. (1) This section provides relief from the 
prohibitions of section 406 of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA or the Act), and section 4975 of the 
Internal Revenue Code of 1986, as amended (the Code), for certain 
transactions in connection with the provision of investment advice to 
participants and beneficiaries. This section, at paragraph (b), 
implements the statutory exemption set forth at sections 408(b)(14) and 
408(g)(1) of ERISA and sections 4975(d)(17) and 4975(f)(8) of the Code. 
The requirements and conditions set forth in this section apply solely 
for the relief described in paragraph (b) of this section and, 
accordingly, no inferences should be drawn with respect to requirements 
applicable to the provision of investment advice not addressed by this 
section.
    (2) Nothing contained in ERISA section 408(g)(1), Code section 
4975(f)(8), or

[[Page 580]]

this regulation imposes an obligation on a plan fiduciary or any other 
party to offer, provide or otherwise make available any investment 
advice to a participant or beneficiary.
    (3) Nothing contained in ERISA section 408(g)(1), Code section 
4975(f)(8), or this regulation invalidates or otherwise affects prior 
regulations, exemptions, interpretive or other guidance issued by the 
Department of Labor pertaining to the provision of investment advice and 
the circumstances under which such advice may or may not constitute a 
prohibited transaction under section 406 of ERISA or section 4975 of the 
Code.
    (b) Statutory exemption--(1) General. Sections 408(b)(14) and 
408(g)(1) of ERISA provide an exemption from the prohibitions of section 
406 of ERISA for transactions described in section 408(b)(14) of ERISA 
in connection with the provision of investment advice to a participant 
or a beneficiary if the investment advice is provided by a fiduciary 
adviser under an ``eligible investment advice arrangement.'' Sections 
4975(d)(17) and (f)(8) of the Code contain parallel provisions to ERISA 
sections 408(b)(14) and (g)(1).
    (2) Eligible investment advice. For purposes of section 408(g)(1) of 
ERISA and section 4975(f)(8) of the Code, an ``eligible investment 
advice arrangement'' means an arrangement that meets either the 
requirements of paragraph (b)(3) of this section or paragraph (b)(4) of 
this section, or both.
    (3) Arrangements that use fee leveling. For purposes of this 
section, an arrangement is an eligible investment advice arrangement 
if--
    (i)(A) Any investment advice is based on generally accepted 
investment theories that take into account the historic risks and 
returns of different asset classes over defined periods of time, 
although nothing herein shall preclude any investment advice from being 
based on generally accepted investment theories that take into account 
additional considerations;
    (B) Any investment advice takes into account investment management 
and other fees and expenses attendant to the recommended investments;
    (C) Any investment advice takes into account, to the extent 
furnished by a plan, participant or beneficiary, information relating to 
age, time horizons (e.g., life expectancy, retirement age), risk 
tolerance, current investments in designated investment options, other 
assets or sources of income, and investment preferences of the 
participant or beneficiary. A fiduciary adviser shall request such 
information, but nothing in this paragraph (b)(3)(i)(C) shall require 
that any investment advice take into account information requested, but 
not furnished by a participant or beneficiary, nor preclude requesting 
and taking into account additional information that a plan or 
participant or beneficiary may provide;
    (D) No fiduciary adviser (including any employee, agent, or 
registered representative) that provides investment advice receives from 
any party (including an affiliate of the fiduciary adviser), directly or 
indirectly, any fee or other compensation (including commissions, 
salary, bonuses, awards, promotions, or other things of value) that 
varies depending on the basis of a participant's or beneficiary's 
selection of a particular investment option; and
    (ii) The requirements of paragraphs (b)(5), (6), (7), (8) and (9) 
and paragraph (d) of this section are met.
    (4) Arrangements that use computer models. For purposes of this 
section, an arrangement is an eligible investment advice arrangement if 
the only investment advice provided under the arrangement is advice that 
is generated by a computer model described in paragraphs (b)(4)(i) and 
(ii) of this section under an investment advice program and with respect 
to which the requirements of paragraphs (b)(5), (6), (7), (8) and (9) 
and paragraph (d) are met.
    (i) A computer model shall be designed and operated to--
    (A) Apply generally accepted investment theories that take into 
account the historic risks and returns of different asset classes over 
defined periods of time, although nothing herein shall preclude a 
computer model from applying generally accepted investment theories that 
take into account additional considerations;
    (B) Take into account investment management and other fees and 
expenses attendant to the recommended investments;

[[Page 581]]

    (C) Appropriately weight the factors used in estimating future 
returns of investment options;
    (D) Request from a participant or beneficiary and, to the extent 
furnished, utilize information relating to age, time horizons (e.g., 
life expectancy, retirement age), risk tolerance, current investments in 
designated investment options, other assets or sources of income, and 
investment preferences; provided, however, that nothing herein shall 
preclude a computer model from requesting and taking into account 
additional information that a plan or a participant or beneficiary may 
provide;
    (E) Utilize appropriate objective criteria to provide asset 
allocation portfolios comprised of investment options available under 
the plan;
    (F) Avoid investment recommendations that:
    (1) Inappropriately favor investment options offered by the 
fiduciary adviser or a person with a material affiliation or material 
contractual relationship with the fiduciary adviser over other 
investment options, if any, available under the plan; or
    (2) Inappropriately favor investment options that may generate 
greater income for the fiduciary adviser or a person with a material 
affiliation or material contractual relationship with the fiduciary 
adviser; and
    (G)(1) Except as provided in paragraph (b)(4)(i)(G)(2) of this 
section, take into account all designated investment options, within the 
meaning of paragraph (c)(1) of this section, available under the plan 
without giving inappropriate weight to any investment option.
    (2) A computer model shall not be treated as failing to meet the 
requirements of this paragraph merely because it does not make 
recommendations relating to the acquisition, holding or sale of an 
investment option that:
    (i) Constitutes an annuity option with respect to which a 
participant or beneficiary may allocate assets toward the purchase of a 
stream of retirement income payments guaranteed by an insurance company, 
provided that, contemporaneous with the provision of investment advice 
generated by the computer model, the participant or beneficiary is also 
furnished a general description of such options and how they operate; or
    (ii) The participant or beneficiary requests to be excluded from 
consideration in such recommendations.
    (ii) Prior to utilization of the computer model, the fiduciary 
adviser shall obtain a written certification, meeting the requirements 
of paragraph (b)(4)(iv) of this section, from an eligible investment 
expert, within the meaning of paragraph (b)(4)(iii) of this section, 
that the computer model meets the requirements of paragraph (b)(4)(i) of 
this section. If, following certification, a computer model is modified 
in a manner that may affect its ability to meet the requirements of 
paragraph (b)(4)(i), the fiduciary adviser shall, prior to utilization 
of the modified model, obtain a new certification from an eligible 
investment expert that the computer model, as modified, meets the 
requirements of paragraph (b)(4)(i).
    (iii) The term ``eligible investment expert'' means a person that, 
through employees or otherwise, has the appropriate technical training 
or experience and proficiency to analyze, determine and certify, in a 
manner consistent with paragraph (b)(4)(iv) of this section, whether a 
computer model meets the requirements of paragraph (b)(4)(i) of this 
section; except that the term ``eligible investment expert'' does not 
include any person that: Has any material affiliation or material 
contractual relationship with the fiduciary adviser, with a person with 
a material affiliation or material contractual relationship with the 
fiduciary adviser, or with any employee, agent, or registered 
representative of the foregoing; or develops a computer model utilized 
by the fiduciary adviser to satisfy this paragraph (b)(4).
    (iv) A certification by an eligible investment expert shall--
    (A) Be in writing;
    (B) Contain--
    (1) An identification of the methodology or methodologies applied in 
determining whether the computer model meets the requirements of 
paragraph (b)(4)(i) of this section;

[[Page 582]]

    (2) An explanation of how the applied methodology or methodologies 
demonstrated that the computer model met the requirements of paragraph 
(b)(4)(i) of this section;
    (3) A description of any limitations that were imposed by any person 
on the eligible investment expert's selection or application of 
methodologies for determining whether the computer model meets the 
requirements of paragraph (b)(4)(i) of this section;
    (4) A representation that the methodology or methodologies were 
applied by a person or persons with the educational background, 
technical training or experience necessary to analyze and determine 
whether the computer model meets the requirements of paragraph 
(b)(4)(i); and
    (5) A statement certifying that the eligible investment expert has 
determined that the computer model meets the requirements of paragraph 
(b)(4)(i) of this section; and
    (C) Be signed by the eligible investment expert.
    (v) The selection of an eligible investment expert as required by 
this section is a fiduciary act governed by section 404(a)(1) of ERISA.
    (5) Arrangement must be authorized by a plan fiduciary. (i) Except 
as provided in paragraph (b)(5)(ii) of this section, the arrangement 
pursuant to which investment advice is provided to participants and 
beneficiaries pursuant to this section must be expressly authorized by a 
plan fiduciary (or, in the case of an Individual Retirement Account 
(IRA), the IRA beneficiary) other than: The person offering the 
arrangement; any person providing designated investment options under 
the plan; or any affiliate of either. Provided, however, that for 
purposes of the preceding, in the case of an IRA, an IRA beneficiary 
will not be treated as an affiliate of a person solely by reason of 
being an employee of such person.
    (ii) In the case of an arrangement pursuant to which investment 
advice is provided to participants and beneficiaries of a plan sponsored 
by the person offering the arrangement or a plan sponsored by an 
affiliate of such person, the authorization described in paragraph 
(b)(5)(i) of this section may be provided by the plan sponsor of such 
plan, provided that the person or affiliate offers the same arrangement 
to participants and beneficiaries of unaffiliated plans in the ordinary 
course of its business.
    (iii) For purposes of the authorization described in paragraph 
(b)(5)(i) of this section, a plan sponsor shall not be treated as a 
person providing a designated investment option under the plan merely 
because one of the designated investment options of the plan is an 
option that permits investment in securities of the plan sponsor or an 
affiliate.
    (6) Annual audit. (i) The fiduciary adviser shall, at least 
annually, engage an independent auditor, who has appropriate technical 
training or experience and proficiency, and so represents in writing to 
the fiduciary adviser, to:
    (A) Conduct an audit of the investment advice arrangements for 
compliance with the requirements of this section; and
    (B) Within 60 days following completion of the audit, issue a 
written report to the fiduciary adviser and, except with respect to an 
arrangement with an IRA, to each fiduciary who authorized the use of the 
investment advice arrangement, in accordance with paragraph (b)(5) of 
this section, that--
    (1) Identifies the fiduciary adviser,
    (2) Indicates the type of arrangement (i.e., fee leveling, computer 
models, or both),
    (3) If the arrangement uses computer models, or both computer models 
and fee leveling, indicates the date of the most recent computer model 
certification, and identifies the eligible investment expert that 
provided the certification, and
    (4) Sets forth the specific findings of the auditor regarding 
compliance of the arrangement with the requirements of this section.
    (ii) With respect to an arrangement with an IRA, the fiduciary 
adviser:
    (A) Within 30 days following receipt of the report from the auditor, 
as described in paragraph (b)(6)(i)(B) of this section, shall furnish a 
copy of the report to the IRA beneficiary or make such report available 
on its Web site, provided that such beneficiaries are

[[Page 583]]

provided information, with the information required to be disclosed 
pursuant to paragraph (b)(7) of this section, concerning the purpose of 
the report, and how and where to locate the report applicable to their 
account; and
    (B) In the event that the report of the auditor identifies 
noncompliance with the requirements of this section, within 30 days 
following receipt of the report from the auditor, shall send a copy of 
the report to the Department of Labor at the following address: 
Investment Advice Exemption Notification, U.S. Department of Labor, 
Employee Benefits Security Administration, Room N-1513, 200 Constitution 
Ave., NW., Washington, DC 20210, or submit a copy electronically to 
[email protected].
    (iii) For purposes of this paragraph (b)(6), an auditor is 
considered independent if it does not have a material affiliation or 
material contractual relationship with the person offering the 
investment advice arrangement to the plan or with any designated 
investment options under the plan, and does not have any role in the 
development of the investment advice arrangement, or certification of 
the computer model utilized under the arrangement.
    (iv) For purposes of this paragraph (b)(6), the auditor shall review 
sufficient relevant information to formulate an opinion as to whether 
the investment advice arrangements, and the advice provided pursuant 
thereto, offered by the fiduciary adviser during the audit period were 
in compliance with this section. Nothing in this paragraph shall 
preclude an auditor from using information obtained by sampling, as 
reasonably determined appropriate by the auditor, investment advice 
arrangements, and the advice pursuant thereto, during the audit period.
    (v) The selection of an auditor for purposes of this paragraph 
(b)(6) is a fiduciary act governed by section 404(a)(1) of ERISA.
    (7) Disclosure to participants. (i) The fiduciary adviser must 
provide, without charge, to a participant or a beneficiary before the 
initial provision of investment advice with regard to any security or 
other property offered as an investment option, a written notification 
of:
    (A) The role of any party that has a material affiliation or 
material contractual relationship with the fiduciary adviser in the 
development of the investment advice program, and in the selection of 
investment options available under the plan;
    (B) The past performance and historical rates of return of the 
designated investment options available under the plan, to the extent 
that such information is not otherwise provided;
    (C) All fees or other compensation that the fiduciary adviser or any 
affiliate thereof is to receive (including compensation provided by any 
third party) in connection with--
    (1) The provision of the advice;
    (2) The sale, acquisition, or holding of any security or other 
property pursuant to such advice; or
    (3) Any rollover or other distribution of plan assets or the 
investment of distributed assets in any security or other property 
pursuant to such advice;
    (D) Any material affiliation or material contractual relationship of 
the fiduciary adviser or affiliates thereof in the security or other 
property;
    (E) The manner, and under what circumstances, any participant or 
beneficiary information provided under the arrangement will be used or 
disclosed;
    (F) The types of services provided by the fiduciary adviser in 
connection with the provision of investment advice by the fiduciary 
adviser;
    (G) The adviser is acting as a fiduciary of the plan in connection 
with the provision of the advice; and
    (H) That a recipient of the advice may separately arrange for the 
provision of advice by another adviser that could have no material 
affiliation with and receive no fees or other compensation in connection 
with the security or other property.
    (ii)(A) The notification required under paragraph (b)(7)(i) of this 
section must be written in a clear and conspicuous manner and in a 
manner calculated to be understood by the average plan participant and 
must be sufficiently accurate and comprehensive to reasonably apprise 
such participants and beneficiaries of the information required to be 
provided in the notification.

[[Page 584]]

    (B) The appendix to this section contains a model disclosure form 
that may be used to provide notification of the information described in 
paragraph (b)(7)(i)(C) of this section. Use of the model form is not 
mandatory. However, use of an appropriately completed model disclosure 
form will be deemed to satisfy the requirements of paragraphs (b)(7)(i) 
and (ii) of this section with respect to such information.
    (iii) The notification required under paragraph (b)(7)(i) of this 
section may, in accordance with 29 CFR 2520.104b-1, be provided in 
written or electronic form.
    (iv) With respect to the information required to be disclosed 
pursuant to paragraph (b)(7)(i) of this section, the fiduciary adviser 
shall, at all times during the provision of advisory services to the 
participant or beneficiary pursuant to the arrangement--
    (A) Maintain accurate, up-to-date information in a form that is 
consistent with paragraph (b)(7)(ii) of this section,
    (B) Provide, without charge, accurate, up-to-date information to the 
recipient of the advice no less frequently than annually,
    (C) Provide, without charge, accurate information to the recipient 
of the advice upon request of the recipient, and
    (D) Provide, without charge, to the recipient of the advice any 
material change to the information described in paragraph (b)(7)(i) at a 
time reasonably contemporaneous to the change in information.
    (8) Disclosure to authorizing fiduciary. The fiduciary adviser 
shall, in connection with any authorization described in paragraph 
(b)(5)(i) of this section, provide the authorizing fiduciary with a 
written notice informing the fiduciary that:
    (i) The fiduciary adviser intends to comply with the conditions of 
the statutory exemption for investment advice under section 408(b)(14) 
and (g) of the Employee Retirement Income Security Act and this section;
    (ii) The fiduciary adviser's arrangement will be audited annually by 
an independent auditor for compliance with the requirements of the 
statutory exemption and related regulations; and
    (iii) The auditor will furnish the authorizing fiduciary a copy of 
that auditor's findings within 60 days of its completion of the audit.
    (9) Other conditions. The requirements of this paragraph are met 
if--
    (i) The fiduciary adviser provides appropriate disclosure, in 
connection with the sale, acquisition, or holding of the security or 
other property, in accordance with all applicable securities laws,
    (ii) Any sale, acquisition, or holding of a security or other 
property occurs solely at the direction of the recipient of the advice,
    (iii) The compensation received by the fiduciary adviser and 
affiliates thereof in connection with the sale, acquisition, or holding 
of the security or other property is reasonable, and
    (iv) The terms of the sale, acquisition, or holding of the security 
or other property are at least as favorable to the plan as an arm's 
length transaction would be.
    (c) Definitions. For purposes of this section:
    (1) The term ``designated investment option'' means any investment 
option designated by the plan into which participants and beneficiaries 
may direct the investment of assets held in, or contributed to, their 
individual accounts. The term ``designated investment option'' shall not 
include ``brokerage windows,'' ``self-directed brokerage accounts,'' or 
similar plan arrangements that enable participants and beneficiaries to 
select investments beyond those designated by the plan. The term 
``designated investment option'' has the same meaning as the term 
``designated investment alternative'' as defined in 29 CFR 2550.404a-
5(h).
    (2)(i) The term ``fiduciary adviser'' means, with respect to a plan, 
a person who is a fiduciary of the plan by reason of the provision of 
investment advice referred to in section 3(21)(A)(ii) of ERISA by the 
person to the participant or beneficiary of the plan and who is--
    (A) Registered as an investment adviser under the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or under the laws of the 
State in which the fiduciary maintains its principal office and place of 
business,
    (B) A bank or similar financial institution referred to in section 
408(b)(4) of

[[Page 585]]

ERISA or a savings association (as defined in section 3(b)(1) of the 
Federal Deposit Insurance Act (12 U.S.C. 1813(b)(1)), but only if the 
advice is provided through a trust department of the bank or similar 
financial institution or savings association which is subject to 
periodic examination and review by Federal or State banking authorities,
    (C) An insurance company qualified to do business under the laws of 
a State,
    (D) A person registered as a broker or dealer under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.),
    (E) An affiliate of a person described in paragraphs (c)(2)(i)(A) 
through (D), or
    (F) An employee, agent, or registered representative of a person 
described in paragraphs (c)(2)(i)(A) through (E) of this section who 
satisfies the requirements of applicable insurance, banking, and 
securities laws relating to the provision of advice.
    (ii) Except as provided under 29 CFR 2550.408g-2, a fiduciary 
adviser includes any person who develops the computer model, or markets 
the computer model or investment advice program, utilized in 
satisfaction of paragraph (b)(4) of this section.
    (3) A ``registered representative'' of another entity means a person 
described in section 3(a)(18) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(18)) (substituting the entity for the broker or dealer 
referred to in such section) or a person described in section 202(a)(17) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17)) 
(substituting the entity for the investment adviser referred to in such 
section).
    (4) ``Individual Retirement Account'' or ``IRA'' means--
    (i) An individual retirement account described in section 408(a) of 
the Code;
    (ii) An individual retirement annuity described in section 408(b) of 
the Code;
    (iii) An Archer MSA described in section 220(d) of the Code;
    (iv) A health savings account described in section 223(d) of the 
Code;
    (v) A Coverdell education savings account described in section 530 
of the Code;
    (vi) A trust, plan, account, or annuity which, at any time, has been 
determined by the Secretary of the Treasury to be described in any of 
paragraphs (c)(4)(i) through (v) of this section;
    (vii) A ``simplified employee pension'' described in section 408(k) 
of the Code; or
    (viii) A ``simple retirement account'' described in section 408(p) 
of the Code.
    (5) An ``affiliate'' of another person means--
    (i) Any person directly or indirectly owning, controlling, or 
holding with power to vote, 5 percent or more of the outstanding voting 
securities of such other person;
    (ii) Any person 5 percent or more of whose outstanding voting 
securities are directly or indirectly owned, controlled, or held with 
power to vote, by such other person;
    (iii) Any person directly or indirectly controlling, controlled by, 
or under common control with, such other person; and
    (iv) Any officer, director, partner, copartner, or employee of such 
other person.
    (6)(i) A person with a ``material affiliation'' with another person 
means--
    (A) Any affiliate of the other person;
    (B) Any person directly or indirectly owning, controlling, or 
holding, 5 percent or more of the interests of such other person; and
    (C) Any person 5 percent or more of whose interests are directly or 
indirectly owned, controlled, or held, by such other person.
    (ii) For purposes of paragraph (c)(6)(i) of this section, 
``interest'' means with respect to an entity--
    (A) The combined voting power of all classes of stock entitled to 
vote or the total value of the shares of all classes of stock of the 
entity if the entity is a corporation;
    (B) The capital interest or the profits interest of the entity if 
the entity is a partnership; or
    (C) The beneficial interest of the entity if the entity is a trust 
or unincorporated enterprise.
    (7) Persons have a ``material contractual relationship'' if payments 
made by one person to the other person pursuant to contracts or 
agreements between the persons exceed 10 percent of the gross revenue, 
on an annual basis, of such other person.

[[Page 586]]

    (8) ``Control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    (d) Retention of records. The fiduciary adviser must maintain, for a 
period of not less than 6 years after the provision of investment advice 
under this section any records necessary for determining whether the 
applicable requirements of this section have been met. A transaction 
prohibited under section 406 of ERISA shall not be considered to have 
occurred solely because the records are lost or destroyed prior to the 
end of the 6-year period due to circumstances beyond the control of the 
fiduciary adviser.
    (e) Noncompliance. (1) The relief from the prohibited transaction 
provisions of section 406 of ERISA and the sanctions resulting from the 
application of section 4975 of the Code described in paragraph (b) of 
this section shall not apply to any transaction described in such 
paragraphs in connection with the provision of investment advice to an 
individual participant or beneficiary with respect to which the 
applicable conditions of this section have not been satisfied.
    (2) In the case of a pattern or practice of noncompliance with any 
of the applicable conditions of this section, the relief described in 
paragraph (b) of this section shall not apply to any transaction in 
connection with the provision of investment advice provided by the 
fiduciary adviser during the period over which the pattern or practice 
extended.
    (f) Effective date and applicability date. This section shall be 
effective December 27, 2011. This section shall apply to transactions 
described in paragraph (b) of this section occurring on or after 
December 27, 2011.

                      Appendix to Sec. 2550.408g-1

                      Fiduciary Adviser Disclosure

    This document contains important information about [enter name of 
Fiduciary Adviser] and how it is compensated for the investment advice 
provided to you. You should carefully consider this information in your 
evaluation of that advice.
    [enter name of Fiduciary Adviser] has been selected to provide 
investment advisory services for the [enter name of Plan]. [enter name 
of Fiduciary Adviser] will be providing these services as a fiduciary 
under the Employee Retirement Income Security Act (ERISA). [enter name 
of Fiduciary Adviser], therefore, must act prudently and with only your 
interest in mind when providing you recommendations on how to invest 
your retirement assets.

        Compensation of the Fiduciary Adviser and Related Parties

    [enter name of Fiduciary Adviser] (is/is not) compensated by the 
plan for the advice it provides. (if compensated by the plan, explain 
what and how compensation is charged (e.g., asset-based fee, flat fee, 
per advice)). (If applicable, [enter name of Fiduciary Adviser] is not 
compensated on the basis of the investment(s) selected by you.)
    Affiliates of [enter name of Fiduciary Adviser] (if applicable 
enter, and other parties with whom [enter name of Fiduciary Adviser] is 
related or has a material financial relationship) also will be providing 
services for which they will be compensated. These services include: 
[enter description of services, e.g., investment management, transfer 
agent, custodial, and shareholder services for some/all the investment 
funds available under the plan.]
    When [enter name of Fiduciary Adviser] recommends that you invest 
your assets in an investment fund of its own or one of its affiliates 
and you follow that advice, [enter name of Fiduciary Adviser] or that 
affiliate will receive compensation from the investment fund based on 
the amount you invest. The amounts that will be paid by you will vary 
depending on the particular fund in which you invest your assets and may 
range from _% to _%. Specific information concerning the fees and other 
charges of each investment fund is available from [enter source, such 
as: your plan administrator, investment fund provider (possibly with 
Internet Web site address)]. This information should be reviewed 
carefully before you make an investment decision.
    (if applicable enter, [enter name of Fiduciary Adviser] or 
affiliates of [enter name of Fiduciary Adviser] also receive 
compensation from non-affiliated investment funds as a result of 
investments you make as a result of recommendations of [enter name of 
Fiduciary Adviser]. The amount of this compensation also may vary 
depending on the particular fund in which you invest. This compensation 
may range from _% to _%. Specific information concerning the fees and 
other charges of each investment fund is available from [enter source, 
such as: your plan administrator, investment fund provider (possibly 
with Internet Web site address)]. This information should be reviewed 
carefully before you make an investment decision.
    (if applicable enter, In addition to the above, [enter name of 
Fiduciary Adviser] or affiliates of [enter name of Fiduciary Adviser] 
also receive other fees or compensation, such

[[Page 587]]

as commissions, in connection with the sale, acquisition or holding of 
investments selected by you as a result of recommendations of [enter 
name of Fiduciary Adviser]. These amounts are: [enter description of all 
other fees or compensation to be received in connection with sale, 
acquisition or holding of investments]. This information should be 
reviewed carefully before you make an investment decision.
    (if applicable enter, When [enter name of Fiduciary Adviser] 
recommends that you take a rollover or other distribution of assets from 
the plan, or recommends how those assets should subsequently be 
invested, [enter name of Fiduciary Adviser] or affiliates of [enter name 
of Fiduciary Adviser] will receive additional fees or compensation. 
These amounts are: [enter description of all other fees or compensation 
to be received in connection with any rollover or other distribution of 
plan assets or the investment of distributed assets]. This information 
should be reviewed carefully before you make a decision to take a 
distribution.

                Consider Impact of Compensation on Advice

    The fees and other compensation that [enter name of Fiduciary 
Adviser] and its affiliates receive on account of assets in [enter name 
of Fiduciary Adviser] (enter if applicable, and non-[enter name of 
Fiduciary Adviser]) investment funds are a significant source of revenue 
for the [enter name of Fiduciary Adviser] and its affiliates. You should 
carefully consider the impact of any such fees and compensation in your 
evaluation of the investment advice that [enter name of Fiduciary 
Adviser] provides to you. In this regard, you may arrange for the 
provision of advice by another adviser that may have no material 
affiliation with or receive no compensation in connection with the 
investment funds or products offered under the plan. This type of advice 
is/is not available through your plan.

                           Investment Returns

    While understanding investment-related fees and expenses is 
important in making informed investment decisions, it is also important 
to consider additional information about your investment options, such 
as performance, investment strategies and risks. Specific information 
related to the past performance and historical rates of return of the 
investment options available under the plan (has/has not) been provided 
to you by [enter source, such as: your plan administrator, investment 
fund provider]. (if applicable enter, If not provided to you, the 
information is attached to this document.)
    For options with returns that vary over time, past performance does 
not guarantee how your investment in the option will perform in the 
future; your investment in these options could lose money.

 Parties Participating in Development of Advice Program or Selection of 
                           Investment Options

    Name, and describe role of, affiliates or other parties with whom 
the fiduciary adviser has a material affiliation or contractual 
relationship that participated in the development of the investment 
advice program (if this is an arrangement that uses computer models) or 
the selection of investment options available under the plan.

                       Use of Personal Information

Include a brief explanation of the following--What personal information 
 will be collected; How the information will be used; Parties with whom 
 information will be shared; How the information will be protected; and 
When and how notice of the Fiduciary Adviser's privacy statement will be 
              available to participants and beneficiaries.

    Should you have any questions about [enter name of Fiduciary 
Adviser] or the information contained in this document, you may contact 
[enter name of contact person for fiduciary adviser, telephone number, 
address].

[76 FR 66162, Oct. 25, 2011]



Sec. 2550.408g-2  Investment advice--fiduciary election.

    (a) General. Section 408(g)(11)(A) of the Employee Retirement Income 
Security Act, as amended (ERISA), provides that a person who develops a 
computer model or who markets a computer model or investment advice 
program used in an ``eligible investment advice arrangement'' shall be 
treated as a fiduciary of a plan by reason of the provision of 
investment advice referred to in ERISA section 3(21)(A)(ii) to the plan 
participant or beneficiary, and shall be treated as a ``fiduciary 
adviser'' for purposes of ERISA sections 408(b)(14) and 408(g), except 
that the Secretary of Labor may prescribe rules under which only one 
fiduciary adviser may elect to be treated as a fiduciary with respect to 
the plan. Section 4975(f)(8)(J)(i) of the Internal Revenue Code, as 
amended (the Code), contains a parallel provision to ERISA section 
408(g)(11)(A) that applies for purposes of Code sections 4975(d)(17) and 
4975(f)(8). This section sets forth requirements that must be satisfied 
in order for one such fiduciary adviser to elect to be treated as a 
fiduciary with

[[Page 588]]

respect to a plan under an eligible investment advice arrangement.
    (b)(1) If an election meets the requirements in paragraph (b)(2) of 
this section, then the person identified in the election shall be the 
sole fiduciary adviser treated as a fiduciary by reason of developing or 
marketing the computer model, or marketing the investment advice 
program, used in an eligible investment advice arrangement.
    (2) An election satisfies the requirements of this paragraph (b) 
with respect to an eligible investment advice arrangement if the 
election is in writing and such writing--
    (i) Identifies the investment advice arrangement, and the person 
offering the arrangement, with respect to which the election is to be 
effective;
    (ii) Identifies a person who--
    (A) Is described in any of 29 CFR 2550.408g-1(c)(2)(i)(A) through 
(E),
    (B) Develops the computer model, or markets the computer model or 
investment advice program, utilized in satisfaction of 29 CFR 2550.408g-
1(b)(4) with respect to the arrangement, and
    (C) Acknowledges that it elects to be treated as the only fiduciary, 
and fiduciary adviser, by reason of developing such computer model, or 
marketing such computer model or investment advice program;
    (iii) Is signed by the person identified in paragraph (b)(2)(ii) of 
this section;
    (iv) Is furnished to the person who authorized the arrangement, in 
accordance with 29 CFR 2550.408g-1(b)(5); and
    (v) Is maintained in accordance with 29 CFR 2550.408g-1(d).

[76 FR 66167, Oct. 25, 2011]



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

[[Page 589]]

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 590]]



     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-4  Civil penalties under section 502(c)(4).
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).
2560.502c-8  Civil penalties under section 502(c)(8).
2560.502i-1  Civil penalties under section 502(i).
2560.503-1  Claims procedure.
2560.521-1  Cease and desist and seizure orders under section 521.
2560.521-2  Disclosure of order and proceedings.
2560.521-3  Effect on other enforcement authority.
2560.521-4  Cross-reference.

    Authority: 29 U.S.C. 1132, 1135, and Secretary of Labor's Order 1-
2011, 77 FR 1088 (Jan. 9, 2012). Section 2560.503-1 also issued under 29 
U.S.C. 1133. Section 2560.502c-7 also issued under 29 U.S.C. 1132(c)(7). 
Section 2560.502c-4 also issued under 29 U.S.C. 1132(c)(4). Section 
2560.502c-8 also issued under 29 U.S.C. 1132(c)(8).



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

[[Page 591]]

report. However, the amount assessed under section 502(c)(2) of the Act 
shall not exceed $1,000 a day (adjusted for inflation 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 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

[[Page 592]]

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.
    (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 at 67 FR 777, Jan. 7, 2002; 68 
FR 3734, Jan. 24, 2003; 81 FR 43453, July 1, 2016]



Sec. 2560.502c-4  Civil penalties under section 502(c)(4).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(4) 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) shall be liable for civil penalties 
assessed by the Secretary under section 502(c)(4) of the Act, for 
failure or refusal to furnish:
    (i) Notice of funding-based limits in accordance with section 101(j) 
of the Act;
    (ii) Actuarial, financial or funding information in accordance with 
section 101(k) of the Act;
    (iii) Notice of potential withdrawal liability in accordance with 
section 101(l) of the Act; or

[[Page 593]]

    (iv) Notice of rights and obligations under an automatic 
contribution arrangement in accordance with section 514(e)(3) of the 
Act.
    (2) For purposes of this section, a failure or refusal to furnish 
the items referred to in paragraph (a)(1) above shall mean a failure or 
refusal to furnish, in whole or in part, the items required under 
section 101(j), (k), or (l), or section 514(e)(3) of the Act at the 
relevant times and manners prescribed in such sections.
    (b) Amount assessed. (1) The amount assessed under section 502(c)(4) 
of the Act for each separate violation shall be determined by the 
Department of Labor, taking into consideration the degree or willfulness 
of the failure or refusal to furnish the items referred to in paragraph 
(a) of this section. However, the amount assessed for each violation 
under section 502(c)(4) of the Act shall not exceed $1,000 a day 
(adjusted for inflation 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 the items referred to 
in paragraph (a) of this section.
    (2) For purposes of calculating the amount to be assessed under this 
section, a failure or refusal to furnish the item with respect to any 
person entitled to receive such item, shall be treated as a separate 
violation under section 101(j), (k), or (l), or section 514(e)(3) of the 
Act, as applicable.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(4) 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)(4) of the 
Act, the amount of such penalty, the number of individuals 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(j), 
(k), or (l), or section 514(e)(3) of the Act, as applicable, or on a 
showing by such person 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 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)(4) 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 nonassessment 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.

[[Page 594]]

    (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 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 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 items required under 
section 101(j), (k), or (l), or section 514(e)(3) of the Act, as 
applicable, all such persons shall be jointly and severally liable for 
such failure. For purposes of paragraph (a)(1)(iii) of this section, the 
term ``administrator'' shall include plan sponsor (within the meaning of 
section 3(16)(B) of the Act).
    (2) Any person, or persons under paragraph (j)(1) of this section, 
against whom a civil penalty has been assessed under section 502(c)(4) 
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-references. (1) The procedural rules in Secs. 2570.130 
through 2570.141 of this chapter apply to administrative hearings under 
section 502(c)(4) of the Act.
    (2) When applying procedural rules in Secs. 2570.130 through 
2570.140:
    (i) Wherever the term ``502(c)(7)'' appears, such term shall mean 
``502(c)(4)'';
    (ii) Reference to Sec. 2560.502c-7(g) in 2570.131(c) shall be 
construed as reference to Sec. 2560.502c-4(g) of this chapter;
    (iii) Reference to Sec. 2560.502c-7(e) in Sec. 2570.131(g) shall be 
construed as reference to Sec. 2560.502c-4(e) of this chapter;
    (iv) Reference to Sec. 2560.502c-7(g) in Sec. 2570.131(m) shall be 
construed as reference to Sec. 2560.502c-4(g); and
    (v) Reference to Secs. 2560.502c-7(g) and 2560.502c-7(h) in 
Sec. 2570.134 shall be construed as reference to Secs. 2560.502c-4(g) 
and 2560.502c-4(h), respectively.

[74 FR 20, Jan. 2, 2009, as amended at 81 FR 43453, July 1, 2016]

[[Page 595]]



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) or the Act 
shall not exceed $1,000 a day (adjusted for inflation 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) of the Act 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

[[Page 596]]

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)(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

[[Page 597]]

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.

[68 FR 17505, Apr. 9, 2003, as amended at 81 FR 43453, July 1, 2016]



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.
    (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 
(such amounts to be adjusted for inflation 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

[[Page 598]]

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 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; 81 FR 
43453, July 1, 2016]

[[Page 599]]



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), who fails or refuses 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, or the 
administrator (within the meaning of section 3(16)(A) of the Act) of an 
applicable individual account plan (within the meaning of section 101(m) 
of the Act), who fails or refuses to provide notice of diversification 
rights to applicable individuals in accordance with section 101(m) of 
the Act, shall be liable for civil penalties assessed by the Secretary 
under section 502(c)(7) of the Act.
    (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, and a 
failure or refusal to provide a notice of diversification rights shall 
mean a failure or refusal, in whole or in part, to provide notice of 
diversification rights to an applicable individual at the time and in 
the manner prescribed by section 101(m) of the Act.
    (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 or notice of diversification rights. However, the amount assessed 
for each violation under section 502(c)(7) of the Act shall not exceed 
$100 a day (adjusted for inflation pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended), computed from, 
in the case of a notice of blackout period under section 101(i) of the 
Act, 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, or in the 
case of a notice of diversification rights under section 101(m) of the 
Act, computed from the date that is 30 days before the first date on 
which rights are exercisable under section 204(j) of the Act up to the 
date such a notice is furnished.
    (2) For purposes of calculating the amount to be assessed under this 
section, a failure or refusal to provide a notice of blackout period or 
a notice of diversification rights 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 or 
section 101(m) of the Act.
    (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 applicable requirements of 
section 101(i) or section 101(m) 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

[[Page 600]]

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 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

[[Page 601]]

Act and its implementing regulations (Sec. 2520.101-3 of this chapter), 
or the failure to provide a notice of diversification rights under 
section 101(m) of the Act, 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, as amended at 72 FR 44972, Aug. 10, 2007; 81 
FR 43453, July 1, 2016]



Sec. 2560.502c-8  Civil penalties under section 502(c)(8).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(8) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the plan sponsor (within the meaning of 
section 3(16)(B)(iii) of the Act) shall be liable for civil penalties 
assessed by the Secretary under section 502(c)(8) of the Act, for:
    (i) Each violation by such sponsor of the requirement under section 
305 of the Act to adopt by the deadline established in that section a 
funding improvement plan or rehabilitation plan with respect to a 
multiemployer plan which is in endangered or critical status; or
    (ii) In the case of a plan in endangered status which is not in 
seriously endangered status, a failure by the plan to meet the 
applicable benchmarks under section 305 by the end of the funding 
improvement period with respect to the plan.
    (2) For purposes of this section, violations or failures referred to 
in paragraph (a)(1) of this section shall mean a failure or refusal, in 
whole or in part, to adopt a funding improvement or rehabilitation plan, 
or to meet the applicable benchmarks, at the relevant times and manners 
prescribed in section 305 of the Act.
    (b) Amount assessed. The amount assessed under section 502(c)(8) of 
the Act for each separate violation shall be determined by the 
Department of Labor, taking into consideration the degree or willfulness 
of the failure or refusal to comply with the specific requirements 
referred to in paragraph (a) of this section. However, the amount 
assessed for each violation under section 502(c)(8) of the Act shall not 
exceed $1,100 a day (adjusted for inflation pursuant to the Federal 
Civil Penalties Inflation Adjustment Act of 1990, as amended), computed 
from the date of the plan sponsor's failure or refusal to comply with 
the specific requirements referred to in paragraph (a) of this section.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(8) of the Act, the Department shall 
provide to the plan sponsor of the plan a written notice indicating the 
Department's intent to assess a penalty under section 502(c)(8) of the 
Act, 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 plan sponsor complied with the requirements of section 305 of 
the Act, or on a showing by the plan sponsor 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 plan sponsor 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 plan sponsor 
that the statement is made under the penalties of perjury.
    (f) Failure to file a statement of reasonable cause. Failure to file 
a statement

[[Page 602]]

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)(8) of the Act. Such 
notice shall then become a final order of the Secretary, within the 
meaning of Sec. 2570.161(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 nonassessment or a complete or 
partial waiver of the penalty, shall notify the plan sponsor, 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. 2570.161(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. 2570.161(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. 2570.161(g) of this chapter, if, within thirty (30) days from the 
date of the service of the notice, the plan sponsor or a representative 
thereof files a request for a hearing under Secs. 2570.160 through 
2570.171 of this chapter, and files an answer to the notice. The request 
for hearing and answer must be filed in accordance with Sec. 2570.162 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 plan sponsor or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the plan sponsor or representative thereof; or
    (iii) By mailing a copy to the last known address of the plan 
sponsor 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 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 plan 
sponsor for violations referred to in paragraph (a) of this section, all 
such persons shall be jointly and severally liable for such violations.
    (2) Any person, or persons under paragraph (j)(1) of this section, 
against whom a civil penalty has been assessed under section 502(c)(8) 
of the Act, pursuant to a final order within the meaning of 
Sec. 2570.161(g) of this chapter, shall

[[Page 603]]

be personally liable for the payment of such penalty.
    (k) Cross-reference. See Secs. 2570.160 through 2570.171 of this 
chapter for procedural rules relating to administrative hearings under 
section 502(c)(8) of the Act.

[75 FR 8800, Feb. 26, 2010, as amended at 81 FR 43454, July 1, 2016]



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.
    (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.


[[Page 604]]


    (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 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;

[[Page 605]]

    (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 are subject (but not provisions concerning the filing and 
initial disposition of benefit claims).
    (7) In the case of a plan providing disability benefits, the plan 
must ensure that all claims and appeals for disability benefits are 
adjudicated in a manner designed to ensure the independence and 
impartiality of the persons involved in making the decision. 
Accordingly, decisions regarding hiring, compensation, termination, 
promotion, or other similar matters with respect to any individual (such 
as a claims adjudicator or medical or vocational expert) must not be 
made based upon the likelihood that the individual will support the 
denial of benefits.
    (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.

[[Page 606]]

    (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 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

[[Page 607]]

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 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

[[Page 608]]

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 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;

[[Page 609]]

    (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--
    (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.
    (vii) In the case of an adverse benefit determination with respect 
to disability benefits--
    (A) A discussion of the decision, including an explanation of the 
basis for disagreeing with or not following:
    (i) The views presented by the claimant to the plan of health care 
professionals treating the claimant and vocational professionals who 
evaluated the claimant;
    (ii) The views 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; and
    (iii) A disability determination regarding the claimant presented by 
the claimant to the plan made by the Social Security Administration;
    (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;
    (C) Either the specific internal rules, guidelines, protocols, 
standards or other similar criteria of the plan relied upon in making 
the adverse determination or, alternatively, a statement that such 
rules, guidelines, protocols, standards or other similar criteria of the 
plan do not exist; and
    (D) 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.
    (viii) In the case of an adverse benefit determination with respect 
to disability benefits, the notification shall be provided in a 
culturally and linguistically appropriate manner (as described in 
paragraph (o) of this section).
    (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

[[Page 610]]

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--
    (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, in addition to complying with the requirements of

[[Page 611]]

paragraphs (h)(2)(ii) through (iv) and (h)(3)(i) through (v) of this 
section, the claims procedures--
    (i) Provide that before the plan can issue an adverse benefit 
determination on review on a disability benefit claim, the plan 
administrator shall provide the claimant, free of charge, with any new 
or additional evidence considered, relied upon, or generated by the 
plan, insurer, or other person making the benefit determination (or at 
the direction of the plan, insurer or such other person) in connection 
with the claim; such evidence must be provided as soon as possible and 
sufficiently in advance of the date on which the notice of adverse 
benefit determination on review is required to be provided under 
paragraph (i) of this section to give the claimant a reasonable 
opportunity to respond prior to that date; and
    (ii) Provide that, before the plan can issue an adverse benefit 
determination on review on a disability benefit claim based on a new or 
additional rationale, the plan administrator shall provide the claimant, 
free of charge, with the rationale; the rationale must be provided as 
soon as possible and sufficiently in advance of the date on which the 
notice of adverse benefit determination on review is required to be 
provided under paragraph (i) of this section to give the claimant a 
reasonable opportunity to respond prior to that date.
    (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 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

[[Page 612]]

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 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)(i) 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

[[Page 613]]

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 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)(i) 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,
    (ii) In the case of a plan providing disability benefits, in 
addition to the information described in paragraph (j)(4)(i) of this 
section, the statement of the claimant's right to bring an action under 
section 502(a) of the Act shall also describe any applicable contractual 
limitations period that applies to the claimant's right to bring such an 
action, including the calendar date on which the contractual limitations 
period expires for the claim.
    (5) In the case of a group health plan--
    (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

[[Page 614]]

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.''
    (6) In the case of an adverse benefit decision with respect to 
disability benefits--
    (i) A discussion of the decision, including an explanation of the 
basis for disagreeing with or not following:
    (A) The views presented by the claimant to the plan of health care 
professionals treating the claimant and vocational professionals who 
evaluated the claimant;
    (B) The views 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; and
    (C) A disability determination regarding the claimant presented by 
the claimant to the plan made by the Social Security Administration;
    (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 change upon request; and
    (iii) Either the specific internal rules, guidelines, protocols, 
standards or other similar criteria of the plan relied upon in making 
the adverse determination or, alternatively, a statement that such 
rules, guidelines, protocols, standards or other similar criteria of the 
plan do not exist.
    (7) In the case of an adverse benefit determination on review with 
respect to a claim for disability benefits, the notification shall be 
provided in a culturally and linguistically appropriate manner (as 
described in paragraph (o) of this section).
    (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--
(1) In general. Except as provided in paragraph (l)(2) of this section, 
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 the basis that the plan has failed to 
provide a reasonable claims procedure that would yield a decision on the 
merits of the claim.
    (2) Plans providing disability benefits. (i) In the case of a claim 
for disability

[[Page 615]]

benefits, if the plan fails to strictly adhere to all the requirements 
of this section with respect to a claim, the claimant is deemed to have 
exhausted the administrative remedies available under the plan, except 
as provided in paragraph (l)(2)(ii) of this section. Accordingly, the 
claimant is entitled to pursue any available remedies under section 
502(a) of the Act on the basis that the plan has failed to provide a 
reasonable claims procedure that would yield a decision on the merits of 
the claim. If a claimant chooses to pursue remedies under section 502(a) 
of the Act under such circumstances, the claim or appeal is deemed 
denied on review without the exercise of discretion by an appropriate 
fiduciary.
    (ii) Notwithstanding paragraph (l)(2)(i) of this section, the 
administrative remedies available under a plan with respect to claims 
for disability benefits will not be deemed exhausted based on de minimis 
violations that do not cause, and are not likely to cause, prejudice or 
harm to the claimant so long as the plan demonstrates that the violation 
was for good cause or due to matters beyond the control of the plan and 
that the violation occurred in the context of an ongoing, good faith 
exchange of information between the plan and the claimant. This 
exception is not available if the violation is part of a pattern or 
practice of violations by the plan. The claimant may request a written 
explanation of the violation from the plan, and the plan must provide 
such explanation within 10 days, including a specific description of its 
bases, if any, for asserting that the violation should not cause the 
administrative remedies available under the plan to be deemed exhausted. 
If a court rejects the claimant's request for immediate review under 
paragraph (l)(2)(i) of this section on the basis that the plan met the 
standards for the exception under this paragraph (l)(2)(ii), the claim 
shall be considered as re-filed on appeal upon the plan's receipt of the 
decision of the court. Within a reasonable time after the receipt of the 
decision, the plan shall provide the claimant with notice of the 
resubmission.
    (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:
    (i) 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

[[Page 616]]

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; and
    (ii) In the case of a plan providing disability benefits, the term 
``adverse benefit determination'' also means any rescission of 
disability coverage with respect to a participant or beneficiary 
(whether or not, in connection with the rescission, there is an adverse 
effect on any particular benefit at that time). For this purpose, the 
term ``rescission'' means a cancellation or discontinuance of coverage 
that has retroactive effect, except to the extent it is attributable to 
a failure to timely pay required premiums or contributions towards the 
cost of coverage.
    (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 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) Standards for culturally and linguistically appropriate notices. 
A plan is considered to provide relevant notices in a ``culturally and 
linguistically appropriate manner'' if the plan meets all the 
requirements of paragraph (o)(1) of this section with respect to the 
applicable non-English languages described in paragraph (o)(2) of this 
section.
    (1) Requirements. (i) The plan must provide oral language services 
(such as a telephone customer assistance hotline) that include answering 
questions in any applicable non-English language and providing 
assistance with filing claims and appeals in any applicable non-English 
language;
    (ii) The plan must provide, upon request, a notice in any applicable 
non-English language; and
    (iii) The plan must include in the English versions of all notices, 
a statement prominently displayed in any applicable non-English language 
clearly indicating how to access the language services provided by the 
plan.
    (2) Applicable non-English language. With respect to an address in 
any United States county to which a notice is sent, a non-English 
language is an applicable non-English language if ten percent or more of 
the population residing in the county is literate only in the same non-
English language, as determined in guidance published by the Secretary.
    (p) Applicability dates and temporarily applicable provisions. (1) 
Except as provided in paragraphs (p)(2), (p)(3) and

[[Page 617]]

(p)(4) 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.
    (3) Paragraphs (b)(7), (g)(1)(vii) and (viii), (j)(4)(ii), (j)(6) 
and (7), (l)(2), (m)(4)(ii), and (o) of this section shall apply to 
claims for disability benefits filed under a plan on or after January 1, 
2018, in addition to the other paragraphs in this rule applicable to 
such claims.
    (4) With respect to claims for disability benefits filed under a 
plan from January 18, 2017 through December 31, 2017, this paragraph 
(p)(4) shall apply instead of paragraphs (g)(1)(vii), (g)(1)(viii), 
(h)(4), (j)(6) and (j)(7).
    (i) In the case of a notification of benefit determination and a 
notification of benefit determination on review by a plan providing 
disability benefits, the notification shall set forth, in a manner 
calculated to be understood by the claimant--
    (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; and
    (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.
    (ii) 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.

[65 FR 70265, Nov. 21, 2000, as amended at 66 FR 35887, July 9, 2001; 81 
FR 92341, Dec. 19, 2016]



Sec. 2560.521-1  Cease and desist and seizure orders under section 521.

    (a) Purpose. Section 521(a) of the Employee Retirement Income 
Security Act of 1974 (ERISA), 29 U.S.C. 1151(a), authorizes the 
Secretary of Labor to issue an ex parte cease and desist order if it 
appears to the Secretary that the alleged conduct of a multiple employer 
welfare arrangement (MEWA) under section 3(40) of ERISA is fraudulent, 
or creates an immediate danger to the public safety or welfare, or is 
causing or can be reasonably expected to cause significant, imminent, 
and irreparable public injury. Section 521(e) of ERISA authorizes the 
Secretary to issue a summary seizure order if it appears that a MEWA is 
in a financially hazardous condition. An order may apply to a MEWA or to 
persons having custody or control of assets of the subject MEWA, any 
authority over management of the subject MEWA, or any role in the 
transaction of the subject MEWA's business. This section sets forth 
standards and procedures for the Secretary to issue ex parte cease and 
desist and summary seizure orders and for administrative review of the 
issuance of such cease and desist orders.
    (b) Definitions. When used in this section, the following terms 
shall have the meanings ascribed in this paragraph (b).
    (1) Multiple employer welfare arrangement (MEWA) is an arrangement 
as defined in section 3(40) of ERISA that either is an employee welfare 
benefit plan subject to Title I of ERISA or offers benefits in 
connection with one or more employee welfare benefit plans subject to 
Title I of ERISA. For purposes of section 521 of ERISA, a MEWA does not 
include a health insurance issuer (including a health maintenance 
organization) that is licensed to offer or provide health insurance 
coverage to the public and employers at large in

[[Page 618]]

each State in which it offers or provides health insurance coverage, and 
that, in each such State, is subject to comprehensive licensure, 
solvency, and examination requirements that the State customarily 
requires for issuing health insurance policies to the public and 
employers at large. The term health insurance issuer does not include 
group health plans. For purposes of this section, the term ``health 
insurance coverage'' has the same meaning as in ERISA section 733(b)(1).
    (2) The conduct of a MEWA is fraudulent:
    (i) When the MEWA or any person acting as an agent or employee of 
the MEWA commits an act or omission knowingly and with an intent to 
deceive or defraud plan participants, plan beneficiaries, employers or 
employee organizations, or other members of the public, the Secretary, 
or a State regarding:
    (A) The financial condition of the MEWA (including the MEWA's 
solvency and the management of plan assets);
    (B) The benefits provided by or in connection with the MEWA;
    (C) The management, control, or administration of the MEWA;
    (D) The existing or lawful regulatory status of the MEWA under 
Federal or State law; or,
    (E) Any other material fact, as determined by the Secretary, 
relating to the MEWA or its operation.
    (ii) Fraudulent conduct includes any false statement regarding any 
of paragraphs (b)(2)(i)(A) through (b)(2)(i)(E) of this section that is 
made with knowledge of its falsity or that is made with reckless 
indifference to the statement's truth or falsity, and the knowing 
concealment of material information regarding any of paragraphs 
(b)(2)(i)(A) through (b)(2)(i)(E) of this section. Examples of 
fraudulent conduct include, but are not limited to, misrepresenting the 
terms of the benefits offered by or in connection with the MEWA or the 
financial condition of the MEWA or engaging in deceptive acts or 
omissions in connection with marketing or sales or fees charged to 
employers or employee organizations.
    (3) The conduct of a MEWA creates an immediate danger to the public 
safety or welfare if the conduct of a MEWA or any person acting as an 
agent or employee of the MEWA impairs, or threatens to impair, a MEWA's 
ability to pay claims or otherwise unreasonably increases the risk of 
nonpayment of benefits. Intent to create an immediate danger is not 
required for this criterion. Examples of such conduct include, but are 
not limited to, a systematic failure to properly process or pay benefit 
claims, including failure to establish and maintain a claims procedure 
that complies with the Secretary's claims procedure regulations (29 CFR 
2560.503-1 and 29 CFR 2590.715-2719), failure to establish or maintain a 
recordkeeping system that tracks the claims made, paid, or processed or 
the MEWA's financial condition, a substantial failure to meet applicable 
disclosure, reporting, and other filing requirements, including the 
annual reporting and registration requirements under sections 101(g) and 
104 of ERISA, failure to establish and implement a policy or method to 
determine that the MEWA is actuarially sound with appropriate reserves 
and adequate underwriting, failure to comply with a cease and desist 
order issued by a government agency or court, and failure to hold plan 
assets in trust.
    (4) The conduct of a MEWA is causing or can be reasonably expected 
to cause significant, imminent, and irreparable public injury:
    (i) If the conduct of a MEWA, or of a person acting as an agent or 
employee of the MEWA, is having, or is reasonably expected to have, a 
significant and imminent negative effect on one or more of the 
following:
    (A) An employee welfare benefit plan that is, or offers benefits in 
connection with, a MEWA;
    (B) The sponsor of such plan or the employer or employee 
organization that makes payments for benefits provided by or in 
connection with a MEWA; or
    (C) Plan participants and plan beneficiaries; and
    (ii) If it is not reasonable to expect that such effect will be 
fully repaired or rectified.
    Intent to cause injury is not required for this criterion. Examples 
of such conduct include, but are not limited to,

[[Page 619]]

conversion or concealment of property of the MEWA; improper disposal, 
transfer, or removal of funds or other property of the MEWA, including 
unreasonable compensation or payments to MEWA operators and service 
providers (e.g. brokers, marketers, and third party administrators); 
employment by the MEWA of a person prohibited from such employment 
pursuant to section 411 of ERISA, and embezzlement from the MEWA. For 
purposes of section 521 of ERISA, compensation that would be excessive 
under 26 CFR 1.162-7 will be considered unreasonable compensation or 
payments for purposes of this regulation. Depending upon the facts and 
circumstances, compensation may be unreasonable under this regulation 
even it is not excessive under 26 CFR 1.162-7.
    (5) A MEWA is in a financially hazardous condition if:
    (i) The Secretary has probable cause to believe that a MEWA:
    (A) Is, or is in imminent danger of becoming, unable to pay benefit 
claims as they come due, or
    (B) Has sustained, or is in imminent danger of sustaining, a 
significant loss of assets; or
    (ii) A person responsible for management, control, or administration 
of the MEWA's assets is the subject of a cease and desist order issued 
by the Secretary.
    (6) A person, for purposes of this section, is an individual, 
partnership, corporation, employee welfare benefit plan, association, or 
other entity or organization.
    (c) Temporary cease and desist order. (1)(i) The Secretary may issue 
a temporary cease and desist order when the Secretary finds there is 
reasonable cause to believe that the conduct of a MEWA, or any person 
acting as an agent or employee of the MEWA, is -
    (A) Fraudulent;
    (B) Creates an immediate danger to the public safety or welfare; or
    (C) Is causing or can be reasonably expected to cause significant, 
imminent, and irreparable public injury.
    (ii) A single act or omission may be the basis for a temporary cease 
and desist order.
    (2) A temporary cease and desist order, as the Secretary determines 
is necessary and appropriate to stop the conduct on which the order is 
based, and to protect the interests of plan participants, plan 
beneficiaries, employers or employee organizations, or other members of 
the public, may--
    (i) Prohibit specific conduct or prohibit the transaction of any 
business of the MEWA;
    (ii) Prohibit any person from taking specified actions, or 
exercising authority or control, concerning funds or property of a MEWA 
or of any employee benefit plan, regardless of whether such funds or 
property have been commingled with other funds or property; and,
    (iii) Bar any person either directly or indirectly, from providing 
management, administrative, or other services to any MEWA or to an 
employee benefit plan or trust.
    (3) The Secretary may require documentation from the subject of the 
order verifying compliance.
    (d) Effect of order on other remedies. The issuance of a temporary 
or final cease and desist order shall not foreclose the Secretary from 
seeking additional remedies under ERISA.
    (e) Administrative hearing. (1) A temporary cease and desist order 
shall become a final order as to any MEWA or other person named in the 
order 30 days after such person receives notice of the order unless, 
within this period, such person requests a hearing in accordance with 
the requirements of this paragraph (e).
    (2) A person requesting a hearing must file a written request and an 
answer to the order showing cause why the order should be modified or 
set aside. The request and the answer must be filed in accordance with 
29 CFR part 2571 and Sec. 18.4 of this title.
    (3) A hearing shall be held expeditiously following the receipt of 
the request for a hearing by the Office of the Administrative Law 
Judges, unless the parties mutually consent, in writing, to a later 
date.
    (4) The decision of the administrative law judge shall be issued 
expeditiously after the conclusion of the hearing.
    (5) The Secretary must offer evidence supporting the findings made 
in issuing the order that there is reasonable cause to believe that the 
MEWA (or a

[[Page 620]]

person acting as an employee or agent of the MEWA) engaged in conduct 
specified in paragraph (c)(1) of this section.
    (6) The person requesting the hearing has the burden to show that 
the order should be modified or set aside. To meet this burden such 
person must show by a preponderance of the evidence that the MEWA (or a 
person acting as an employee or agent of the MEWA) did not engage in 
conduct specified in paragraph (c)(1) of this section or must show that 
the requirements imposed by the order, are, in whole or part, arbitrary 
and capricious.
    (7) Any temporary cease and desist order for which a hearing has 
been requested shall remain in effect and enforceable, pending 
completion of the administrative proceedings, unless stayed by the 
Secretary, an administrative law judge, or by a court.
    (8) The Secretary may require that the hearing and all evidence be 
treated as confidential.
    (f) Summary seizure order. (1) Subject to paragraphs (f)(2) and (3) 
of this section, the Secretary may issue a summary seizure order when 
the Secretary finds there is probable cause to believe that a MEWA is in 
a financially hazardous condition.
    (2) Except as provided in paragraph (f)(3) of this section, the 
Secretary, before issuing a summary seizure order to remove assets and 
records from the control and management of the MEWA or any persons 
having custody or control of such assets or records, shall obtain 
judicial authorization from a federal court in the form of a warrant or 
other appropriate form of authorization and may at that time pursue 
other actions such as those set forth in paragraph (f)(5) of this 
section.
    (3) If the Secretary reasonably believes that any delay in issuing 
the order is likely to result in the removal, dissipation, or 
concealment of plan assets or records, the Secretary may issue and serve 
a summary seizure order before seeking court authorization. Promptly 
following service of the order, the Secretary shall seek authorization 
from a federal court and may at that time pursue other actions such as 
those set forth in paragraph (f)(5) of this section.
    (4) A summary seizure order may authorize the Secretary to take 
possession or control of all or part of the books, records, accounts, 
and property of the MEWA (including the premises in which the MEWA 
transacts its business) to protect the benefits of plan participants, 
plan beneficiaries, employers or employee organizations, or other 
members of the public, and to safeguard the assets of employee welfare 
benefit plans. The order may also direct any person having control and 
custody of the assets that are the subject of the order not to allow any 
transfer or disposition of such assets except upon the written direction 
of the Secretary, or of a receiver or independent fiduciary appointed by 
a court.
    (5) In connection with or following the execution of a summary 
seizure order, the Secretary may--
    (i) Secure court appointment of a receiver or independent fiduciary 
to perform any necessary functions of the MEWA;
    (ii) Obtain court authorization for the Secretary, the receiver or 
independent fiduciary to take any other action to seize, secure, 
maintain, or preserve the availability of the MEWA's assets; and
    (iii) Obtain such other appropriate relief available under ERISA to 
protect the interest of employee welfare benefit plan participants, plan 
beneficiaries, employers or employee organizations or other members of 
the public. Other appropriate equitable relief may include the 
liquidation and winding up of the MEWA's affairs and, where applicable, 
the affairs of any person sponsoring the MEWA.
    (g) Effective date of orders. Cease and desist and summary seizure 
orders are effective immediately upon issuance by the Secretary and 
shall remain effective, except to the extent and until any provision is 
modified or the order is set aside by the Secretary, an administrative 
law judge, or a court.
    (h) Service of orders. (1) As soon as practicable after the issuance 
of a temporary or final cease and desist order and no later than five 
business days after issuance of a summary seizure order, the Secretary 
shall serve the order either:

[[Page 621]]

    (i) By delivering a copy to the person who is the subject of the 
order. If the person is a partnership, service may be made to any 
partner. If the person is a corporation, association, or other entity or 
organization, service may be made to any officer of such entity or any 
person designated for service of process under State law or the 
applicable plan document. If the person is an employee welfare benefit 
plan, service may be made to a trustee or administrator. A person's 
attorney may accept service on behalf of such person;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of such person or attorney; or
    (iii) By mailing a copy to the last known address of such person or 
attorney.
    (2) If service is accomplished by certified mail, service is 
complete upon mailing. If service is done by regular mail, service is 
complete upon receipt by the addressee.
    (3) Service of a temporary or final cease and desist order and of a 
summary seizure order shall include a statement of the Secretary's 
findings giving rise to the order, and, where applicable, a copy of any 
warrant or other authorization by a court.

[78 FR 13805, Mar. 1, 2013]



Sec. 2560.521-2  Disclosure of order and proceedings.

    (a) Notwithstanding Sec. 2560.521-1(e)(8), the Secretary shall make 
available to the public final cease and desist and summary seizure 
orders or modifications and terminations of such final orders.
    (b) Except as prohibited by applicable law, and at his or her 
discretion, the Secretary may disclose the issuance of a temporary cease 
and desist order or summary seizure order and information and evidence 
of any proceedings and hearings related to an order, to any Federal, 
State, or foreign authorities responsible for enforcing laws that apply 
to MEWAs and parties associated with, or providing services to, MEWAs.
    (c) The sharing of such documents, material, or other information 
and evidence under this section does not constitute a waiver of any 
applicable privilege or claim of confidentiality.

[78 FR 13805, Mar. 1, 2013]



Sec. 2560.521-3  Effect on other enforcement authority.

    The Secretary's authority under section 521 shall not be construed 
to limit the Secretary's ability to exercise his or her enforcement or 
investigatory authority under any other provision of title I of ERISA. 
29 U.S.C. 1001 et seq. The Secretary may, in his or her sole discretion, 
initiate court proceedings without using the procedures in this section.

[78 FR 13805, Mar. 1, 2013]



Sec. 2560.521-4  Cross-reference.

    See 29 CFR 2571.1 through 2571.13 for procedural rules relating to 
administrative hearings under section 521 of ERISA.

[78 FR 13805, Mar. 1, 2013]



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 Governing the Filing and Processing of 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.

[[Page 622]]

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.
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.

[[Page 623]]

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.

 Subpart I_Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(8)

2570.160  Scope of rules.
2570.161  Definitions.
2570.162  Service: Copies of documents and pleadings.
2570.163  Parties, how designated.
2570.164  Consequences of default.
2570.165  Consent order or settlement.
2570.166  Scope of discovery.
2570.167  Summary decision.
2570.168  Decision of the administrative law judge.
2570.169  Review by the Secretary.
2570.170  Scope of review.
2570.171  Procedures for review by the Secretary.

    Authority: 5 U.S.C. 8477; 29 U.S.C. 1002(40), 1021, 1108, 1132, and 
1135; sec. 102, Reorganization Plan No. 4 of 1978, 5 U.S.C. App at 672 
(2006); Secretary of Labor's Order 3-2010, 75 FR 55354 (September 10, 
2010)
    Subpart I is also issued under 29 U.S.C. 1132(c)(8).

    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 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;

[[Page 624]]

    (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.
    (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; 
68 FR 17508, Apr. 9, 2003]



Sec. 2570.4  Parties.

    For prohibited transaction penalty proceedings, this section shall 
apply in lieu of Sec. 18.10 of this title.

[[Page 625]]

    (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 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.

[[Page 626]]

    (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, 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.

[[Page 627]]

    (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 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

[[Page 628]]

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 Governing the Filing and Processing of Prohibited 
                   Transaction Exemption Applications

    Source: 76 FR 66644, Oct. 27, 2011, unless otherwise noted.



Sec. 2570.30  Scope of rules.

    (a) The rules of procedure set forth in this subpart apply to 
prohibited transaction exemptions issued by the Department under the 
authority of:
    (1) Section 408(a) of the Employee Retirement Income Security Act of 
1974 (ERISA);
    (2) Section 4975(c)(2) of the Internal Revenue Code of 1986 (the 
Code); \1\ or
---------------------------------------------------------------------------

    \1\ Section 102 of Presidential Reorganization Plan No. 4 of 1978 (3 
CFR part 332 (1978), reprinted in 5 U.S.C. app. at 672 (2006), and in 92 
Stat. 3790 (1978)), effective December 31, 1978, generally transferred 
the authority of the Secretary of the Treasury to issue administrative 
exemptions under section 4975(c)(2) of the Code to the Department of 
Labor.
---------------------------------------------------------------------------

    (3) The Federal Employees' Retirement System Act of 1986 (FERSA) (5 
U.S.C. 8477(c)(3)).
    (b) Under these rules of procedure, the Department may conditionally 
or unconditionally exempt any fiduciary or transaction, or class of 
fiduciaries or transactions, from all or part of the restrictions 
imposed by section 406 of ERISA and the corresponding restrictions of 
the Code and FERSA. While administrative exemptions granted under these 
rules are ordinarily prospective in nature, an applicant may also obtain 
retroactive relief for past prohibited transactions if certain 
safeguards described in this subpart were in place at the time the 
transaction was consummated.
    (c) These rules govern the filing and processing of applications for 
both individual and class exemptions that the Department may propose and 
grant pursuant to the authorities cited in paragraph (a) of this 
section. The Department may also propose and grant exemptions on its own 
motion, in which case the procedures relating to publication of notices, 
hearings, evaluation and public inspection of the administrative record, 
and modification or revocation of previously granted exemptions will 
apply.
    (d) The issuance of an administrative exemption by the Department 
under these procedural rules does not relieve a fiduciary or other party 
in interest or disqualified person with respect to a plan from the 
obligation to comply with certain other provisions of ERISA, the Code, 
or FERSA, including any prohibited transaction provisions to which the 
exemption does not apply,

[[Page 629]]

and the general fiduciary responsibility provisions of ERISA which 
require, among other things, that a fiduciary discharge his or her 
duties respecting the plan solely in the interests of the participants 
and beneficiaries of the plan and in a prudent fashion; nor does it 
affect the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries.
    (e) The Department will not propose or issue exemptions upon oral 
request alone, nor will the Department 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.
    (f) The Department will generally treat any exemption application 
that is filed solely under section 408(a) of ERISA or solely under 
section 4975(c)(2) of the Code as an exemption request 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 the corresponding provisions 
of the Code.



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. 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;
    (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; or
    (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 
involved in the subject exemption transaction.
    (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 transaction and party in interest 
within the class of transactions and parties in interest specified in 
the exemption when the conditions of the exemption are satisfied.
    (c) Department means the U.S. Department of Labor and includes the 
Secretary of Labor or his or her 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 and transactions 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.
    (h) A qualified appraisal report is any appraisal report that 
satisfies all of the requirements set forth in this subpart at 
Sec. 2570.34(c)(4).
    (i) A qualified independent appraiser is any individual or entity 
with appropriate training, experience, and facilities to provide a 
qualified appraisal report on behalf of the plan regarding the 
particular asset or property appraised in the report, that is 
independent of and unrelated to any party in interest

[[Page 630]]

engaging in the exemption transaction and its affiliates; in general, 
the determination as to the independence of the appraiser is made by the 
Department on the basis of all relevant facts and circumstances. In 
making this determination, the Department generally will take into 
account the amount of both the appraiser's revenues and projected 
revenues for the current federal income tax year (including amounts 
received for preparing the appraisal report) that will be derived from 
the party in interest or its affiliates relative to the appraiser's 
revenues from all sources for the prior federal income tax year. Absent 
facts and circumstances demonstrating a lack of independence, the 
Department will operate according to the presumption that such appraiser 
will be independent if the revenues it receives or is projected to 
receive, within the current federal income tax year, from parties in 
interest (and their affiliates) to the transaction are not more than 2% 
of such appraiser's annual revenues based upon its prior income tax 
year. Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, an appraiser nonetheless may be considered 
independent based upon other facts and circumstances provided that it 
receives or is projected to receive revenues that are not more than 5% 
within the current federal income tax year from parties in interest (and 
their affiliates) to the transaction based upon its prior income tax 
year.
    (j) A qualified independent fiduciary is any individual or entity 
with appropriate training, experience, and facilities to act on behalf 
of the plan regarding the exemption transaction in accordance with the 
fiduciary duties and responsibilities prescribed by ERISA, that is 
independent of and unrelated to any party in interest engaging in the 
exemption transaction and its affiliates; in general, the determination 
as to the independence of a fiduciary is made by the Department on the 
basis of all relevant facts and circumstances. In making this 
determination, the Department generally will take into account the 
amount of both the fiduciary's revenues and projected revenues for the 
current federal income tax year (including amounts received for 
preparing fiduciary reports) that will be derived from the party in 
interest or its affiliates relative to the fiduciary's revenues from all 
sources for the prior federal income tax year. Absent facts and 
circumstances demonstrating a lack of independence, the Department will 
operate according to the presumption that such fiduciary will be 
independent if the revenues it receives or is projected to receive, 
within the current federal income tax year, from parties in interest 
(and their affiliates) to the transaction are not more than 2% of such 
fiduciary's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, a fiduciary nonetheless may be considered 
independent based upon other facts and circumstances provided that it 
receives or is projected to receive revenues that are not more than 5% 
within the current federal income tax year from parties in interest (and 
their affiliates) to the transaction based upon its prior income tax 
year.



Sec. 2570.32  Persons who may apply for exemptions.

    (a) 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 (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 an authorized 
representative. An application submitted by a representative of the 
applicant must include proof of authority in the form of:
    (1) A power of attorney; or
    (2) A written certification from the applicant that the 
representative is authorized to file the application.

[[Page 631]]

    (c) If the authorized representative of an applicant submits an 
application for an exemption to the Department together with proof of 
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 ordinarily will not consider:
    (1) An application that fails to include all the information 
required by Secs. 2570.34 and 2570.35 of this subpart or otherwise fails 
to conform to the requirements of these procedures; or
    (2) An application 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 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) An application for an individual exemption relating to a 
specific transaction or transactions ordinarily will not be considered 
if the Department has under consideration a class exemption relating to 
the same type of transaction or transactions. Notwithstanding the 
foregoing, the Department may consider such an application if the 
issuance of the final class exemption may not be imminent, and the 
Department determines that time constraints necessitate consideration of 
the transaction on an individual basis.
    (c) The administrative record of an exemption application includes 
the initial exemption application and any supporting information 
provided by the applicant (as well as any comments and testimony 
received by the Department in connection with an application). If an 
applicant designates as confidential any information required by these 
regulations or requested by the Department, the Department will 
determine whether the information is material to the exemption 
determination. If it determines the information to be material, the 
Department will not process the application unless the applicant 
withdraws the claim of confidentiality.
    (d) If for any reason the Department decides not to consider an 
exemption application, it will inform the applicant in writing of that 
decision and of the reasons therefore.



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 including 
identification of all the parties in interest involved, a description of 
any larger integrated transaction of which the exemption transaction is 
a part, and a chronology of the events leading up to the transaction;
    (3) The identity of any representatives for the affected plan(s) and 
parties in interest and what individuals or entities they represent;
    (4) The 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

[[Page 632]]

    (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 by any party to the 
exemption transaction from the Department 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
    (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 the issuance of an 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 or her own 
behalf, a statement which--
    (i) Identifies the individual signing the application and his or her 
position or title; and
    (ii) Explains briefly the basis of his or her 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, in its individual capacity, in the case of an 
individual party in interest seeking exemptive relief on his or her 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; or
    (D) The plan fiduciary that has the authority, responsibility, and 
control with respect to the exemption transaction where the applicant is 
a plan.
    (c) Specialized statements, as applicable, from a qualified 
independent appraiser acting solely on behalf of the plan, such as 
appraisal reports or analyses of market conditions, submitted to support 
an application for exemption must be accompanied by a statement of 
consent from such appraiser acknowledging that the statement is being 
submitted to the Department as part of an application for exemption. 
Such statements must also contain the following written information:
    (1) A copy of the qualified independent appraiser's engagement 
letter with the plan describing the specific duties the appraiser shall 
undertake;
    (2) A summary of the qualified independent appraiser's 
qualifications to serve in such capacity;
    (3) A detailed description of any relationship that the qualified 
independent appraiser has had or may have with any party in interest 
engaging in the transaction with the plan, or its affiliates, that may 
influence the appraiser;
    (4) A written appraisal report prepared by the qualified independent 
appraiser, acting solely on behalf of the plan, rather than, for 
example, on behalf of the plan sponsor, which satisfies the following 
requirements:
    (i) The report must describe the method(s) used in determining the 
fair market value of the subject asset(s) and an explanation of why such 
method best reflects the fair market value of the asset(s);
    (ii) The report must take into account any special benefit that the 
party in interest or its affiliate(s) may derive from control of the 
asset(s), such as from owning an adjacent parcel of real property or 
gaining voting control over a company; and
    (iii) The report must be current and not more than one year old from 
the date of the transaction, and there must

[[Page 633]]

be a written update by the qualified independent appraiser affirming the 
accuracy of the appraisal as of the date of the transaction. If the 
appraisal report is a year old or more, a new appraisal shall be 
submitted to the Department by the applicant.
    (5) If the subject of the appraisal report is real property, the 
qualified independent appraiser shall submit a written representation 
that he or she is a member of a professional organization of appraisers 
that can sanction its members for misconduct;
    (6) If the subject of the appraisal report is an asset other than 
real property, the qualified independent appraiser shall submit a 
written representation describing the appraiser's prior experience in 
valuing assets of the same type; and
    (7) The qualified independent appraiser shall submit a written 
representation disclosing the percentage of its current revenue that is 
derived from any party in interest involved in the transaction or its 
affiliates; in general, such percentage shall be computed by comparing, 
in fractional form:
    (i) The amount of the appraiser's projected revenues from the 
current federal income tax year (including amounts received from 
preparing the appraisal report) that will be derived from the party in 
interest or its affiliates (expressed as a numerator); and
    (ii) The appraiser's revenues from all sources for the prior federal 
income tax year (expressed as a denominator).
    (d) For those exemption transactions requiring the retention of a 
qualified independent fiduciary to represent the interests of the plan, 
a statement must be submitted by such fiduciary that contains the 
following written information:
    (1) A signed and dated declaration under penalty of perjury that, to 
the best of the qualified independent fiduciary's knowledge and belief, 
all of the representations made in such statement are true and correct;
    (2) A copy of the qualified independent fiduciary's engagement 
letter with the plan describing the fiduciary's specific duties;
    (3) An explanation for the conclusion that the fiduciary is a 
qualified independent fiduciary, which also must include a summary of 
that person's qualifications to serve in such capacity, as well as a 
description of any prior experience by that person or other demonstrated 
characteristics of the fiduciary (such as special areas of expertise) 
that render that person or entity suitable to perform its duties on 
behalf of the plan with respect to the exemption transaction;
    (4) A detailed description of any relationship that the qualified 
independent fiduciary has had or may have with the party in interest 
engaging in the transaction with the plan or its affiliates;
    (5) An acknowledgement by the qualified independent fiduciary that 
it understands its duties and responsibilities under ERISA in acting as 
a fiduciary on behalf of the plan rather than, for example, acting on 
behalf of the plan sponsor;
    (6) The qualified independent fiduciary's opinion on whether the 
proposed transaction would be in the interests of the plan and of its 
participants and beneficiaries, and protective of the rights of 
participants and beneficiaries of such plan, along with a statement of 
the reasons on which the opinion is based;
    (7) Where the proposed transaction is continuing in nature, a 
declaration by the qualified independent fiduciary that it is authorized 
to take all appropriate actions to safeguard the interests of the plan, 
and shall, during the pendency of the transaction:
    (i) Monitor the transaction on behalf of the plan on a continuing 
basis;
    (ii) Ensure that the transaction remains in the interests of the 
plan and, if not, take any appropriate actions available under the 
particular circumstances; and
    (iii) Enforce compliance with all conditions and obligations imposed 
on any party dealing with the plan with respect to the transaction; and
    (8) The qualified independent fiduciary shall submit a written 
representation disclosing the percentage of such fiduciary's current 
revenue that is derived from any party in interest involved in the 
transaction or its affiliates; in general, such percentage shall be 
computed by comparing, in fractional form:

[[Page 634]]

    (i) The amount of the fiduciary's projected revenues from the 
current federal income tax year that will be derived from the party in 
interest or its affiliates (expressed as a numerator); and
    (ii) The fiduciary's revenues from all sources (excluding fixed, 
non-discretionary retirement income) for the prior federal income tax 
year (expressed as a denominator).
    (e) Specialized statements, as applicable, from other third-party 
experts, including but not limited to economists or market specialists, 
submitted on behalf of the plan to support an application for exemption 
must be accompanied by a statement of consent from such expert 
acknowledging that the statement prepared on behalf of the plan is being 
submitted to the Department as part of an application for exemption. 
Such statements must also contain the following written information:
    (1) A copy of the expert's engagement letter with the plan 
describing the specific duties the expert will undertake;
    (2) A summary of the expert's qualifications to serve in such 
capacity; and
    (3) A detailed description of any relationship that the expert has 
had or may have with any party in interest engaging in the transaction 
with the plan, or its affiliates, that may influence the actions of the 
expert.
    (f) An application for exemption may also include a draft of the 
requested exemption which describes 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 of this subpart, 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, section 4975(c)(1) of the Code, section 406 or 407(a) of 
ERISA, or 5 U.S.C. 8477(c)(3), including a description of the 
circumstances surrounding such violation;
    (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 (other than a lawsuit with respect to a routine claim for 
benefits), and a description of the circumstances of such lawsuit or 
criminal action;
    (6) Whether the applicant (including any person described in 
Sec. 2570.34(b)(5)(ii)) or any of the parties in interest involved in 
the exemption transaction has, within the last 13 years, been either 
convicted or released from imprisonment, whichever is later, as a result 
of: any felony involving abuse or misuse of such person's position or 
employment with an employee benefit plan or a labor organization; any 
felony arising out of the conduct of the business of a broker, dealer, 
investment adviser, bank, insurance company or fiduciary; income tax 
evasion; any felony involving the larceny, theft, robbery, extortion, 
forgery, counterfeiting, fraudulent concealment, embezzlement, 
fraudulent conversion, or misappropriation of funds or securities; 
conspiracy or attempt to commit any such crimes or a crime of which any 
of the foregoing crimes is an element; or any other crime described in 
section 411 of ERISA, and a description of the

[[Page 635]]

circumstances of any such conviction. For purposes of this section, a 
person shall be deemed to have been ``convicted'' from the date of the 
judgment of the trial court, regardless of whether that judgment remains 
under appeal;
    (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 provide a brief statement describing the investigation, 
examination, litigation or controversy. The Department reserves the 
right to require the production of additional information or 
documentation concerning any of the above matters. In this regard, a 
denial of the exemption application will result from a failure to 
provide additional information requested by the Department.
    (8) Whether any plan affected by the requested exemption has 
experienced a reportable event under section 4043 of ERISA, and, if so, 
a description of the circumstances of any such reportable event;
    (9) Whether a notice of intent to terminate has been filed under 
section 4041 of ERISA respecting any plan affected by the requested 
exemption, and, if so, a description of the circumstances for the 
issuance of such notice;
    (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 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, or any civil penalties due under section 502(i) or (l) of 
ERISA by reason of the transaction have been paid. If so, the applicant 
should submit documentation (e.g., a canceled check) demonstrating that 
the excise taxes or civil penalties were paid.
    (15) The name of every person who has investment discretion over any 
plan 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

[[Page 636]]

    (iv) The statutory or administrative exemption covering these 
investments, if any.
    (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;
    (3) A copy of the most recent financial statements of each plan 
affected by the requested exemption; and
    (4) A net worth statement with respect to any party in interest that 
is providing a personal guarantee with respect to the exemption 
transaction.
    (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 in 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 an 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 in 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

[[Page 637]]

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.
    (d) Retroactive exemptions:
    (1) Generally, the Department will favorably consider requests for 
retroactive relief, in all exemption applications, only where the 
safeguards necessary for the grant of a prospective exemption were in 
place at the time at which the parties entered into the transaction. An 
applicant for a retroactive exemption must have acted in good faith by 
taking reasonable and appropriate steps to protect the plan from abuse 
and unnecessary risk at the time of the transaction.
    (2) Among the factors that the Department would take into account in 
making a finding that an applicant acted in good faith include the 
following:
    (i) The participation of an independent fiduciary acting on behalf 
of the plan who is qualified to negotiate, approve and monitor the 
transaction;
    (ii) The existence of a contemporaneous appraisal by a qualified 
independent appraiser or reference to an objective third party source, 
such as a stock or bond index;
    (iii) The existence of a bidding process or evidence of comparable 
fair market transactions with unrelated third parties;
    (iv) That the applicant has submitted an accurate and complete 
application for exemption containing documentation of all necessary and 
relevant facts and representations upon which the applicant relied. In 
this regard, additional weight will be given to facts and 
representations which are prepared and certified by a source independent 
of the applicant;
    (v) That the applicant has submitted evidence that the plan 
fiduciary did not engage in an act or transaction knowing that such act 
or transaction was prohibited under section 406 of ERISA and/or section 
4975 of the Code. In this regard, the Department will accord appropriate 
weight to the submission of a contemporaneous, reasoned legal opinion of 
counsel, upon which the plan fiduciary relied in good faith before 
entering the act or transaction;
    (vi) That the applicant has submitted a statement of the 
circumstances which prompted the submission of the application for 
exemption and the steps taken by the applicant with regard to the 
transaction upon discovery of the violation;
    (vii) That the applicant has submitted a statement, prepared and 
certified by an independent person familiar with the types of 
transactions for which relief is requested, demonstrating that the terms 
and conditions of the transaction (including, in the case of an 
investment, the return in fact realized by the plan) were at least as 
favorable to the plan as that obtainable in a similar transaction with 
an unrelated party; and
    (viii) Such other undertakings and assurances with respect to the 
plan and its participants that may be offered by the applicant which are 
relevant to the criteria under section 408(a) of ERISA and section 
4975(c)(2) of the Code.
    (3) The Department, as a general matter, will not favorably consider 
requests for retroactive exemptions where transactions or conduct with 
respect to which an exemption is requested resulted in a loss to the 
plan. In addition, the Department will not favorably consider requests 
for exemptions where the transactions are inconsistent with the general 
fiduciary responsibility provisions of sections 403 or 404 of ERISA or 
the exclusive benefit requirements of section 401(a) of the Code.



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 may be mailed via 
first-class mail to: Employee Benefits Security Administration, Office 
of Exemption Determinations, U.S. Department of Labor, Room N-5700, 200 
Constitution Avenue NW., Washington, DC 20210. Alternatively, 
applications may be emailed to the Department at [email protected] or 
transmitted via facsimile at (202) 219-0204. Notwithstanding the 
foregoing methods of

[[Page 638]]

transmission, applicants are also required to submit one paper copy of 
the exemption application for the Department's file.



Sec. 2570.37  Duty to amend and supplement exemption applications.

    (a) While an exemption application is pending final action with the 
Department, an applicant must promptly notify the Department in writing 
if he or she discovers that any material fact or representation 
contained in the 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. In addition, an applicant must 
promptly notify the Department in writing if it learns that a material 
fact or representation has been omitted from the exemption application.
    (b) If, at any time during the pendency of an exemption application, 
the 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 Department.
    (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 
tentatively concludes that it will not propose or grant the exemption, 
it will notify the applicant in writing. At the same time, the 
Department will provide a brief 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 this subpart 
and/or to notify the Department of its intent to submit additional 
information under Sec. 2570.39 of this subpart. 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.



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, or electronically to the email address provided 
in the tentative denial letter. At the same time, the applicant should 
indicate generally the type of information that will be submitted.
    (b) The additional information an applicant intends to provide in 
support of the application must be in writing and be received by the 
Department within 40 days from the date of the tentative denial letter. 
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 this subpart to sign such a declaration.
    (c) If, for reasons beyond its control, an applicant is unable to 
submit all the additional information he or she intends to provide in 
support of his application within the 40-day period described in 
paragraph (b) of this section, he or she may request an extension of 
time to furnish the information. Such requests must be made before the 
expiration of the 40-day period and will be granted only in unusual 
circumstances and for a limited period as determined,

[[Page 639]]

respectively, by the Department in its sole discretion.
    (d) If an applicant is unable to submit all of the additional 
information he or she intends to provide within the 40-day period 
specified in paragraph (b) of this section, or within any additional 
period granted 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.
    (e) The Department will issue, without further notice, a final 
denial letter denying the requested exemption pursuant to Sec. 2570.41 
where--
    (1) The Department has not received the additional information that 
the applicant stated his or her intention to submit within the 40-day 
period described in paragraph (b) of this section, or within any 
additional period granted pursuant to paragraph (c) of this section;
    (2) The applicant did not request a conference pursuant to 
Sec. 2570.38(b) of this subpart; and
    (3) The applicant has not withdrawn the 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 this subpart.
    (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) In instances where the applicant has requested a conference 
pursuant to Sec. 2570.38(b) and also has submitted additional 
information pursuant to Sec. 2570.39, the Department will schedule a 
conference under this section for a date and time that occurs within 20 
days after the date on which the Department has provided either oral or 
written notification to the applicant that, after reviewing the 
additional information, it is still not prepared to propose the 
requested exemption. If, for reasons beyond its control, the applicant 
cannot attend a conference within the 20-day limit described in this 
paragraph, the applicant may request an extension of time for the 
scheduling of a conference, provided that such request is made before 
the expiration of the 20-day limit. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.
    (e) In instances where the applicant has requested a conference 
pursuant to Sec. 2570.38(b) but has not expressed an intent to submit 
additional information in support of the exemption application as 
provided in Sec. 2570.39, the Department will schedule a conference 
under this section for a date and time that occurs within 40 days after 
the date of the issuance of the tentative denial letter described in 
Sec. 2570.38(a). If, for reasons beyond its control, the applicant 
cannot attend a conference within the 40-day limit described in this 
paragraph, the applicant may request an extension of time for the 
scheduling of a conference, provided that such request is made before 
the expiration of the 40-day limit. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.
    (f) In instances where the applicant has requested a conference 
pursuant to Sec. 2570.38(b) of this subpart, has notified the Department 
of its intent to submit additional information pursuant to Sec. 2570.39, 
and has failed to furnish such information within 40 days from the date 
of the tentative denial letter, the

[[Page 640]]

Department will schedule a conference under this section for a date and 
time that occurs within 60 days after the date of the issuance of the 
tentative denial letter described in Sec. 2570.38(a). If, for reasons 
beyond its control, the applicant cannot attend a conference within the 
60-day limit described in this paragraph, the applicant may request an 
extension of time for the scheduling of a conference, provided that such 
request is made before the expiration of the 60-day limit. The 
Department will only grant such an extension in unusual circumstances 
and for a brief period as determined, respectively, by the Department in 
its sole discretion.
    (g) If the applicant fails to either timely schedule or appear for a 
conference agreed to by the Department pursuant to this section, the 
applicant will be deemed to have waived its right to a conference.
    (h) Within 20 days after the date of any conference held under this 
section, the applicant may submit to the Department (electronically or 
in paper form) any additional written data, arguments, or precedents 
discussed at the conference but not previously or adequately presented 
in writing. If, for reasons beyond its control, the applicant is unable 
to submit the additional information within this 20-day limit, the 
applicant may request an extension of time to furnish the information, 
provided that such request is made before the expiration of the 20-day 
limit described in this paragraph. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.



Sec. 2570.41  Final denial letters.

    The Department will issue a final denial letter denying a requested 
exemption where:
    (a) The conditions for issuing a final denial letter specified in 
Sec. 2570.38(b) or Sec. 2570.39(e) of this subpart are satisfied;
    (b) After issuing a tentative denial letter under Sec. 2570.38 of 
this subpart and considering the entire record in the case, including 
all written information submitted pursuant to Secs. 2570.39 and 2570.40 
of this subpart, the Department decides not to propose an exemption or 
to withdraw an exemption already proposed; or
    (c) After proposing an exemption and conducting a hearing on the 
exemption under either Sec. 2570.46 or Sec. 2570.47 of this subpart and 
after considering the entire record in the case, including the record of 
the hearing, the Department decides to withdraw the proposed exemption.



Sec. 2570.42  Notice of proposed exemption.

    If the Department tentatively decides that an administrative 
exemption is warranted, it will publish a notice of a proposed exemption 
in the Federal Register. In addition to providing notice of the pendency 
of the exemption before the Department, the notice will:
    (a) Explain the exemption transaction and summarize the information 
and reasons in support of proposing the exemption;
    (b) Describe the scope of relief and any conditions of the proposed 
exemption;
    (c) Inform interested persons of their right to submit comments to 
the Department (either electronically or in writing) relating to the 
proposed exemption and establish a deadline for receipt of such 
comments; and
    (d) Where 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 subpart and 
establish a deadline for receipt of requests for such hearings.



Sec. 2570.43  Notification of interested persons by applicant.

    (a) If a notice of proposed exemption is published in the Federal 
Register in accordance with Sec. 2570.42 of this subpart, the applicant 
must notify interested persons of the pendency of the exemption in the 
manner and within the time period specified in the application. If the 
Department determines that this notification would be inadequate, the 
applicant must obtain the Department's consent as to the manner and time 
period of providing the notice

[[Page 641]]

to interested persons. Any such notification must include:
    (1) A copy of the notice of proposed exemption as published in the 
Federal Register; 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 summarized in 
the enclosed [Summary of Proposed Exemption, and described in greater 
detail in the accompanying] \2\ 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].\3\ [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].] \4\
---------------------------------------------------------------------------

    \2\ To be added in instances where the Department requires the 
applicant to furnish a Summary of Proposed Exemption to interested 
persons as described in Sec. 2570.43(d).
    \3\ The applicant will write in this space the date of the last day 
of the time period specified in the notice of proposed exemption.
    \4\ 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.
---------------------------------------------------------------------------

    All comments and/or requests for a hearing should be addressed to 
the Office of Exemption Determinations, Employee Benefits Security 
Administration, Room ___,\5\ U.S. Department of Labor, 200 Constitution 
Avenue NW., Washington, DC 20210, ATTENTION: Application No.___.\6\ 
Comments and hearing requests may also be transmitted to the Department 
electronically at [email protected] or at http://www.regulations.gov (follow 
instructions for submission), and should prominently reference the 
application number listed above. In addition, comments and hearing 
requests may be transmitted to the Department via facsimile at (202) 
219-0204. Individuals submitting comments or requests for a hearing on 
this matter are advised not to disclose sensitive personal data, such as 
social security numbers.
---------------------------------------------------------------------------

    \5\ The applicant will fill in the room number of the Office of 
Exemptions Determinations. As of the date of this final regulation, the 
room number of the Office of Exemption Determinations is N-5700.
    \6\ 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 the comments received in response to the enclosed 
notice. If the Department decides to hold a hearing on the exemption 
request before making its final decision, you will be notified of the 
time and place of the hearing.

    (b) The method used by an applicant 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. If the applicant elects to furnish notice 
electronically, he or she must provide satisfactory proof of electronic 
delivery to the entire class of interested persons.
    (c) After furnishing the notification described in paragraph (a) of 
this section, an applicant must provide the Department with a written 
statement confirming that notice was furnished in accordance with the 
foregoing requirements of this section. 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 this subpart to sign such a 
declaration. No exemption will be granted until such a statement and its 
accompanying declaration have been furnished to the Department.
    (d) In addition to the provision of notification required by 
paragraph (a) of this section, the Department, in its discretion, may 
also require an applicant to furnish interested persons with a brief 
summary of the proposed exemption (Summary of Proposed Exemption), 
written in a manner calculated to be understood by the average 
recipient, which objectively describes:
    (1) The exemption transaction and the parties in interest thereto;
    (2) Why such transaction would violate the prohibited transaction 
provisions of ERISA, the Code, and/or FERSA from which relief is sought;
    (3) The reasons why the plan seeks to engage in the transaction; and
    (4) The conditions and safeguards proposed to protect the plan and 
its

[[Page 642]]

participants and beneficiaries from potential abuse or unnecessary risk 
of loss in the event the Department grants the exemption.
    (e) Applicants who are required to provide interested persons with 
the Summary of Proposed Exemption described in paragraph (d) of this 
section shall furnish the Department with a copy of such summary for 
review and approval prior to its distribution to interested persons. 
Such applicants shall also provide confirmation to the Department that 
the Summary of Proposed Exemption was furnished to interested persons as 
part of the written statement and declaration required of exemption 
applicants by paragraph (c) of this section.



Sec. 2570.44  Withdrawal of exemption applications.

    (a) An applicant may withdraw an application for an exemption at any 
time by oral or written (including electronic) notice to the Department. 
A withdrawn application generally shall not prejudice any subsequent 
applications for an exemption submitted by an applicant.
    (b) Upon receiving an applicant's notice of withdrawal regarding 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 withdrawal regarding 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 or she may 
contact the Department in writing (including electronically) to request 
that the application be reinstated. The applicant should refer 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 was outstanding, that 
information must accompany the request for 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 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) to sign such a declaration.

[[Page 643]]

    (d) If, after reviewing a request for reconsideration, the 
Department decides that the facts and arguments presented do not warrant 
reversal of its 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 final 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, telephone number, and email address 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. A notice of such hearing shall be 
published by the Department in the Federal Register. The Department may 
decline to hold a hearing where:
    (1) The request for the hearing does not meet the requirements of 
paragraph (a) of this section;
    (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 (including electronic) 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(b).
    (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) 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. A notice of such 
hearing shall be published by the Department in the Federal Register.
    (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) The Department may not grant an exemption under section 408(a) 
of

[[Page 644]]

ERISA, section 4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) unless, 
following evaluation of the facts and representations comprising the 
administrative record of the proposed exemption (including any comments 
received in response to a notice of proposed exemption and the record of 
any hearing held in connection with the proposed exemption), it finds 
that the exemption is:
    (1) Administratively feasible;
    (2) In the interests of the plan (or the Thrift Savings Fund in the 
case of FERSA) and of its participants and beneficiaries; and
    (3) Protective of the rights of participants and beneficiaries of 
such plan (or the Thrift Savings Fund in the case of FERSA).
    (b) In each instance where the Department determines to grant an 
exemption, it shall publish a notice in the Federal Register which 
summarizes the transaction or transactions for which exemptive relief 
has been granted and specifies 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 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.
    (d) For transactions that are continuing in nature, an exemption 
ceases to be effective if, during the continuation of the transaction, 
there are material changes to the original facts and representations 
underlying such exemption or if one or more of the exemption's 
conditions cease to be met.
    (e) The determination as to whether, under the totality of the facts 
and circumstances, a particular statement contained in (or omitted from) 
an exemption application constitutes a material fact or representation 
is made by the Department.



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 findings 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. Prior to the publication of such 
notice, the applicant will be notified of the Department's proposed 
action and the reasons therefore. Subsequent to the publication of the 
notice, the applicant will have the opportunity to comment on the 
proposed 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 will be open to 
public inspection and copying at the EBSA Public Disclosure Room, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    (b) Upon request, the staff of the Public Disclosure Room 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 subpart B is effective with respect to all exemptions filed 
with or initiated by the Department under section 408(a) of ERISA, 
section 4975(c)(2) of the Code, and/or 5 U.S.C. 8477(c)(3) at any time 
on or after December 27, 2011. Applications for exemptions under section 
408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 U.S.C. 
8477(c)(3)

[[Page 645]]

filed on or after September 10, 1990, but before December 27, 2011 are 
governed by part 2570 of chapter XXV of title 29 of the Code of Federal 
Regulations (title 29 CFR part 2570 as revised July 1, 1991).



 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 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 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

[[Page 646]]

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 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:

[[Page 647]]

    (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. 2570.64  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

[[Page 648]]

full settlement and have agreed to dismissal of the action subject to 
compliance with the terms of the settlement; or
    (3) Inform the administrative law judge that agreement cannot be 
reached.
    (d) Disposition. In the event a settlement agreement containing 
consent findings and an order is submitted within the time allowed 
therefore, the administrative law judge shall issue a decision 
incorporating such findings and agreement within thirty (30) days of his 
receipt of such document. The decision of the administrative law judge 
shall incorporate all of the findings, terms, and conditions of the 
settlement agreement and consent order of the parties. Such decision 
shall become final agency action within the meaning of 5 U.S.C. 704.
    (e) Settlement without consent of all parties. In cases in which 
some, but not all, of the parties to a proceeding submit a consent 
agreement to the administrative law judge, the following procedure shall 
apply:
    (1) If all of the parties have not consented to the proposed 
settlement submitted to the administrative law judge, then such non-
consenting parties must receive notice, and a copy, of the proposed 
settlement at the time it is submitted to the administrative law judge;
    (2) Any non-consenting party shall have fifteen (15) days to file 
any objections to the proposed settlement with the administrative law 
judge and all other parties;
    (3) If any party submits an objection to the proposed settlement, 
the administrative law judge shall decide within thirty (30) days after 
receipt of such objections whether he shall sign or reject the proposed 
settlement. Where the record lacks substantial evidence upon which to 
base a decision or there is a genuine issue of material fact, then the 
administrative law judge may establish procedures for the purpose of 
receiving additional evidence upon which a decision on the contested 
issues may reasonably be based;
    (4) If there are no objections to the proposed settlement, or if the 
administrative law judge decides to sign the proposed settlement after 
reviewing any such objections, the administrative law judge shall 
incorporate the consent agreement into a decision meeting the 
requirements of paragraph (d) of this section.



Sec. 2570.66  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

[[Page 649]]

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 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

[[Page 650]]

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 (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.

[[Page 651]]

    (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.
    (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

[[Page 652]]

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 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)

    Source: 68 FR 17508, Apr. 9, 2003, 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 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

[[Page 653]]

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;
    (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

[[Page 654]]

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.
    (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

[[Page 655]]

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 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

[[Page 656]]

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

[[Page 657]]

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 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

[[Page 658]]

civil penalty under ERISA section 502(c)(6) against a particular party. 
Such final order may result from a decision of an administrative law 
judge or the Secretary, the failure of a party to file a statement of 
matters reasonably beyond the control of the plan administrator 
described in Sec. 2560.502c-6(e) of this chapter within the prescribed 
time limits, or the failure of a party to invoke the procedures for 
hearings or appeals under this title within the prescribed time limits. 
Such a final order shall constitute final agency action within the 
meaning of 5 U.S.C. 704;
    (h) Hearing means that part of a proceeding which involves the 
submission of evidence, either by oral presentation or written 
submission, to the administrative law judge;
    (i) Order means the whole or any part of a final procedural or 
substantive disposition of a matter under ERISA section 502(c)(6);
    (j) Party includes a person or agency named or admitted as a party 
to a proceeding;
    (k) Person includes an individual, partnership, corporation, 
employee benefit plan, association, exchange or other entity or 
organization;
    (l) Petition means a written request, made by a person or party, for 
some affirmative action;
    (m) Pleading means the notice as defined in Sec. 2560.502c-6(g) of 
this chapter, the answer to the notice, any supplement or amendment 
thereto, and any reply that may be permitted to any answer, supplement 
or amendment;
    (n) 502(c)(6) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(6) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(6);
    (p) Secretary means the Secretary of Labor and includes, pursuant to 
any delegation of authority by the Secretary, any assistant secretary 
(including the Assistant Secretary for 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.

[[Page 659]]

    (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 ``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

[[Page 660]]

for hearing, the parties jointly may move to defer the hearing for a 
reasonable time to permit negotiation of a settlement or an agreement 
containing findings and an order disposing of the whole or any part of 
the proceeding. The allowance of such a deferral and the duration 
thereof shall be in the discretion of the administrative law judge, 
after consideration of such factors as the nature of the proceeding, the 
requirements of the public interest, the representations of the parties, 
and the probability of reaching an agreement which will result in a just 
disposition of the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice and the agreement;
    (3) A waiver of any further procedural steps before the 
administrative law judge;
    (4) A waiver of any right to challenge or contest the validity of 
the order and decision entered into in accordance with the agreement; 
and
    (5) That the order and decision of the administrative law judge 
shall be final agency action.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, but, in any case, at least five (5) days prior to the date 
set for hearing, the parties or their authorized representative or their 
counsel may:
    (1) Submit the proposed agreement containing consent findings and an 
order to the administrative law judge; or
    (2) Notify the administrative law judge that the parties have 
reached a full settlement and have agreed to dismissal of the action 
subject to compliance with the terms of the settlement; or
    (3) Inform the administrative law judge that agreement cannot be 
reached.
    (d) Disposition. In the event a settlement agreement containing 
consent findings and an order is submitted within the time allowed 
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

[[Page 661]]

law judge. The motion for discovery shall be granted by the 
administrative law judge only upon a showing of good cause. In order to 
establish ``good cause'' for the purposes of this section, a party must 
show that the discovery requested relates to a genuine issue as to a 
material fact that is relevant to the proceeding. The order of the 
administrative law judge shall expressly limit the scope and terms of 
discovery to that for which ``good cause'' has been shown, as provided 
in this paragraph.
    (b) A party may obtain discovery of documents and tangible things 
otherwise discoverable under paragraph (a) of this section and prepared 
in anticipation of or for the hearing by or for another party's 
representative (including his or her attorney, consultant, surety, 
indemnitor, insurer, or agent) only upon showing that the party seeking 
discovery has substantial need of the materials or information in the 
preparation of his or her case and that he or she is unable without 
undue hardship to obtain the substantial equivalent of the materials or 
information by other means. In ordering discovery of such materials when 
the required showing has been made, the administrative law judge shall 
protect against disclosure of the mental impressions, conclusions, 
opinions, or legal theories of an attorney or other representatives of a 
party concerning the proceeding.



Sec. 2570.117  Summary decision.

    For 502(c)(6) civil penalty proceedings, this section shall apply in 
lieu of Sec. 18.41 of this title.
    (a) No genuine issue of material fact. (1) Where no issue of a 
material fact is found to have been raised, the administrative law judge 
may issue a 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

[[Page 662]]

shall be supported by reliable and probative evidence. The decision of 
the administrative law judge shall become final agency action within the 
meaning of 5 U.S.C. 704 unless an appeal is made pursuant to the 
procedures set forth in Secs. 2570.119 through 2570.121.



Sec. 2570.119  Review by the Secretary.

    (a) The Secretary may review a decision of an administrative law 
judge. Such a review may occur only when a party files a notice of 
appeal from a decision of an administrative law judge within twenty (20) 
days of the issuance of such decision. In all other cases, the decision 
of the administrative law judge shall become final agency action within 
the meaning of 5 U.S.C. 704.
    (b) A notice of appeal to the Secretary shall state with specificity 
the issue(s) in the decision of the administrative law judge on which 
the party is seeking review. Such notice of appeal must be served on all 
parties of record.
    (c) Upon receipt of a notice of appeal, the Secretary shall request 
the Chief Administrative Law Judge to submit to him or her a copy of the 
entire record before the administrative law judge.



Sec. 2570.120  Scope of review.

    The review of the Secretary shall not be 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

[[Page 663]]

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;
    (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.

[[Page 664]]

    (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 ``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

[[Page 665]]

move to defer the hearing for a reasonable time to permit negotiation of 
a settlement or an agreement containing findings and an order disposing 
of the whole or any part of the proceeding. The allowance of such a 
deferral and the duration thereof shall be in the discretion of the 
administrative law judge, after consideration of such factors as the 
nature of the proceeding, the requirements of the public interest, the 
representations of the parties, and the probability of reaching an 
agreement which will result in a just disposition of the issues 
involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice and the agreement;
    (3) A waiver of any further procedural steps before the 
administrative law judge;
    (4) A waiver of any right to challenge or contest the validity of 
the order and decision entered into in accordance with the agreement; 
and
    (5) That the order and decision of the administrative law judge 
shall be final agency action.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, but, in any case, at least five (5) days prior to the date 
set for hearing, the parties or their authorized representative or their 
counsel may:
    (1) Submit the proposed agreement containing consent findings and an 
order to the administrative law judge; or
    (2) Notify the administrative law judge that the parties have 
reached a full settlement and have agreed to dismissal of the action 
subject to compliance with the terms of the settlement; or
    (3) Inform the administrative law judge that agreement cannot be 
reached.
    (d) Disposition. In the event a settlement agreement containing 
consent findings and an order is submitted within the time allowed 
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

[[Page 666]]

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. 2570.137  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

[[Page 667]]

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 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.

[[Page 668]]

    (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 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);

[[Page 669]]

    (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.



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.

[[Page 670]]

    (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 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

[[Page 671]]

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.



 Subpart I_Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(8)

    Source: 75 FR 8801, Feb. 26, 2010, unless otherwise noted.



Sec. 2570.160  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(8) civil penalty proceedings'' (as defined in Sec. 2570.161(n) 
of this subpart) under section 502(c)(8) 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)(8) 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. 2570.161  Definitions.

    For 502(c)(8) 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-8(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)(8) 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-8(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;
    (i) Order means the whole or any part of a final procedural or 
substantive disposition of a matter under ERISA section 502(c)(8);
    (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-8(g) of 
this chapter, the answer to the notice, any supplement or amendment 
thereto, and any

[[Page 672]]

reply that may be permitted to any answer, supplement or amendment;
    (n) 502(c)(8) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(8) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(8);
    (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. 2570.162  Service: Copies of documents and pleadings.

    For 502(c)(8) 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)(8) 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. 2570.163  Parties, how designated.

    For 502(c)(8) 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 ``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

[[Page 673]]

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. 2570.164  Consequences of default.

    For 502(c)(8) 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-8(g) of this chapter within the 30 day period provided by 
Sec. 2560.502c-8(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)(8) of the Act. Such notice shall then become the final order of 
the Secretary, within the meaning of Sec. 2570.161(g) of this subpart, 
forty-five (45) days from the date of service of the notice.



Sec. 2570.165  Consent order or settlement.

    For 502(c)(8) civil penalty proceedings, the following shall apply 
in lieu of Sec. 18.9 of this title.
    (a) General. At any time after the commencement of a proceeding, but 
at least five (5) days prior to the date set for hearing, the parties 
jointly may move to defer the hearing for a reasonable time to permit 
negotiation of a settlement or an agreement containing findings and an 
order disposing of the whole or any part of the proceeding. The 
allowance of such a deferral and the duration thereof shall be in the 
discretion of the administrative law judge, after consideration of such 
factors as the nature of the proceeding, the requirements of the public 
interest, the representations of the parties, and the probability of 
reaching an agreement which will result in a just disposition of the 
issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice and the agreement;
    (3) A waiver of any further procedural steps before the 
administrative law judge;
    (4) A waiver of any right to challenge or contest the validity of 
the order and decision entered into in accordance with the agreement; 
and
    (5) That the order and decision of the administrative law judge 
shall be final agency action.

[[Page 674]]

    (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. 2570.166  Scope of discovery.

    For 502(c)(8) 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

[[Page 675]]

of an attorney or other representatives of a party concerning the 
proceeding.



Sec. 2570.167  Summary decision.

    For 502(c)(8) 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. 2570.169 through 2570.171 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. 2570.168  Decision of the administrative law judge.

    For 502(c)(8) 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)(8) 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)(8) 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. 2570.169 through 2570.171 of this subpart.



Sec. 2570.169  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. 2570.170  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

[[Page 676]]

shall be no opportunity for oral argument.



Sec. 2570.171  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.



PART 2571_PROCEDURAL REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT 
UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT--Table of Contents



  Subpart A_Procedures for Administrative Hearings on the Issuance of 
   Cease and Desist Orders Under ERISA Section 521_Multiple Employer 
                          Welfare Arrangements

Sec.
2571.1  Scope of rules.
2571.2  Definitions.
2571.3  Service: copies of documents and pleadings.
2571.4  Parties.
2571.5  Consequences of default.
2571.6  Consent order or settlement.
2571.7  Scope of discovery.
2571.8  Summary decision.
2571.9  Decision of the administrative law judge.
2571.10  Review by the Secretary.
2571.11  Scope of review by the Secretary.
2571.12  Procedures for review by the Secretary.
2571.13  Effective date.

Subpart B [Reserved]

    Authority: 29 U.S.C. 1002(40), 1132, 1135; and 1151, Secretary of 
Labor's Order 1-2011, 77 FR 1088 (January 9, 2012).

    Source: 78 FR 13808, Mar. 1, 2013, unless otherwise noted.



  Subpart A_Procedures for Administrative Hearings on the Issuance of 
   Cease and Desist Orders Under ERISA Section 521_Multiple Employer 
                          Welfare Arrangements



Sec. 2571.1  Scope of rules.

    The rules of practice set forth in this part apply to ex parte cease 
and desist order proceedings under section 521 of the Employee 
Retirement Income Security Act of 1974, as amended (ERISA). 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 521 except as modified by this 
section. These proceedings shall be conducted as expeditiously as 
possible, and the parties and the Office of the Administrative Law 
Judges shall make every effort to avoid delay at each stage of the 
proceedings.



Sec. 2571.2  Definitions.

    For section 521 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 an 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 temporary order 
issued pursuant to 29 CFR 2560.521-1(c);
    (d) Commencement of proceeding is the filing of an answer by the 
respondent;
    (e) Consent agreement means a proposed written agreement and order 
containing a specified proposed remedy or other relief acceptable to the 
Secretary and consenting parties;
    (f) Final order means a cease and desist order that is a final order 
of the Secretary of Labor under ERISA section 521. Such final order may 
result from a decision of an administrative law judge or of the 
Secretary on review of a decision of an administrative law judge, or 
from the failure of a party to

[[Page 677]]

invoke the procedures for a hearing under 29 CFR 2560.521-1 within the 
prescribed time limit. A final order shall constitute a final agency 
action within the meaning of 5 U.S.C. 704;
    (g) Hearing means that part of a section 521 proceeding which 
involves the submission of evidence, either by oral presentation or 
written submission, to the administrative law judge;
    (h) Order means the whole or any part of a final procedural or 
substantive disposition of a section 521 proceeding;
    (i) Party includes a person or agency named or admitted as a party 
to a section 521 proceeding;
    (j) Person includes an individual, partnership, corporation, 
employee welfare benefit plan, association, or other entity or 
organization;
    (k) Petition means a written request, made by a person or party, for 
some affirmative action;
    (l) Respondent means the party against whom the Secretary is seeking 
to impose a cease and desist order under ERISA section 521;
    (m) Secretary means the Secretary of Labor or his or her delegate;
    (n) Section 521 proceeding means an adjudicatory proceeding relating 
to the issuance of a temporary order under 29 CFR 2560.521-1 and section 
521 of ERISA;
    (o) Solicitor means the Solicitor of Labor or his or her delegate; 
and
    (p) Temporary order means the temporary cease and desist order 
issued by the Secretary under 29 CFR 2560.521-1(c) and section 521 of 
ERISA.



Sec. 2571.3  Service: copies of documents and pleadings.

    For section 521 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, 800 K Street NW., Suite 400, Washington, DC 
20001-8002, or to the OALJ Regional Office to which the section 521 
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 
Secretary shall be served by delivery to the Associate Solicitor, Plan 
Benefits Security Division, ERISA Section 521 Proceeding, P.O. Box 1914, 
Washington, DC 20013 and any attorney named for service of process as 
set forth in the temporary order. The person serving the document shall 
certify to the manner of date and service.
    (c) By the Office of Administrative Law Judges. Service of orders, 
decisions, and all other documents shall be made in such manner as the 
Office of Administrative Law Judges determines to the last known 
address.
    (d) Form of pleadings.
    (1) Every pleading or other paper filed in a section 521 proceeding 
shall designate 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 printed when possible on 
standard size 8\1/2\  x  11 inch paper.
    (2) Illegible documents, whether handwritten, printed, photocopies, 
or otherwise, will not be accepted. Papers may be reproduced by any 
duplicating process provided all copies are clear and legible.



Sec. 2571.4  Parties.

    For section 521 proceedings, this section shall apply in lieu of 
Sec. 18.10 of this title:

[[Page 678]]

    (a) The term ``party'' wherever used in these rules shall include 
any person that is a subject of the temporary order and is challenging 
the temporary order under these section 521 proceedings, and the 
Secretary. A party challenging a temporary order shall be designated as 
the ``respondent.'' The Secretary shall be designated as the 
``complainant.''
    (b) Other persons 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 section 521 
proceeding and their interest is not adequately represented by the 
existing parties, and that in the discretion of the administrative law 
judge the participation of such persons would be appropriate.
    (c) A person not named in a temporary order, but wishing to 
participate as a respondent under this section shall submit a petition 
to the administrative law judge within fifteen (15) days after the 
person has knowledge of, or should have known about, the section 521 
proceeding. The petition shall be filed with the administrative law 
judge and served on each person who has been made a party at the time of 
filing. Such petition shall concisely state:
    (1) Petitioner's interest in the section 521 proceeding (including 
how the section 521 proceedings will directly and adversely affect them 
or the class they represent and why their interest is not adequately 
represented by the existing parties);
    (2) How his or her participation as a party will contribute 
materially to the disposition of the section 521 proceeding;
    (3) Who will appear for the 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 
section 521 proceeding, as defined in paragraph (b) of this section, and 
shall permit or deny participation accordingly. Where persons with 
common interest file petitions to participate as parties in a section 
521 proceeding, the administrative law judge may request all such 
petitioners to designate a single representative, or the administrative 
law judge may designate one or more of the petitioners to represent the 
others. 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 may 
consider whether to treat the petition as a request for participation as 
amicus curiae.



Sec. 2571.5  Consequences of default.

    For section 521 proceedings, this section shall apply in lieu of 
Sec. 18.5(b) of this title. Failure of the respondent to file an answer 
to the temporary order within the 30-day period provided by 29 CFR 
2560.521-1(e) shall constitute a waiver of the respondent's right to 
appear and contest the temporary order. Such failure shall also be 
deemed to be an admission of the facts as alleged in the temporary order 
for purposes of any proceeding involving the order issued under section 
521 of ERISA. The temporary order shall then become the final order of 
the Secretary, within the meaning of 29 CFR 2571.2(f), 30 days from the 
date of the service of the temporary order.



Sec. 2571.6  Consent order or settlement.

    For section 521 proceedings, this section shall apply in lieu of 
Sec. 18.9 of this title:
    (a) In general. At any time after the commencement of a section 521 
proceeding, the parties jointly may move to defer the hearing for a 
reasonable time in order to negotiate a settlement or an agreement 
containing findings and a consent order disposing of the whole or any 
part of the section 521 proceeding. The administrative law judge shall 
have discretion to allow or

[[Page 679]]

deny such a postponement and to determine its duration. In exercising 
this discretion, the administrative law judge shall consider the nature 
of the section 521 proceeding, the requirements of the public interest, 
the representations of the parties and the probability of reaching an 
agreement that will result in a just disposition of the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of the section 521 proceeding or any part thereof shall also 
provide:
    (1) That the consent order shall have the same force and effect as 
an order made after full hearing;
    (2) That the entire record on which the consent order is 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 consent order and decision entered into in accordance with the 
agreement; and
    (5) That the consent order and decision of the administrative law 
judge shall be final agency action within the meaning of 5 U.S.C. 704.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives 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. If a settlement agreement containing consent 
findings and an order, agreed to by all the parties to a section 521 
proceeding, is submitted within the time allowed therefor, 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 respondents. In cases in which 
some, but not all, of the respondents to a section 521 proceeding submit 
an agreement and consent order to the administrative law judge, the 
following procedure shall apply:
    (1) If all of the respondents 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 respondent 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 respondent 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 issue may be reasonably 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; and
    (5) If the consent agreement is incorporated into a decision meeting 
the requirements of paragraph (d) of this section, the administrative 
law judge shall continue the section 521 proceeding with respect to any 
non-consenting respondents.



Sec. 2571.7  Scope of discovery.

    For section 521 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 administrative law judge may grant a 
motion for discovery

[[Page 680]]

only upon a showing of good cause. In order to establish ``good cause'' 
for the purposes of this section, the moving party must show that the 
requested discovery relates to a genuine issue as to a fact that is 
material to the section 521 proceeding. The order of the administrative 
law judge shall expressly limit the scope and terms of the discovery to 
that for which ``good cause'' has been shown, as provided in this 
paragraph.
    (b) Any evidentiary privileges apply as they would apply in a civil 
proceeding in federal district court. For example, legal advice provided 
by an attorney to a client is generally protected from disclosure. 
Mental impressions, conclusions, opinions, or legal theories of a 
party's attorney or other representative developed in anticipation of 
litigation are also generally protected from disclosure. The 
administrative law judge may not, however, protect from discovery or 
use, relevant communications between an attorney and a plan 
administrator or other plan fiduciary, or work product, that fall under 
the fiduciary exception to the attorney-client or work product 
privileges. The fiduciary exception to these privileges exists when an 
attorney advises the plan administrator or other plan fiduciary on 
matters concerning plan administration or other fiduciary activities. 
Consequently, the administrative law judge may not protect such 
communications from discovery or from use by the Secretary in the 
proceedings. The administrative law judge also may also not protect 
attorney work product prepared to assist the fiduciary in its fiduciary 
capacity from discovery or from use by the Secretary in the proceedings. 
The fiduciary exception does not apply, however, to the extent that 
communications were made or documents were prepared exclusively to aid 
the fiduciary personally or for non-fiduciary matters (e.g. settlor 
acts), provided that the plan did not pay for the legal services. The 
Secretary need not make a special showing, such as good cause, merely to 
obtain information or documents covered by the fiduciary exception. 
Other relevant exceptions to the attorney-client or work product 
privileges shall also apply.



Sec. 2571.8  Summary decision.

    For section 521 proceedings, this section shall apply in lieu of 
Sec. 18.41 of this title:
    (a) No genuine issue of material fact. Where the administrative law 
judge finds that no issue of a material fact has been raised, he or she 
may issue a decision which, in the absence of an appeal, pursuant to 
Secs. 2571.10 through 2571.12, shall become a final agency action within 
the meaning of 5 U.S.C. 704.
    (b) A decision made under this section, shall include a statement 
of:
    (1) Findings of fact and conclusions of law, and the reasons 
thereof, on all issues presented; and
    (2) Any terms and conditions of the ruling.
    (c) A copy of any decision under this section shall be served on 
each party.



Sec. 2571.9  Decision of the administrative law judge.

    For section 521 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. The administrative law 
judge shall make his or her decision expeditiously after the conclusion 
of the section 521 proceeding. 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 and shall be supported by reliable and probative 
evidence. The decision of the administrative law judge shall become 
final agency action

[[Page 681]]

within the meaning of 5 U.S.C. 704 unless an appeal is made pursuant to 
the procedures set forth in Secs. 2571.10 through 2571.12.



Sec. 2571.10  Review by the Secretary.

    (a) The Secretary may review the decision of an administrative law 
judge. Such 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 a decision. In all other cases, the decision of 
the administrative law judge shall become the 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 an appeal, the Secretary shall request the Chief 
Administrative Law Judge to submit to the Secretary a copy of the entire 
record before the administrative law judge.



Sec. 2571.11  Scope of review by the Secretary.

    The review of the Secretary shall be based on the record established 
before the administrative law judge. There shall be no opportunity for 
oral argument.



Sec. 2571.12  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 
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 the final agency action with the 
meaning of 5 U.S.C. 704.



Sec. 2571.13  Effective date.

    This regulation is effective with respect to all cease and desist 
orders issued by the Secretary under section 521 of ERISA at any time 
after April 1, 2013.

Subpart B [Reserved]



PART 2575_ADJUSTMENT OF CIVIL PENALTIES UNDER ERISA TITLE I--
Table of Contents



       Subpart A_Adjustment of Civil Penalties Under ERISA Title I

Sec.
2575.1  In general.
2575.2  Catch-up adjustments to civil monetary penalties.
2575.3  Subsequent adjustments to civil monetary penalties.
2575.502c-1  Adjusted civil penalty under section 502(c)(1).
2575.502c-3  Adjusted civil penalty under section 502(c)(3).

Subparts 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

    Authority: Pub. L. 101-410, 104 Stat. 890 (28 U.S.C. 2461 note), as 
amended by section 31001(s) of Pub. L. 104-134, 110 Stat. 1321-373, and 
section 701 of Pub. L. 114-74, 129 Stat. 584; 29 U.S.C 1059(b), 1132(c), 
1135 and 1185d; and Secretary of Labor's Order 1-2011, 77 FR 1088 
(January 9, 2012).

    Source: 62 FR 40699, July 29, 1997, unless otherwise noted. 
Redesignated at 64 FR 42246, Aug. 3, 1999.



Sec. 2575.1  In general.

    In accordance with the requirements of the Federal Civil Penalties 
Inflation Adjustment Act of 1990, Pub. L. 104-410, 104 Stat. 890, as 
amended by the section 31001(s) of the Debt Collection Improvement Act 
of 1996, Pub. L. 104-34, 110 Stat. 1321-373, and section 701 of the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015, Pub. L. 114-74, 129 Stat. 584, (collectively the Inflation 
Adjustment

[[Page 682]]

Act), the applicable civil monetary penalties of title I of the Employee 
Retirement Income Security Act of 1974, as amended (ERISA), under the 
jurisdiction of the U.S. Department of Labor (Department) and listed in 
29 CFR 2575.2 are adjusted as set forth in this subpart, effective as of 
the relevant dates specified in Sec. 2575.2.

[81 FR 43454, July 1, 2016]



Sec. 2575.2  Catch-up adjustments to civil monetary penalties.

    The civil monetary penalties set forth in paragraphs (a) through (m) 
of this section are adjusted for inflation as required by section 
4(b)(1) of the Inflation Adjustment Act and 29 CFR 2575.1 as follows:
    (a) The civil monetary penalty of $10 for each employee established 
by section 209(b) of ERISA, is adjusted to $11 for violations occurring 
after July 29, 1997, for which a penalty is assessed before August 1, 
2016 and to $28 for penalties assessed after August 1, 2016, and before 
the effective date of the next adjustment for inflation made by the 
Secretary in accordance with the Inflation Adjustment Act and 
Sec. 2575.3.
    (b) The civil monetary penalty of up to $1,000 established by 
Section 502(c)(2) of ERISA is adjusted to $1,100 for violations 
occurring after July 29, 1997, for which a penalty is assessed before 
August 1, 2016, and to $2,063 for penalties assessed after August 1, 
2016, and before the effective date of the next adjustment for inflation 
made by the Secretary in accordance with the Inflation Adjustment Act 
and Sec. 2575.3.
    (c) The civil monetary penalty of up to $1,000 established by 
section 502(c)(4) of ERISA is adjusted to $1,632 for penalties assessed 
after August 1, 2016, and before the effective date of the next 
adjustment for inflation made by the Secretary in accordance with the 
Inflation Adjustment Act and Sec. 2575.3.
    (d) The civil monetary penalty of up to $1,000 established by 
Section 502(c)(5) of ERISA is adjusted to $1,100 for violations 
occurring after March 24, 2003, for which a penalty is assessed before 
August 1, 2016, and to $1,502 for penalties assessed after August 1, 
2016, and before the effective date of the next adjustment for inflation 
made by the Secretary in accordance with the Inflation Adjustment Act 
and Sec. 2575.3.
    (e) The civil monetary penalty of up to $100 not to exceed $1,000 
per request, established by section 502(c)(6) of ERISA, is adjusted to 
$110 not to exceed $1,100 per request for violations occurring after 
March 24, 2003, for which a penalty is assessed before August 1, 2016, 
and to $147 not to exceed $1,472 per request for penalties assessed 
after August 1, 2016, and before the effective date of the next 
adjustment for inflation made by the Secretary in accordance with the 
Inflation Adjustment Act and Sec. 2575.3.
    (f) The civil monetary penalty of up to $100 established by section 
502(c)(7) of ERISA is adjusted to $131 for penalties assessed after 
August 1, 2016, and before the effective date of the next adjustment for 
inflation made by the Secretary in accordance with the Inflation 
Adjustment Act and Sec. 2575.3.
    (g) The civil monetary penalty of up to $1,100 established by 
section 502(c)(8) of ERISA is adjusted to $1,296 for penalties assessed 
after August 1, 2016, and before the effective date of the next 
adjustment for inflation made by the Secretary in accordance with the 
Inflation Adjustment Act and Sec. 2575.3.
    (h) The civil monetary penalty of up to $100 established by section 
502(c)(9)(A) of ERISA is adjusted to $110 for penalties assessed after 
August 1, 2016, and before the effective date of the next adjustment for 
inflation made by the Secretary in accordance with the Inflation 
Adjustment Act and Sec. 2575.3.
    (i) The civil monetary penalty of up to $100 established by section 
502(c)(9)(B) of ERISA is adjusted to $110 for penalties assessed after 
August 1, 2016, and before the effective date of the next adjustment for 
inflation made by the Secretary in accordance with the Inflation 
Adjustment Act and Sec. 2575.3.
    (j) The civil monetary penalties established by section 502(c)(10) 
of ERISA are adjusted in accordance with paragraphs (j)(1) through (4) 
of this section:
    (1) The $100 civil monetary penalty of section 502(c)(10)(B)(i) of 
ERISA is adjusted to $110 to for penalties assessed after August 1, 
2016, and before the effective date of the next adjustment for

[[Page 683]]

inflation made by the Secretary in accordance with the Inflation 
Adjustment Act and Sec. 2575.3;
    (2) The $2,500 minimum civil monetary penalty of section 
502(c)(10)(C)(i) of ERISA for de minimis uncorrected violations is 
adjusted to $2,745 for penalties assessed after August 1, 2016, and 
before the effective date of the next adjustment for inflation made by 
the Secretary in accordance with the Inflation Adjustment Act and 
Sec. 2575.3;
    (3) The $15,000 minimum civil monetary penalty of section 
502(c)(10)(C)(ii) of ERISA for uncorrected violations that are not de 
minimis is adjusted to $16,473 for penalties assessed after August 1, 
2016, and before the effective date of the next adjustment for inflation 
made by the Secretary in accordance with the Inflation Adjustment Act 
and Sec. 2575.3; and
    (4) The $500,000 maximum civil monetary penalty for unintentional 
failures set in Section 502 (c)(10)(D)(iii)(II) of ERISA is adjusted to 
$549,095, for penalties assessed after August 1, 2016, and before the 
effective date of the next adjustment for inflation made by the 
Secretary in accordance with the Inflation Adjustment Act and 
Sec. 2575.3.
    (k) The civil monetary penalty of up to $100 established by section 
502(c)(12) of ERISA remains at $100 for penalties assessed after August 
1, 2016, and before the effective date of the next adjustment for 
inflation made by the Secretary in accordance with the Inflation 
Adjustment Act and Sec. 2575.3.
    (l) The maximum civil monetary penalty of $10,000 established by 
section 502(m) of ERISA is adjusted to $15,909 for penalties assessed 
after August 1, 2016, and before the effective date of the next 
adjustment for inflation made by the Secretary in accordance with the 
Inflation Adjustment Act and Sec. 2575.3.
    (m) The civil monetary penalty of not more than $1,000, established 
by Public Health Services Act section 2715(f) and incorporated into 
ERISA by section 715 of ERISA, is adjusted to $1,087 for penalties 
assessed after August 1, 2016, and before the effective date of the next 
adjustment for inflation made by the Secretary in accordance with the 
Inflation Adjustment Act and Sec. 2575.3.

[81 FR 43454, July 1, 2016]



Sec. 2575.3  Subsequent adjustments to civil monetary penalties.

    No later than January 15, starting in 2017, and each subsequent 
year, the Secretary shall adjust for inflation, as required by the 
Inflation Adjustment Act, the civil monetary penalties described in 
Sec. 2575.2 for violations occurring on or after November 2, 2015, and 
any future civil monetary penalties enforceable by the Secretary under 
title I of ERISA. The Secretary shall publish such annual adjustments in 
the Federal Register notwithstanding section 553 of the Administrative 
Procedure Act. Future penalties or adjustments to the amount of the 
penalty that are enacted by statute or regulation (other than an 
adjustment for inflation under the Inflation Adjustment Act) will not be 
adjusted for inflation in the first year those penalty levels take 
effect. Annual inflation adjustments shall apply to penalties assessed 
after the date notice of the annual inflation adjustment is published in 
the Federal Register.

[82 FR 5383, Jan. 18, 2017]



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-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.

[[Page 684]]

Subparts B-D [Reserved]



PART 2578_RULES AND REGULATIONS FOR ABANDONED PLANS--Table of Contents



    Authority: 29 U.S.C. 1135; 1104(a); 1103(d)(1).



Sec. 2578.1  Termination of abandoned individual account plans.

    (a) General. The purpose of this part is to establish standards for 
the termination and winding up of an individual account plan (as defined 
in section 3(34) of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act)) with respect to which a qualified termination 
administrator (as defined in paragraph (g) of this section) has 
determined there is no responsible plan sponsor or plan administrator 
within the meaning of section 3(16)(B) and (A) of the Act, respectively, 
to perform such acts.
    (b) Finding of abandonment. (1) A qualified termination 
administrator may find an individual account plan to be abandoned when:
    (i) Either: (A) No contributions to, or distributions from, the plan 
have been made for a period of at least 12 consecutive months 
immediately preceding the date on which the determination is being made; 
or
    (B) Other facts and circumstances (such as a filing by or against 
the plan sponsor for liquidation under title 11 of the United States 
Code, or communications from participants and beneficiaries regarding 
distributions) known to the qualified termination administrator suggest 
that the plan is or may become abandoned by the plan sponsor; and
    (ii) Following reasonable efforts to locate or communicate with the 
plan sponsor, the qualified termination administrator determines that 
the plan sponsor:
    (A) No longer exists;
    (B) Cannot be located; or
    (C) Is unable to maintain the plan.
    (2) Notwithstanding paragraph (b)(1) of this section, a qualified 
termination administrator may not find a plan to be abandoned if, at any 
time before the plan is deemed terminated pursuant to paragraph (c) of 
this section, the qualified termination administrator receives an 
objection from the plan sponsor regarding the finding of abandonment and 
proposed termination.
    (3) A qualified termination administrator shall, for purposes of 
paragraph (b)(1)(ii) of this section, be deemed to have made a 
reasonable effort to locate or communicate with the plan sponsor if the 
qualified termination administrator sends to the last known address of 
the plan sponsor, and, in the case of a plan sponsor that is a 
corporation, to the address of the person designated as the 
corporation's agent for service of legal process, by a method of 
delivery requiring acknowledgement of receipt, the notice described in 
paragraph (b)(5) of this section.
    (4) If receipt of the notice described in paragraph (b)(5) of this 
section is not acknowledged pursuant to paragraph (b)(3) of this 
section, the qualified termination administrator shall be deemed to have 
made a reasonable effort to locate or communicate with the plan sponsor 
if the qualified termination administrator contacts known service 
providers (other than itself) of the plan and requests the current 
address of the plan sponsor from such service providers and, if such 
information is provided, the qualified termination administrator sends 
to each such address, by a method of delivery requiring acknowledgement 
of receipt, the notice described in paragraph (b)(5) of this section.
    (5) The notice referred to in paragraph (b)(3) of this section shall 
contain the following information:
    (i) The name and address of the qualified termination administrator;
    (ii) The name of the plan;
    (iii) The account number or other identifying information relating 
to the plan;
    (iv) A statement that the plan may be terminated and benefits 
distributed pursuant to 29 CFR 2578.1 if the plan sponsor fails to 
contact the qualified termination administrator within 30 days;
    (v) The name, address, and telephone number of the person, office, 
or department that the plan sponsor must contact regarding the plan;
    (vi) A statement that if the plan is terminated pursuant to 29 CFR 
2578.1,

[[Page 685]]

notice of such termination will be furnished to the U.S. Department of 
Labor's Employee Benefits Security Administration;
    (vii) The following statement: ``The U.S. Department of Labor 
requires that you be informed that, as a fiduciary or plan administrator 
or both, you may be personally liable for costs, civil penalties, excise 
taxes, etc. as a result of your acts or omissions with respect to this 
plan. The termination of this plan will not relieve you of your 
liability for any such costs, penalties, taxes, etc.''; and
    (viii) A statement that the plan sponsor may contact the U.S 
Department of Labor for more information about the federal law governing 
the termination and winding-up process for abandoned plans and the 
telephone number of the appropriate Employee Benefit Security 
Administration contact person.
    (c) Deemed termination. (1) Except as provided in paragraph (c)(2) 
of this section, if a qualified termination administrator finds, 
pursuant to paragraph (b)(1) of this section, that an individual account 
plan has been abandoned, the plan shall be deemed to be terminated on 
the ninetieth (90th) day following the date of the letter from EBSA's 
Office of Enforcement acknowledging receipt of the notice of plan 
abandonment, described in paragraph (c)(3) of this section.
    (2) If, prior to the end of the 90-day period described in paragraph 
(c)(1) of this section, the Department notifies the qualified 
termination administrator that it--
    (i) Objects to the termination of the plan, the plan shall not be 
deemed terminated under paragraph (c)(1) of this section until the 
qualified termination administrator is notified that the Department has 
withdrawn its objection; or
    (ii) Waives the 90-day period described in paragraph (c)(1), the 
plan shall be deemed terminated upon the qualified termination 
administrator's receipt of such notification.
    (3) Following a qualified termination administrator's finding, 
pursuant to paragraph (b)(1) of this section, that an individual account 
plan has been abandoned, the qualified termination administrator shall 
furnish to the U.S. Department of Labor a notice of plan abandonment 
that is signed and dated by the qualified termination administrator and 
that includes the following information:
    (i) Qualified termination administrator information. (A) The name, 
EIN, address, and telephone number of the person electing to be the 
qualified termination administrator, including the address, e-mail 
address, and telephone number of the person signing the notice (or other 
contact person, if different from the person signing the notice);
    (B) A statement that the person (identified in paragraph 
(c)(3)(i)(A) of this section) is a qualified termination administrator 
within the meaning of paragraph (g) of this section and elects to 
terminate and wind up the plan (identified in paragraph (c)(3)(ii)(A) of 
this section) in accordance with the provisions of this section; and
    (C) An identification whether the person electing to be the 
qualified termination administrator or its affiliate is, or within the 
past 24 months has been, the subject of an investigation, examination, 
or enforcement action by the Department, Internal Revenue Service, or 
Securities and Exchange Commission concerning such entity's conduct as a 
fiduciary or party in interest with respect to any plan covered by the 
Act.
    (ii) Plan information. (A) The name, address, telephone number, 
account number, EIN, and plan number of the plan with respect to which 
the person is electing to serve as the qualified termination 
administrator;
    (B) The name and last known address and telephone number of the plan 
sponsor; and
    (C) The estimated number of participants in the plan;
    (iii) Findings. A statement that the person electing to be the 
qualified termination administrator finds that the plan (identified in 
paragraph (c)(3)(ii)(A) of this section) is abandoned pursuant to 
paragraph (b) of this section. This statement shall include an 
explanation of the basis for such a finding, specifically referring to 
the provisions in paragraph (b)(1) of this section, a description of the 
specific steps (set forth in paragraphs (b)(3) and

[[Page 686]]

(b)(4) of this section) taken to locate or communicate with the known 
plan sponsor, and a statement that no objection has been received from 
the plan sponsor;
    (iv) Plan asset information. (A) The estimated value of the plan's 
assets held by the person electing to be the qualified termination 
administrator;
    (B) The length of time plan assets have been held by the person 
electing to be the qualified termination administrator, if such period 
of time is less than 12 months;
    (C) An identification of any assets with respect to which there is 
no readily ascertainable fair market value, as well as information, if 
any, concerning the value of such assets; and
    (D) An identification of known delinquent contributions pursuant to 
paragraph (d)(2)(iii) of this section;
    (v) Service provider information. (A) The name, address, and 
telephone number of known service providers (e.g., record keeper, 
accountant, lawyer, other asset custodian(s)) to the plan; and
    (B) An identification of any services considered necessary to wind 
up the plan in accordance with this section, the name of the service 
provider(s) that is expected to provide such services, and an itemized 
estimate of expenses attendant thereto expected to be paid out of plan 
assets by the qualified termination administrator; and
    (vi) Perjury statement. A statement that the information being 
provided in the notice is true and complete based on the knowledge of 
the person electing to be the qualified termination administrator, and 
that the information is being provided by the qualified termination 
administrator under penalty of perjury.
    (d) Winding up the affairs of the plan. (1) In any case where an 
individual account plan is deemed to be terminated pursuant to paragraph 
(c) of this section, the qualified termination administrator shall take 
steps as may be necessary or appropriate to wind up the affairs of the 
plan and distribute benefits to the plan's participants and 
beneficiaries.
    (2) For purposes of paragraph (d)(1) of this section, the qualified 
termination administrator shall:
    (i) Update plan records. (A) Undertake reasonable and diligent 
efforts to locate and update plan records necessary to determine the 
benefits payable under the terms of the plan to each participant and 
beneficiary.
    (B) For purposes of paragraph (d)(2)(i)(A) of this section, a 
qualified termination administrator shall not have failed to make 
reasonable and diligent efforts to update plan records merely because 
the administrator determines in good faith that updating the records is 
either impossible or involves significant cost to the plan in relation 
to the total assets of the plan.
    (ii) Calculate benefits. Use reasonable care in calculating the 
benefits payable to each participant or beneficiary based on plan 
records described in paragraph (d)(2)(i) of this section. A qualified 
termination administrator shall not have failed to use reasonable care 
in calculating benefits payable solely because the qualified termination 
administrator--
    (A) Treats as forfeited an account balance that, taking into account 
estimated forfeitures and other assets allocable to the account, is less 
than the estimated share of plan expenses allocable to that account, and 
reallocates that account balance to defray plan expenses or to other 
plan accounts in accordance with (d)(2)(ii)(B) of this section;
    (B) Allocates expenses and unallocated assets in accordance with the 
plan documents, or, if the plan document is not available, is ambiguous, 
or if compliance with the plan is unfeasible,
    (1) Allocates unallocated assets (including forfeitures and assets 
in a suspense account) to participant accounts on a per capita basis 
(allocated equally to all accounts); and
    (2) Allocates expenses on a pro rata basis (proportionately in the 
ratio that each individual account balance bears to the total of all 
individual account balances) or on a per capita basis (allocated equally 
to all accounts).
    (iii) Report delinquent contributions. (A) Notify the Department of 
any known contributions (either employer or employee) owed to the plan 
in conjunction with the filing of either the

[[Page 687]]

notification required in paragraph (c)(3) or (d)(2)(ix) of this section.
    (B) Nothing in paragraph (d)(2)(iii)(A) of this section or any other 
provision of the Act shall be construed to impose an obligation on the 
qualified termination administrator to collect delinquent contributions 
on behalf of the plan, provided that the qualified termination 
administrator satisfies the requirements of paragraph (d)(2)(iii)(A) of 
this section.
    (iv) Engage service providers. Engage, on behalf of the plan, such 
service providers as are necessary for the qualified termination 
administrator to wind up the affairs of the plan and distribute benefits 
to the plan's participants and beneficiaries in accordance with 
paragraph (d)(1) of this section.
    (v) Pay reasonable expenses. (A) Pay, from plan assets, the 
reasonable expenses of carrying out the qualified termination 
administrator's authority and responsibility under this section.
    (B) Expenses of plan administration shall be considered reasonable 
solely for purposes of paragraph (d)(2)(v)(A) of this section if:
    (1) Such expenses are for services necessary to wind up the affairs 
of the plan and distribute benefits to the plan's participants and 
beneficiaries,
    (2) Such expenses: (i) Are consistent with industry rates for such 
or similar services, based on the experience of the qualified 
termination administrator; and
    (ii) Are not in excess of rates ordinarily charged by the qualified 
termination administrator (or affiliate) for same or similar services 
provided to customers that are not plans terminated pursuant to this 
section, if the qualified termination administrator (or affiliate) 
provides same or similar services to such other customers, and
    (3) The payment of such expenses would not constitute a prohibited 
transaction under the Act or is exempted from such prohibited 
transaction provisions pursuant to section 408(a) of the Act.
    (vi) Notify participants. (A) Furnish to each participant or 
beneficiary of the plan a notice written in a manner calculated to be 
understood by the average plan participant and containing the following:
    (1) The name of the plan;
    (2) A statement that the plan has been determined to be abandoned by 
the plan sponsor and, therefore, has been terminated pursuant to 
regulations issued by the U.S. Department of Labor;
    (3)(i) A statement of the account balance and the date on which it 
was calculated by the qualified termination administrator, and
    (ii) The following statement: ``The actual amount of your 
distribution may be more or less than the amount stated in this letter 
depending on investment gains or losses and the administrative cost of 
terminating your plan and distributing your benefits.'';
    (4) A description of the distribution options available under the 
plan and a request that the participant or beneficiary elect a form of 
distribution and inform the qualified termination administrator (or 
designee) of that election;
    (5) A statement explaining that, if a participant or beneficiary 
fails to make an election within 30 days from receipt of the notice, the 
qualified termination administrator (or designee) will distribute the 
account balance of the participant or beneficiary directly:
    (i) To an individual retirement plan (i.e., individual retirement 
account or annuity),
    (ii) To an inherited individual retirement plan described in 
Sec. 2550.404a-3(d)(1)(ii) of this chapter (in the case of a 
distribution on behalf of a distributee other than a participant or 
spouse),
    (iii) In any case where the amount to be distributed meets the 
conditions in Sec. 2550.404a-3 (d)(1)(iii), to an interest-bearing 
federally insured bank account, the unclaimed property fund of the State 
of the last known address of the participant or beneficiary, or an 
individual retirement plan (described in Sec. 2550.404a-3(d)(1)(i) or 
(d)(1)(ii) of this chapter) or
    (iv) To an annuity provider in any case where the qualified 
termination administrator determines that the survivor annuity 
requirements in sections 401(a)(11) and 417 of the Internal Revenue Code 
(or section 205 of ERISA) prevent a distribution under paragraph 
(d)(2)(vii)(B)(1) of this section;

[[Page 688]]

    (6) In the case of a distribution to an individual retirement plan 
(described in Sec. 2550.404a-3(d)(1)(i) or (d)(1)(ii) of this chapter) a 
statement explaining that the account balance will be invested in an 
investment product designed to preserve principal and provide a 
reasonable rate of return and liquidity;
    (7) A statement of the fees, if any, that will be paid from the 
participant or beneficiary's individual retirement plan (described in 
Sec. 2550.404a-3(d)(1)(i) or (d)(1)(ii) of this chapter) or other 
account (described in Sec. 2550.404a-3(d)(1)(iii)(A) of this chapter), 
if such information is known at the time of the furnishing of this 
notice;
    (8) The name, address and phone number of the provider of the 
individual retirement plan (described in Sec. 2550.404a-3(d)(1)(i) or 
(d)(1)(ii) of this chapter), qualified survivor annuity, or other 
account (described in Sec. 2550.404a-3(d)(1)(iii)(A) of this chapter), 
if such information is known at the time of the furnishing of this 
notice; and
    (9) The name, address, and telephone number of the qualified 
termination administrator and, if different, the name, address and phone 
number of a contact person (or entity) for additional information 
concerning the termination and distribution of benefits under this 
section.
    (B)(1) For purposes of paragraph (d)(2)(vi)(A) of this section, a 
notice shall be furnished to each participant or beneficiary in 
accordance with the requirements of Sec. 2520.104b-1(b)(1) of this 
chapter to the last known address of the participant or beneficiary; and
    (2) In the case of a notice that is returned to the plan as 
undeliverable, the qualified termination administrator shall, consistent 
with the duties of a fiduciary under section 404(a)(1) of ERISA, take 
steps to locate and provide notice to the participant or beneficiary 
prior to making a distribution pursuant to paragraph (d)(2)(vii) of this 
section. If, after such steps, the qualified termination administrator 
is unsuccessful in locating and furnishing notice to a participant or 
beneficiary, the participant or beneficiary shall be deemed to have been 
furnished the notice and to have failed to make an election within the 
30-day period described in paragraph (d)(2)(vii) of this section.
    (vii) Distribute benefits. (A) Distribute benefits in accordance 
with the form of distribution elected by each participant or beneficiary 
with spousal consent, if required.
    (B) If the participant or beneficiary fails to make an election 
within 30 days from the date the notice described in paragraph 
(d)(2)(vi) of this section is furnished, distribute benefits--
    (1) In accordance with Sec. 2550.404a-3 of this chapter; or
    (2) If a qualified termination administrator determines that the 
survivor annuity requirements in sections 401(a)(11) and 417 of the 
Internal Revenue Code (or section 205 of ERISA) prevent a distribution 
under paragraph (d)(2)(vii)(B)(1) of this section, in any manner 
reasonably determined to achieve compliance with those requirements.
    (C) For purposes of distributions pursuant to paragraph 
(d)(2)(vii)(B) of this section, the qualified termination administrator 
may designate itself (or an affiliate) as the transferee of such 
proceeds, and invest such proceeds in a product in which it (or an 
affiliate) has an interest, only if such designation and investment is 
exempted from the prohibited transaction provisions under the Act 
pursuant to section 408(a) of the Act.
    (viii) Special Terminal Report for Abandoned Plans. File the Special 
Terminal Report for Abandoned Plans in accordance with Sec. 2520.103-13 
of this chapter.
    (ix) Final Notice. No later than two months after the end of the 
month in which the qualified termination administrator satisfies the 
requirements in paragraph (d)(2)(i) through (d)(2)(vii) of this section, 
furnish to the Office of Enforcement, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, a notice, signed and dated by the qualified 
termination administrator, containing the following information:
    (A) The name, EIN, address, e-mail address, and telephone number of 
the qualified termination administrator, including the address and 
telephone

[[Page 689]]

number of the person signing the notice (or other contact person, if 
different from the person signing the notice);
    (B) The name, account number, EIN, and plan number of the plan with 
respect to which the person served as the qualified termination 
administrator;
    (C) A statement that the plan has been terminated and all the plan's 
assets have been distributed to the plan's participants and 
beneficiaries on the basis of the best available information;
    (D) A statement that plan expenses were paid out of plan assets by 
the qualified termination administrator in accordance with the 
requirements of paragraph (d)(2)(v) of this section;
    (E) If fees and expenses paid to the qualified termination 
administrator (or its affiliate) exceed by 20 percent or more the 
estimate required by paragraph (c)(3)(v)(B) of this section, a statement 
that actual fees and expenses exceeded estimated fees and expenses and 
the reasons for such additional costs;
    (F) An identification of known delinquent contributions pursuant to 
paragraph (d)(2)(iii) of this section (if not already reported under 
paragraph (c)(3)(iv)(D)); and
    (G) A statement that the information being provided in the notice is 
true and complete based on the knowledge of the qualified termination 
administrator, and that the information is being provided by the 
qualified termination administrator under penalty of perjury.
    (3) The terms of the plan shall, for purposes of title I of ERISA, 
be deemed amended to the extent necessary to allow the qualified 
termination administrator to wind up the plan in accordance with this 
section.
    (e) Limited liability. (1)(i) Except as otherwise provided in 
paragraph (e)(1)(ii) and (iii) of this section, to the extent that the 
activities enumerated in paragraph (d)(2) of this section involve the 
exercise of discretionary authority or control that would make the 
qualified termination administrator a fiduciary within the meaning of 
section 3(21) of the Act, the qualified termination administrator shall 
be deemed to satisfy its responsibilities under section 404(a) of the 
Act with respect to such activities, provided that the qualified 
termination administrator complies with the requirements of paragraph 
(d)(2) of this section.
    (ii) A qualified termination administrator shall be responsible for 
the selection and monitoring of any service provider (other than 
monitoring a provider selected pursuant to paragraph (d)(2)(vii)(B) of 
this section) determined by the qualified termination administrator to 
be necessary to the winding up of the affairs of the plan, as well as 
ensuring the reasonableness of the compensation paid for such services. 
If a qualified termination administrator selects and monitors a service 
provider in accordance with the requirements of section 404(a)(1) of the 
Act, the qualified termination administrator shall not be liable for the 
acts or omissions of the service provider with respect to which the 
qualified termination administrator does not have knowledge.
    (iii) For purposes of a distribution pursuant to paragraph 
(d)(2)(vii)(B)(2) of this section, a qualified termination administrator 
shall be responsible for the selection of an annuity provider in 
accordance with section 404 of the Act.
    (2) Nothing herein shall be construed to impose an obligation on the 
qualified termination administrator to conduct an inquiry or review to 
determine whether or what breaches of fiduciary responsibility may have 
occurred with respect to a plan prior to becoming the qualified 
termination administrator for such plan.
    (3) If assets of an abandoned plan are held by a person other than 
the qualified termination administrator, such person shall not be 
treated as in violation of section 404 (a) the Act solely on the basis 
that the person cooperated with and followed the directions of the 
qualified termination administrator in carrying out its responsibilities 
under this section with respect to such plan, provided that, in advance 
of any transfer or disposition of any assets at the direction of the 
qualified termination administrator, such person confirms with the 
Department of Labor that the person representing to be the qualified

[[Page 690]]

termination administrator with respect to the plan is the qualified 
termination administrator recognized by the Department of Labor.
    (f) Continued liability of plan sponsor. Nothing in this section 
shall serve to relieve or limit the liability of any person other than 
the qualified termination administrator due to a violation of ERISA.
    (g) Qualified termination administrator. A termination administrator 
is qualified under this section only if:
    (1) It is eligible to serve as a trustee or issuer of an individual 
retirement plan, within the meaning of section 7701(a)(37) of the 
Internal Revenue Code, and
    (2) It holds assets of the plan that is considered abandoned 
pursuant to paragraph (b) of this section.
    (h) Affiliate. (1) Except as provided in paragraph (h)(2) of this 
section, the term affiliate means any person directly or indirectly 
controlling, controlled by, or under common control with, the person; or 
any officer, director, partner or employee of the person.
    (2) For purposes of paragraph (c)(3)(i)(C) of this section, the term 
affiliate means a 50 percent or more owner of a qualified termination 
administrator, or any person described in paragraph (h)(1) of this 
section that provides services to the plan.
    (3) For purposes of paragraph (h)(1) of this section, the term 
control means the power to exercise a controlling influence over the 
management or policies of a person other than an individual.
    (i) Model notices. Appendices to this section contain model notices 
that are intended to assist qualified termination administrators in 
discharging the notification requirements under this section. Their use 
is not mandatory. However, the use of appropriately completed model 
notices will be deemed to satisfy the requirements of paragraphs (b)(5), 
(c)(3), (d)(2)(vi), and (d)(2)(ix) of this section.

[[Page 691]]

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[GRAPHIC] [TIFF OMITTED] TR19MY06.000


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[GRAPHIC] [TIFF OMITTED] TR19MY06.001


[[Page 694]]


[GRAPHIC] [TIFF OMITTED] TR19MY06.002


[[Page 695]]


[GRAPHIC] [TIFF OMITTED] TR07OC08.035


[[Page 696]]


[GRAPHIC] [TIFF OMITTED] TR07OC08.036


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[GRAPHIC] [TIFF OMITTED] TR21AP06.010


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[GRAPHIC] [TIFF OMITTED] TR21AP06.011


[71 FR 20837, Apr. 21, 2006; 71 FR 29073, May 19, 2006; 72 FR 7522, Feb. 
15, 2007; 73 FR 58465, Oct. 7, 2008]



                         SUBCHAPTER H [RESERVED]



[[Page 699]]



   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 700]]



          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 
employment 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 701]]

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 702]]

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 703]]

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 704]]

    (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 705]]

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 assets, 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 706]]

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

[[Page 707]]

bond shall be required in an amount 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

[[Page 708]]

the reporting year, plus any items received during the year for any 
reason, 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

[[Page 709]]

not more than $500,000. A bond for such amount shall be obtained in any 
form 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,

[[Page 710]]

such arrangement shall allow recovery to be attributed proportionately 
to the 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

[[Page 711]]

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.



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

[[Page 712]]

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).



                          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)

[[Page 713]]

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 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.

[[Page 714]]

    (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 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.

[[Page 715]]



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 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 716]]



   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 717]]

$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 718]]

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 719]]

    (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 720]]

    (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 721]]



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 722]]



                     SUBCHAPTER L_GROUP HEALTH PLANS





PART 2590_RULES AND REGULATIONS FOR GROUP HEALTH PLANS--
Table of Contents



Subpart A_Continuation Coverage, Qualified Medical Child Support Orders, 
                      Coverage for Adopted Children

Sec.
2590.606-1  General notice of continuation coverage.
2590.606-2  Notice requirement for employers.
2590.606-3  Notice requirements for covered employees and qualified 
          beneficiaries.
2590.606-4  Notice requirements for plan administrators.
2590.609-1  [Reserved]
2590.609-2  National Medical Support Notice.

     Subpart B_Health Coverage Portability, Nondiscrimination, and 
                              Renewability

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  Evidence of creditable coverage.
2590.701-6  Special enrollment periods.
2590.701-7  HMO affiliation period as an alternative to a preexisting 
          condition exclusion.
2590.701-8  Interaction with the Family and Medical Leave Act. 
          [Reserved]
2590.702  Prohibiting discrimination against participants and 
          beneficiaries based on a health factor.
2590.702-1  Additional requirements prohibiting discrimination based on 
          genetic information.
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 mental health and substance use disorder benefits.
2590.715-1251  Preservation of right to maintain existing coverage.
2590.715-2704  Prohibition of preexisting condition exclusions.
2590.715-2705  Prohibiting discrimination against participants and 
          beneficiaries based on a health factor.
2590.715-2708  Prohibition on waiting periods that exceed 90 days.
2590.715-2711  No lifetime or annual limits.
2590.715-2712  Rules regarding rescissions.
2590.715-2713  Coverage of preventive health services.
2590.715-2713A  Accommodations in connection with coverage of preventive 
          health services.
2590.715-2714  Eligibility of children until at least age 26.
2590.715-2715  Summary of benefits and coverage and uniform glossary.
2590.715-2719  Internal claims and appeals and external review 
          processes.
2590.715-2719A  Patient protections.

        Subpart D_General Provisions Related to Subparts B and C

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, 1161-1168, 1169, 1181-1183, 
1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; sec. 
101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 105-200, 
112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110-343, 122 
Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-148, 124 Stat. 
119, as amended by Pub. L. 111-152, 124 Stat. 1029; Division M, Pub. L. 
113-235, 128 Stat. 2130; Secretary of Labor's Order 1-2011, 77 FR 1088 
(Jan. 9, 2012).

    Source: 62 FR 16941, Apr. 8, 1997, unless otherwise noted.



Subpart A_Continuation Coverage, Qualified Medical Child Support Orders, 
                      Coverage for Adopted Children



Sec. 2590.606-1  General notice of continuation coverage.

    (a) General. Pursuant to section 606(a)(1) of the Employee 
Retirement Income Security Act of 1974, as amended (the Act), the 
administrator of a group health plan subject to the continuation 
coverage requirements of part 6 of title I of the Act shall provide, in 
accordance with this section, written notice to each covered employee 
and spouse of the covered employee (if any) of the right to continuation 
coverage provided under the plan.
    (b) Timing of notice. (1) The notice required by paragraph (a) of 
this section shall be furnished to each employee

[[Page 723]]

and each employee's spouse, not later than the earlier of:
    (i) The date that is 90 days after the date on which such 
individual's coverage under the plan commences, or, if later, the date 
that is 90 days after the date on which the plan first becomes subject 
to the continuation coverage requirements; or
    (ii) The first date on which the administrator is required, pursuant 
to Sec. 2590.606-4(b), to furnish the covered employee, spouse, or 
dependent child of such employee notice of a qualified beneficiary's 
right to elect continuation coverage.
    (2) A notice that is furnished in accordance with paragraph (b)(1) 
of this section shall, for purposes of section 606(a)(1) of the Act, be 
deemed to be provided at the time of commencement of coverage under the 
plan.
    (3) In any case in which an administrator is required to furnish a 
notice to a covered employee or spouse pursuant to paragraph (b)(1)(ii) 
of this section, the furnishing of a notice to such individual in 
accordance with Sec. 2590.606-4(b) shall be deemed to satisfy the 
requirements of this section.
    (c) Content of notice. 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 contain the following information:
    (1) The name of the plan under which continuation coverage is 
available, and the name, address and telephone number of a party or 
parties from whom additional information about the plan and continuation 
coverage can be obtained;
    (2) A general description of the continuation coverage under the 
plan, including identification of the classes of individuals who may 
become qualified beneficiaries, the types of qualifying events that may 
give rise to the right to continuation coverage, the obligation of the 
employer to notify the plan administrator of the occurrence of certain 
qualifying events, the maximum period for which continuation coverage 
may be available, when and under what circumstances continuation 
coverage may be extended beyond the applicable maximum period, and the 
plan's requirements applicable to the payment of premiums for 
continuation coverage;
    (3) An explanation of the plan's requirements regarding the 
responsibility of a qualified beneficiary to notify the administrator of 
a qualifying event that is a divorce, legal separation, or a child's 
ceasing to be a dependent under the terms of the plan, and a description 
of the plan's procedures for providing such notice;
    (4) An explanation of the plan's requirements regarding the 
responsibility of qualified beneficiaries who are receiving continuation 
coverage to provide notice to the administrator of a determination by 
the Social Security Administration, under title II or XVI of the Social 
Security Act (42 U.S.C. 401 et seq. or 1381 et seq.), that a qualified 
beneficiary is disabled, and a description of the plan's procedures for 
providing such notice;
    (5) An explanation of the importance of keeping the administrator 
informed of the current addresses of all participants or beneficiaries 
under the plan who are or may become qualified beneficiaries; and
    (6) A statement that the notice does not fully describe continuation 
coverage or other rights under the plan and that more complete 
information regarding such rights is available from the plan 
administrator and in the plan's SPD.
    (d) Single notice rule. A plan administrator may satisfy the 
requirement to provide notice in accordance with this section to a 
covered employee and the covered employee's spouse by furnishing a 
single notice addressed to both the covered employee and the covered 
employee's spouse, if, on the basis of the most recent information 
available to the plan, the covered employee's spouse resides at the same 
location as the covered employee, and the spouse's coverage under the 
plan commences on or after the date on which the covered employee's 
coverage commences, but not later than the date on which the notice 
required by this section is required to be provided to the covered 
employee. Nothing in this section shall be construed to create a 
requirement to provide a separate notice to dependent children who share 
a residence with a covered employee or a

[[Page 724]]

covered employee's spouse to whom notice is provided in accordance with 
this section.
    (e) Notice in summary plan description. A plan administrator may 
satisfy the requirement to provide notice in accordance with this 
section by including the information described in paragraphs (c)(1), 
(2), (3), (4), and (5) of this section in a summary plan description 
meeting the requirements of Sec. 2520.102-3 of this chapter furnished in 
accordance with paragraph (b) of this section.
    (f) Delivery of notice. The notice required by this section shall be 
furnished in a 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.
    (g) Model notice. The appendix to this section contains a model 
notice that is intended to assist administrators in discharging the 
notice obligations of this section. Use of the model notice is not 
mandatory. The model notice reflects the requirements of this section as 
they would apply to single-employer group health plans and must be 
modified if used to provide notice with respect to other types of group 
health plans, such as multiemployer plans or plans established and 
maintained by employee organizations for their members. In order to use 
the model notice, administrators must appropriately add relevant 
information where indicated in the model notice, select among 
alternative language, and supplement the model notice to reflect 
applicable plan provisions. Items of information that are not applicable 
to a particular plan may be deleted. Use of the model notice, 
appropriately modified and supplemented, will be deemed to satisfy the 
notice content requirements of paragraph (c) of this section.
    (h) Applicability. This section shall apply to any notice obligation 
described in this section that arises on or after the first day of the 
first plan year beginning on or after November 26, 2004.

[[Page 725]]

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[69 FR 30097, May 26, 2004; 69 FR 34921, June 23, 2004]



Sec. 2590.606-2  Notice requirement for employers.

    (a) General. Pursuant to section 606(a)(2) of the Employee 
Retirement Income Security Act of 1974, as amended (the Act), except as 
otherwise provided herein, the employer of a covered employee under a 
group health plan subject to the continuation coverage requirements of 
part 6 of title I of the Act shall provide, in accordance with this 
section, notice to the administrator of the plan of the occurrence of a 
qualifying event that is the covered employee's death, termination of 
employment (other than by reason of gross misconduct), reduction in 
hours of employment, Medicare entitlement, or a proceeding in a case 
under title 11, United States Code, with respect to the employer from 
whose employment the covered employee retired at any time.
    (b) Timing of notice. The notice required by this section shall be 
furnished to the administrator of the plan--
    (1) In the case of a plan that provides, with respect to a 
qualifying event, pursuant to section 607(5) of the Act, that 
continuation coverage and the applicable period for providing notice 
under section 606(a)(2) of the Act shall commence on the date of loss of 
coverage, not later than 30 days after the date on which a qualified 
beneficiary loses coverage under the plan due to the qualifying event;
    (2) In the case of a multiemployer plan that provides, pursuant to 
section 606(a)(2) of the Act, for a longer period of time within which 
employers may provide notice of a qualifying event, not later than the 
end of the period provided pursuant to the plan's terms for such notice; 
and
    (3) In all other cases, not later than 30 days after the date on 
which the qualifying event occurred.
    (c) Content of notice. The notice required by this section shall 
include sufficient information to enable the administrator to determine 
the plan, the covered employee, the qualifying event, and the date of 
the qualifying event.
    (d) Multiemployer plan special rules. This section shall not apply 
to any employer that maintains a multiemployer plan, with respect to 
qualifying events affecting coverage under such plan, if the plan 
provides, pursuant to section 606(b) of the Act, that the administrator 
shall determine whether such a qualifying event has occurred.
    (e) Applicability. This section shall apply to any notice obligation 
described in this section that arises on or after the first day of the 
first plan year beginning on or after November 26, 2004.

[69 FR 30097, May 26, 2004]



Sec. 2590.606-3  Notice requirements for covered employees and 
qualified beneficiaries.

    (a) General. In accordance with the authority of sections 505 and 
606(a)(3) of the Employee Retirement Income Security Act of 1974, as 
amended (the Act), this section sets forth requirements for group health 
plans subject to the continuation coverage requirements of part 6 of 
title I of the Act with respect to the responsibility of

[[Page 729]]

covered employees and qualified beneficiaries to provide the following 
notices to administrators:
    (1) Notice of the occurrence of a qualifying event that is a divorce 
or legal separation of a covered employee from his or her spouse;
    (2) Notice of the occurrence of a qualifying event that is a 
beneficiary's ceasing to be covered under a plan as a dependent child of 
a participant;
    (3) Notice of the occurrence of a second qualifying event after a 
qualified beneficiary has become entitled to continuation coverage with 
a maximum duration of 18 (or 29) months;
    (4) Notice that a qualified beneficiary entitled to receive 
continuation coverage with a maximum duration of 18 months has been 
determined by the Social Security Administration, under title II or XVI 
of the Social Security Act (42 U.S.C. 401 et seq. or 1381 et seq.) 
(SSA), to be disabled at any time during the first 60 days of 
continuation coverage; and
    (5) Notice that a qualified beneficiary, with respect to whom a 
notice described in paragraph (a)(4) of this section has been provided, 
has subsequently been determined by the Social Security Administration, 
under title II or XVI of the SSA to no longer be disabled.
    (b) Reasonable procedures. (1) A plan subject to the continuation 
coverage requirements shall establish reasonable procedures for the 
furnishing of the notices described in paragraph (a) of this section.
    (2) For purposes of this section, a plan's notice procedures shall 
be deemed reasonable only if such procedures:
    (i) Are described in the plan's summary plan description required by 
Sec. 2520.102-3 of this chapter;
    (ii) Specify the individual or entity designated to receive such 
notices;
    (iii) Specify the means by which notice may be given;
    (iv) Describe the information concerning the qualifying event or 
determination of disability that the plan deems necessary in order to 
provide continuation coverage rights consistent with the requirements of 
the Act; and
    (v) Comply with the requirements of paragraphs (c), (d), and (e) of 
this section.
    (3) A plan's procedures will not fail to be reasonable, pursuant to 
this section, solely because the procedures require a covered employee 
or qualified beneficiary to utilize a specific form to provide notice to 
the administrator, provided that any such form is easily available, 
without cost, to covered employees and qualified beneficiaries.
    (4) If a plan has not established reasonable procedures for 
providing a notice required by this section, such notice shall be deemed 
to have been provided when a written or oral communication identifying a 
specific event is made in a manner reasonably calculated to bring the 
information to the attention of any of the following:
    (i) In the case of a single-employer plan, the person or 
organizational unit that customarily handles employee benefits matters 
of the employer;
    (ii) In the case of a plan to which more than one unaffiliated 
employer contributes, or which is established or maintained by an 
employee organization, either the joint board, association, committee, 
or other similar group (or any member of any such group) administering 
the plan, or the person or organizational unit to which claims for 
benefits under the plan customarily are referred; or
    (iii) In the case of a plan the benefits of which are provided or 
administered by an insurance company, insurance service, or other 
similar organization subject to regulation under the insurance laws of 
one or more States, the person or organizational unit that customarily 
handles claims for benefits under the plan or any officer of the 
insurance company, insurance service, or other similar organization.
    (c) Periods of time for providing notice. A plan may establish a 
reasonable period of time for furnishing any of the notices described in 
paragraph (a) of this section, provided that any time limit imposed by 
the plan with respect to a particular notice may not be shorter than the 
time limit described in this paragraph (c) with respect to that notice.

[[Page 730]]

    (1) Time limits for notices of qualifying events. The period of time 
for furnishing a notice described in paragraph (a)(1), (2), or (3) of 
this section may not end before the date that is 60 days after the 
latest of:
    (i) The date on which the relevant qualifying event occurs;
    (ii) The date on which the qualified beneficiary loses (or would 
lose) coverage under the plan as a result of the qualifying event; or
    (iii) The date on which the qualified beneficiary is informed, 
through the furnishing of the plan's summary plan description or the 
notice described in Sec. 2590.606-1, of both the responsibility to 
provide the notice and the plan's procedures for providing such notice 
to the administrator.
    (2) Time limits for notice of disability determination. (i) Subject 
to paragraph (c)(2)(ii) of this section, the period of time for 
furnishing the notice described in paragraph (a)(4) of this section may 
not end before the date that is 60 days after the latest of:
    (A) The date of the disability determination by the Social Security 
Administration;
    (B) The date on which a qualifying event occurs;
    (C) The date on which the qualified beneficiary loses (or would 
lose) coverage under the plan as a result of the qualifying event; or
    (D) The date on which the qualified beneficiary is informed, through 
the furnishing of the summary plan description or the notice described 
in Sec. 2590.606-1, of both the responsibility to provide the notice and 
the plan's procedures for providing such notice to the administrator.
    (ii) Notwithstanding paragraph (c)(2)(i) of this section, a plan may 
require the notice described in paragraph (a)(4) of this section to be 
furnished before the end of the first 18 months of continuation 
coverage.
    (3) Time limits for notice of change in disability status. The 
period of time for furnishing the notice described in paragraph (a)(5) 
of this section may not end before the date that is 30 days after the 
later of:
    (i) The date of the final determination by the Social Security 
Administration, under title II or XVI of the SSA, that the qualified 
beneficiary is no longer disabled; or
    (ii) The date on which the qualified beneficiary is informed, 
through the furnishing of the plan's summary plan description or the 
notice described in Sec. 2590.606-1, of both the responsibility to 
provide the notice and the plan's procedures for providing such notice 
to the administrator.
    (d) Required contents of notice. (1) A plan may establish reasonable 
requirements for the content of any notice described in this section, 
provided that a plan may not deem a notice to have been provided 
untimely if such notice, although not containing all of the information 
required by the plan, is provided within the time limit established 
under the plan in conformity with paragraph (c) of this section, and the 
administrator is able to determine from such notice the plan, the 
covered employee and qualified beneficiary(ies), the qualifying event or 
disability, and the date on which the qualifying event (if any) 
occurred.
    (2) An administrator may require a notice that does not contain all 
of the information required by the plan to be supplemented with the 
additional information necessary to meet the plan's reasonable content 
requirements for such notice in order for the notice to be deemed to 
have been provided in accordance with this section.
    (e) Who may provide notice. With respect to each of the notice 
requirements of this section, any individual who is either the covered 
employee, a qualified beneficiary with respect to the qualifying event, 
or any representative acting on behalf of the covered employee or 
qualified beneficiary may provide the notice, and the provision of 
notice by one individual shall satisfy any responsibility to provide 
notice on behalf of all related qualified beneficiaries with respect to 
the qualifying event.
    (f) Plan provisions. To the extent that a plan provides a covered 
employee or qualified beneficiary a period of time longer than that 
specified in this section to provide notice to the administrator, the 
terms of the plan shall govern the time frame for such notice.
    (g) Additional rights to continuation coverage. Nothing in this 
section shall

[[Page 731]]

be construed to preclude a plan from providing, in accordance with its 
terms, continuation coverage to a qualified beneficiary although a 
notice requirement of this section was not satisfied.
    (h) Applicability. This section shall apply to any notice obligation 
described in this section that arises on or after the first day of the 
first plan year beginning on or after November 26, 2004.

[69 FR 30097, May 26, 2004]



Sec. 2590.606-4  Notice requirements for plan administrators.

    (a) General. Pursuant to section 606(a)(4) of the Employee 
Retirement Income Security Act of 1974, as amended (the Act), the 
administrator of a group health plan subject to the continuation 
coverage requirements of Part 6 of title I of the Act shall provide, in 
accordance with this section, notice to each qualified beneficiary of 
the qualified beneficiary's rights to continuation coverage under the 
plan.
    (b) Notice of right to elect continuation coverage. (1) Except as 
provided in paragraph (b) (2) or (3) of this section, upon receipt of a 
notice of qualifying event furnished in accordance with Sec. 2590.606-2 
or Sec. 2590.606-3, the administrator shall furnish to each qualified 
beneficiary, not later than 14 days after receipt of the notice of 
qualifying event, a notice meeting the requirements of paragraph (b)(4) 
of this section.
    (2) In the case of a plan with respect to which an employer of a 
covered employee is also the administrator of the plan, except as 
provided in paragraph (b)(3) of this section, if the employer is 
otherwise required to furnish a notice of a qualifying event to an 
administrator pursuant to Sec. 2590.606-2, the administrator shall 
furnish to each qualified beneficiary a notice meeting the requirements 
of paragraph (b)(4) of this section not later than 44 days after:
    (i) In the case of a plan that provides, with respect to the 
qualifying event, that continuation coverage and the applicable period 
for providing notice under section 606(a)(2) of the Act shall commence 
with the date of loss of coverage, the date on which a qualified 
beneficiary loses coverage under the plan due to the qualifying event; 
or
    (ii) In all other cases, the date on which the qualifying event 
occurred.
    (3) In the case of a plan that is a multiemployer plan, a notice 
meeting the requirements of paragraph (b)(4) of this section shall be 
furnished not later than the later of:
    (i) The end of the time period provided in paragraph (b)(1) of this 
section; or
    (ii) The end of the time period provided in the terms of the plan 
for such purpose.
    (4) The notice required by this paragraph (b) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall contain the following information:
    (i) The name of the plan under which continuation coverage is 
available; and the name, address and telephone number of the party 
responsible under the plan for the administration of continuation 
coverage benefits;
    (ii) Identification of the qualifying event;
    (iii) Identification, by status or name, of the qualified 
beneficiaries who are recognized by the plan as being entitled to elect 
continuation coverage with respect to the qualifying event, and the date 
on which coverage under the plan will terminate (or has terminated) 
unless continuation coverage is elected;
    (iv) A statement that each individual who is a qualified beneficiary 
with respect to the qualifying event has an independent right to elect 
continuation coverage, that a covered employee or a qualified 
beneficiary who is the spouse of the covered employee (or was the spouse 
of the covered employee on the day before the qualifying event occurred) 
may elect continuation coverage on behalf of all other qualified 
beneficiaries with respect to the qualifying event, and that a parent or 
legal guardian may elect continuation coverage on behalf of a minor 
child;
    (v) An explanation of the plan's procedures for electing 
continuation coverage, including an explanation of the time period 
during which the election must be made, and the date by which the 
election must be made;
    (vi) An explanation of the consequences of failing to elect or 
waiving

[[Page 732]]

continuation coverage, including an explanation that a qualified 
beneficiary's decision whether to elect continuation coverage will 
affect the future rights of qualified beneficiaries to portability of 
group health coverage, guaranteed access to individual health coverage, 
and special enrollment under part 7 of title I of the Act, with a 
reference to where a qualified beneficiary may obtain additional 
information about such rights; and a description of the plan's 
procedures for revoking a waiver of the right to continuation coverage 
before the date by which the election must be made;
    (vii) A description of the continuation coverage that will be made 
available under the plan, if elected, including the date on which such 
coverage will commence, either by providing a description of the 
coverage or by reference to the plan's summary plan description;
    (viii) An explanation of the maximum period for which continuation 
coverage will be available under the plan, if elected; an explanation of 
the continuation coverage termination date; and an explanation of any 
events that might cause continuation coverage to be terminated earlier 
than the end of the maximum period;
    (ix) A description of the circumstances (if any) under which the 
maximum period of continuation coverage may be extended due either to 
the occurrence of a second qualifying event or a determination by the 
Social Security Administration, under title II or XVI of the Social 
Security Act (42 U.S.C. 401 et seq. or 1381 et seq.) (SSA), that the 
qualified beneficiary is disabled, and the length of any such extension;
    (x) In the case of a notice that offers continuation coverage with a 
maximum duration of less than 36 months, a description of the plan's 
requirements regarding the responsibility of qualified beneficiaries to 
provide notice of a second qualifying event and notice of a disability 
determination under the SSA, along with a description of the plan's 
procedures for providing such notices, including the times within which 
such notices must be provided and the consequences of failing to provide 
such notices. The notice shall also explain the responsibility of 
qualified beneficiaries to provide notice that a disabled qualified 
beneficiary has subsequently been determined to no longer be disabled;
    (xi) A description of the amount, if any, that each qualified 
beneficiary will be required to pay for continuation coverage;
    (xii) A description of the due dates for payments, the qualified 
beneficiaries' right to pay on a monthly basis, the grace periods for 
payment, the address to which payments should be sent, and the 
consequences of delayed payment and non-payment;
    (xiii) An explanation of the importance of keeping the administrator 
informed of the current addresses of all participants or beneficiaries 
under the plan who are or may become qualified beneficiaries; and
    (xiv) A statement that the notice does not fully describe 
continuation coverage or other rights under the plan, and that more 
complete information regarding such rights is available in the plan's 
summary plan description or from the plan administrator.
    (c) Notice of unavailability of continuation coverage. (1) In the 
event that an administrator receives a notice furnished in accordance 
with Sec. 2590.606-3 relating to a qualifying event, second qualifying 
event, or determination of disability by the Social Security 
Administration regarding a covered employee, qualified beneficiary, or 
other individual and determines that the individual is not entitled to 
continuation coverage under part 6 of title I of the Act, the 
administrator shall provide to such individual an explanation as to why 
the individual is not entitled to continuation coverage.
    (2) The notice required by this paragraph (c) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall be furnished by the administrator in accordance with the time 
frame set out in paragraph (b) of this section that would apply if the 
administrator received a notice of qualifying event and determined that 
the individual was entitled to continuation coverage.
    (d) Notice of termination of continuation coverage. (1) The 
administrator of a plan that is providing continuation

[[Page 733]]

coverage to one or more qualified beneficiaries with respect to a 
qualifying event shall provide, in accordance with this paragraph (d), 
notice to each such qualified beneficiary of any termination of 
continuation coverage that takes effect earlier than the end of the 
maximum period of continuation coverage applicable to such qualifying 
event.
    (2) The notice required by this paragraph (d) shall be written in a 
manner calculated to be understood by the average plan participant and 
shall contain the following information:
    (i) The reason that continuation coverage has terminated earlier 
than the end of the maximum period of continuation coverage applicable 
to such qualifying event;
    (ii) The date of termination of continuation coverage; and
    (iii) Any rights the qualified beneficiary may have under the plan 
or under applicable law to elect an alternative group or individual 
coverage, such as a conversion right.
    (3) The notice required by this paragraph (d) shall be furnished by 
the administrator as soon as practicable following the administrator's 
determination that continuation coverage shall terminate.
    (e) Special notice rules. The notices required by paragraphs (b), 
(c), and (d) of this section shall be furnished to each qualified 
beneficiary or individual, except that:
    (1) An administrator may provide notice to a covered employee and 
the covered employee's spouse by furnishing a single notice addressed to 
both the covered employee and the covered employee's spouse, if, on the 
basis of the most recent information available to the plan, the covered 
employee's spouse resides at the same location as the covered employee; 
and
    (2) An administrator may provide notice to each qualified 
beneficiary who is the dependent child of a covered employee by 
furnishing a single notice to the covered employee or the covered 
employee's spouse, if, on the basis of the most recent information 
available to the plan, the dependent child resides at the same location 
as the individual to whom such notice is provided.
    (f) Delivery of notice. The notices required by this section shall 
be furnished 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.
    (g) Model notice. The appendix to this section contains a model 
notice that is intended to assist administrators in discharging the 
notice obligations of paragraph (b) of this section. Use of the model 
notice is not mandatory. The model notice reflects the requirements of 
this section as they would apply to single-employer group health plans 
and must be modified if used to provide notice with respect to other 
types of group health plans, such as multiemployer plans or plans 
established and maintained by employee organizations for their members. 
In order to use the model notice, administrators must appropriately add 
relevant information where indicated in the model notice, select among 
alternative language and supplement the model notice to reflect 
applicable plan provisions. Items of information that are not applicable 
to a particular plan may be deleted. Use of the model notice, 
appropriately modified and supplemented, will be deemed to satisfy the 
notice content requirements of paragraph (b)(4) of this section.
    (h) Applicability. This section shall apply to any notice obligation 
described in this section that arises on or after the first day of the 
first plan year beginning on or after November 26, 2004.

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[69 FR 30097, May 26, 2004; 69 FR 34921, June 23, 2004]



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 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

[[Page 741]]

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_Health Coverage Portability, Nondiscrimination, and 
                              Renewability

    Source: 62 FR 16941, Apr. 8, 1997, unless otherwise noted. 
Redesignated at 65 FR 82142, Dec. 27, 2000.



Sec. 2590.701-1  Basis and scope.

    (a) Statutory basis. This Subpart B 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 B. 
This Subpart B sets forth minimum requirements for group health plans 
and group health insurance issuers offering group health insurance 
coverage concerning certain consumer protections of the Health Insurance 
Portability and Accountability Act (HIPAA), including special enrollment 
periods and the prohibition against discrimination based on a health 
factor, as amended by the Patient Protection and Affordable Care Act 
(Affordable Care Act). Other consumer protection provisions, including 
other protections provided by the Affordable Care Act and the Mental 
Health Parity and Addiction Equity Act, are set forth in Subpart C of 
this part.

[69 FR 78763, Dec. 30, 2004, as amended at 74 FR 51683, Oct. 7, 2009; 79 
FR 10308, Feb. 24, 2014]



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:
    (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 Internal Revenue Code (other than paragraph (f)(1) 
of such section 4980B insofar as it relates to pediatric vaccines), or 
Title XXII of the PHS Act.
    (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;
    (ii) When the individual no longer resides, lives, or works in the 
service

[[Page 742]]

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; or
    (iii) When the individual incurs a claim that would meet or exceed a 
lifetime limit on all benefits 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).
    Dependent means any individual who is or may become eligible for 
coverage under the terms of a group health plan because of a 
relationship to a participant.
    Enroll means to become covered for benefits under a group health 
plan (that is, when coverage becomes effective), without regard to when 
the individual may have completed or filed any forms that are required 
in order to become covered under the plan. For this purpose, an 
individual who has health 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 means the first day of coverage or, if there is a 
waiting period, the first day of the waiting period. If an individual 
receiving benefits under a group health plan changes benefit packages, 
or if the plan changes group health insurance issuers, the individual's 
enrollment date does not change.
    Excepted benefits means the benefits described as excepted in 
Sec. 2590.732(c).
    First day of coverage means, in the case of an individual covered 
for benefits under a group health plan, 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 or contract.
    Genetic information has the meaning given the term in Sec. 2590.702-
1(a)(3) of this Part.
    Group health insurance coverage means health insurance coverage 
offered in connection with a group health plan.
    Group health plan or plan means a group health plan within the 
meaning of Sec. 2590.732(a).
    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 coverage includes group health 
insurance coverage, individual health insurance coverage, and short-
term, limited-duration insurance.
    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 PHS Act);
    (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 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. 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

[[Page 743]]

State elects otherwise in accordance with section 2791(e)(1)(B)(ii) of 
the PHS Act, such term also includes coverage offered in connection with 
a group health plan that has fewer than two participants who are current 
employees on the first day of the plan year.
    Internal Revenue Code means the Internal Revenue Code of 1986, as 
amended (Title 26, United States Code).
    Issuer means a health insurance issuer.
    Late enrollee means an individual whose enrollment in a plan is a 
late enrollment.
    Late enrollment means enrollment of an individual under a group 
health plan other than on the earliest date on which coverage can become 
effective for the individual under the terms of the plan; or through 
special enrollment. (For rules relating to special enrollment, see 
Sec. 2590.701-6.) If an individual ceases to be eligible for coverage 
under a plan, and then subsequently becomes eligible for coverage under 
the plan, only the individual's most recent period of eligibility 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.
    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.
    Participant means participant within the meaning of section 3(7) of 
the Act.
    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 
ends 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 or 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 (including a denial of coverage) based on the fact that the 
condition was present before the effective date of coverage (or if 
coverage is denied, the date of the denial) under a group health plan or 
group or individual health insurance coverage (or other coverage 
provided to Federally eligible individuals pursuant to 45 CFR part 148), 
whether or not any medical advice, diagnosis, care, or treatment was 
recommended or received before that day. A preexisting condition 
exclusion includes any limitation or exclusion of benefits (including a 
denial of coverage) applicable to an individual as a result of 
information relating to an individual's health status before the 
individual's effective date of coverage (or if coverage is denied, the 
date of the denial) under a group health plan, or group or individual 
health insurance coverage (or other coverage provided to Federally 
eligible individuals pursuant to 45 CFR part 148), such as a condition 
identified as a result of a pre-enrollment questionnaire or physical 
examination given to the individual, or review of

[[Page 744]]

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 (PHS Act) means the Public Health Service 
Act (42 U.S.C. 201, et seq.).
    Short-term, limited-duration insurance means health insurance 
coverage provided pursuant to a contract with an issuer that:
    (1) Has an expiration date specified in the contract (taking into 
account any extensions that may be elected by the policyholder with or 
without the issuer's consent) that is less than 3 months after the 
original effective date of the contract; and
    (2) Displays prominently in the contract and in any application 
materials provided in connection with enrollment in such coverage in at 
least 14 point type the following: ``THIS IS NOT QUALIFYING HEALTH 
COVERAGE (``MINIMUM ESSENTIAL COVERAGE'') THAT SATISFIES THE HEALTH 
COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE 
MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR 
TAXES.''
    Significant break in coverage means a significant break in coverage 
within the meaning of Sec. 2590.701-4(b)(2)(iii).
    Special enrollment means enrollment in a group health plan or group 
health insurance coverage under the rights described in Sec. 2590.701-6.
    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).
    Travel insurance means insurance coverage for personal risks 
incident to planned travel, which may include, but is not limited to, 
interruption or cancellation of trip or event, loss of baggage or 
personal effects, damages to accommodations or rental vehicles, and 
sickness, accident, disability, or death occurring during travel, 
provided that the health benefits are not offered on a stand-alone basis 
and are incidental to other coverage. For this purpose, the term travel 
insurance does not include major medical plans that provide 
comprehensive medical protection for travelers with trips lasting 6 
months or longer, including, for example, those working overseas as an 
expatriate or military personnel being deployed.
    Waiting period means waiting period within the meaning of 
Sec. 2590.715-2708(b).

[69 FR 78763, Dec. 30, 2004, as amended at 74 FR 51683, Oct. 7, 2009; 75 
FR 37229, June 28, 2010; 79 FR 10308, Feb. 24, 2014; 80 FR 72256, Nov. 
18, 2015; 81 FR 75325, Oct. 31, 2016]



Sec. 2590.701-3  Limitations on preexisting condition exclusion period.
Limitations on preexisting condition exclusion period.

    (a) Preexisting condition exclusion defined--(1) A preexisting 
condition exclusion means a preexisting condition exclusion within the 
meaning of Sec. 2590.701-2.
    (2) Examples. The rules of this paragraph (a)(1) are illustrated by 
the following examples:

    Example 1. (i) Facts. A group health plan provides benefits solely 
through an insurance policy offered by Issuer S. At the expiration of 
the policy, the plan switches coverage to a policy offered by Issuer T. 
Issuer T's policy excludes benefits for any prosthesis if the body part 
was lost before the effective date of coverage under the policy.
    (ii) Conclusion. In this Example 1, the exclusion of benefits for 
any prosthesis if the body part was lost before the effective date of 
coverage is a preexisting condition exclusion because it operates to 
exclude benefits for a condition based on the fact that the condition 
was present before the effective date of coverage under the policy. The 
exclusion of benefits, therefore, is prohibited.
    Example 2. (i) Facts. A group health plan provides coverage for 
cosmetic surgery in cases of accidental injury, but only if the injury 
occurred while the individual was covered under the plan.
    (ii) Conclusion. In this Example 2, the plan provision excluding 
cosmetic surgery benefits for individuals injured before enrolling in 
the plan is a preexisting condition exclusion because it operates to 
exclude benefits relating to a condition based on the fact that the 
condition was present before the effective date of coverage. The plan 
provision, therefore, is prohibited.
    Example 3. (i) Facts. A group health plan provides coverage for the 
treatment of diabetes, generally not subject to any requirement to 
obtain an approval for a treatment

[[Page 745]]

plan. However, if an individual was diagnosed with diabetes before the 
effective date of coverage under the plan, diabetes coverage is subject 
to a requirement to obtain approval of a treatment plan in advance.
    (ii) Conclusion. In this Example 3, the requirement to obtain 
advance approval of a treatment plan is a preexisting condition 
exclusion because it limits benefits for a condition based on the fact 
that the condition was present before the effective date of coverage. 
The plan provision, therefore, is prohibited.
    Example 4. (i) Facts. A group health plan provides coverage for 
three infertility treatments. The plan counts against the three-
treatment limit benefits provided under prior health coverage.
    (ii) Conclusion. In this Example 4, counting benefits for a specific 
condition provided under prior health coverage against a treatment limit 
for that condition is a preexisting condition exclusion because it 
operates to limit benefits for a condition based on the fact that the 
condition was present before the effective date of coverage. The plan 
provision, therefore, is prohibited.
    Example 5. (i) Facts. When an individual's coverage begins under a 
group health plan, the individual generally becomes eligible for all 
benefits. However, benefits for pregnancy are not available until the 
individual has been covered under the plan for 12 months.
    (ii) Conclusion. In this Example 5, the requirement to be covered 
under the plan for 12 months to be eligible for pregnancy benefits is a 
subterfuge for a preexisting condition exclusion because it is designed 
to exclude benefits for a condition (pregnancy) that arose before the 
effective date of coverage. The plan provision, therefore, is 
prohibited.
    Example 6. (i) Facts. A group health plan provides coverage for 
medically necessary items and services, generally including treatment of 
heart conditions. However, the plan does not cover those same items and 
services when used for treatment of congenital heart conditions.
    (ii) Conclusion. In this Example 6, the exclusion of coverage for 
treatment of congenital heart conditions is a preexisting condition 
exclusion because it operates to exclude benefits relating to a 
condition based on the fact that the condition was present before the 
effective date of coverage. The plan provision, therefore, is 
prohibited.
    Example 7. (i) Facts. A group health plan generally provides 
coverage for medically necessary items and services. However, the plan 
excludes coverage for the treatment of cleft palate.
    (ii) Conclusion. In this Example 7, the exclusion of coverage for 
treatment of cleft palate is not a preexisting condition exclusion 
because the exclusion applies regardless of when the condition arose 
relative to the effective date of coverage. The plan provision, 
therefore, is not prohibited. (But see 45 CFR 147.150, which may require 
coverage of cleft palate as an essential health benefit for health 
insurance coverage in the individual or small group market, depending on 
the essential health benefits benchmark plan as defined in 45 CFR 
156.20).
    Example 8. (i) Facts. A group health plan provides coverage for 
treatment of cleft palate, but only if the individual being treated has 
been continuously covered under the plan from the date of birth.
    (ii) Conclusion. In this Example 8, the exclusion of coverage for 
treatment of cleft palate for individuals who have not been covered 
under the plan from the date of birth operates to exclude benefits in 
relation to a condition based on the fact that the condition was present 
before the effective date of coverage. The plan provision, therefore, is 
prohibited.

    (b) General rules. See Sec. 2590.715-2704 for rules prohibiting the 
imposition of a preexisting condition exclusion.

[69 FR 78763, Dec. 30, 2004, as amended at 75 FR 37229, June 28, 2010; 
79 FR 10308, Feb. 24, 2014; 80 FR 72256, Nov. 18, 2015]



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. 2590.732(a).
    (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

[[Page 746]]

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 
Internal Revenue Code;
    (B) A qualified high risk pool described in section 2744(c)(2) of 
the PHS Act; 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 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, the 
U.S. government, a foreign country, or any political subdivision of a 
State, the U.S. government, or a foreign country that provides health 
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)).
    (xi) Title XXI of the Social Security Act (State Children's Health 
Insurance Program).
    (2) Excluded coverage. Creditable coverage does not include coverage 
of solely excepted benefits (described in Sec. 2590.732).
    (b) Counting creditable coverage rules superseded by prohibition on 
preexisting condition exclusion. See Sec. 2590.715-2704 for rules 
prohibiting the imposition of a preexisting condition exclusion.

[69 FR 78763, Dec. 30, 2004, as amended at 79 FR 10309, Feb. 24, 2014]



Sec. 2590.701-5  Evidence of creditable coverage.

    (a) In general. The rules for providing certificates of creditable 
coverage and demonstrating creditable coverage have been superseded by 
the prohibition on preexisting condition exclusions. See Sec. 2590.715-
2704 for rules prohibiting the imposition of a preexisting condition 
exclusion.
    (b) Applicability. The provisions of this section apply beginning 
December 31, 2014.

[79 FR 10309, Feb. 24, 2014]



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 health insurance coverage in connection with a group health 
plan, is required to permit current employees and dependents (as defined 
in Sec. 2590.701-2) who are described in paragraph (a)(2) of this 
section to enroll for coverage under the terms of the plan if the 
conditions in paragraph (a)(3) of this section are satisfied. 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) Individuals eligible for special enrollment--(i) When employee 
loses coverage. A current employee and any dependents (including the 
employee's spouse) each are eligible for special enrollment in any 
benefit package under the plan (subject to plan eligibility rules 
conditioning dependent enrollment on enrollment of the employee) if--
    (A) The employee and the dependents are otherwise eligible to enroll 
in the benefit package;
    (B) When coverage under the plan was previously offered, the 
employee had coverage under any group health plan or health insurance 
coverage; and
    (C) The employee satisfies the conditions of paragraph (a)(3)(i), 
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv) 
of this section.
    (ii) When dependent loses coverage--(A) A dependent of a current 
employee (including the employee's spouse) and the

[[Page 747]]

employee each are eligible for special enrollment in any benefit package 
under the plan (subject to plan eligibility rules conditioning dependent 
enrollment on enrollment of the employee) if--
    (1) The dependent and the employee are otherwise eligible to enroll 
in the benefit package;
    (2) When coverage under the plan was previously offered, the 
dependent had coverage under any group health plan or health insurance 
coverage; and
    (3) The dependent satisfies the conditions of paragraph (a)(3)(i), 
(ii), or (iii) of this section and, if applicable, paragraph (a)(3)(iv) 
of this section.
    (B) However, the plan or issuer is not required to enroll any other 
dependent unless that dependent satisfies the criteria of this paragraph 
(a)(2)(ii), or the employee satisfies the criteria of paragraph 
(a)(2)(i) of this section.
    (iii) Examples. The rules of this paragraph (a)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. Individual A works for Employer X. A, A's 
spouse, and A's dependent children are eligible but not enrolled for 
coverage under X's group health plan. A's spouse works for Employer Y 
and at the time coverage was offered under X's plan, A was enrolled in 
coverage under Y's plan. Then, A loses eligibility for coverage under 
Y's plan.
    (ii) Conclusion. In this Example 1, because A satisfies the 
conditions for special enrollment under paragraph (a)(2)(i) of this 
section, A, A's spouse, and A's dependent children are eligible for 
special enrollment under X's plan.
    Example 2. (i) Facts. Individual A and A's spouse are eligible but 
not enrolled for coverage under Group Health Plan P maintained by A's 
employer. When A was first presented with an opportunity to enroll A and 
A's spouse, they did not have other coverage. Later, A and A's spouse 
enroll in Group Health Plan Q maintained by the employer of A's spouse. 
During a subsequent open enrollment period in P, A and A's spouse did 
not enroll because of their coverage under Q. They then lose eligibility 
for coverage under Q.
    (ii) Conclusion. In this Example 2, because A and A's spouse were 
covered under Q when they did not enroll in P during open enrollment, 
they satisfy the conditions for special enrollment under paragraphs 
(a)(2)(i) and (ii) of this section. Consequently, A and A's spouse are 
eligible for special enrollment under P.
    Example 3. (i) Facts. Individual B works for Employer X. B and B's 
spouse are eligible but not enrolled for coverage under X's group health 
plan. B's spouse works for Employer Y and at the time coverage was 
offered under X's plan, B's spouse was enrolled in self-only coverage 
under Y's group health plan. Then, B's spouse loses eligibility for 
coverage under Y's plan.
    (ii) Conclusion. In this Example 3, because B's spouse satisfies the 
conditions for special enrollment under paragraph (a)(2)(ii) of this 
section, both B and B's spouse are eligible for special enrollment under 
X's plan.
    Example 4. (i) Facts. Individual A works for Employer X. X maintains 
a group health plan with two benefit packages--an HMO option and an 
indemnity option. Self-only and family coverage are available under both 
options. A enrolls for self-only coverage in the HMO option. A's spouse 
works for Employer Y and was enrolled for self-only coverage under Y's 
plan at the time coverage was offered under X's plan. Then, A's spouse 
loses coverage under Y's plan. A requests special enrollment for A and 
A's spouse under the plan's indemnity option.
    (ii) Conclusion. In this Example 4, because A's spouse satisfies the 
conditions for special enrollment under paragraph (a)(2)(ii) of this 
section, both A and A's spouse can enroll in either benefit package 
under X's plan. Therefore, if A requests enrollment in accordance with 
the requirements of this section, the plan must allow A and A's spouse 
to enroll in the indemnity option.

    (3) Conditions for special enrollment--(i) Loss of eligibility for 
coverage. In the case of an employee or dependent who has coverage that 
is not COBRA continuation coverage, the conditions of this paragraph 
(a)(3)(i) are satisfied at the time the coverage is terminated as a 
result of loss of eligibility (regardless of whether the individual is 
eligible for or elects COBRA continuation coverage). Loss of eligibility 
under this paragraph (a)(3)(i) does not include a loss due to the 
failure of the employee or dependent 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). Loss of eligibility for coverage under this paragraph 
(a)(3)(i) includes (but is not limited to)--
    (A) Loss of eligibility for coverage as a result of legal 
separation, divorce, cessation of dependent status (such as attaining 
the maximum age to be eligible as a dependent child under the plan), 
death of an employee, termination of employment, reduction in the

[[Page 748]]

number of hours of employment, and any loss of eligibility for coverage 
after a period that is measured by reference to any of the foregoing;
    (B) In the case of coverage offered through an HMO, or other 
arrangement, in the individual market that does not provide benefits to 
individuals who no longer reside, live, or work in a service area, loss 
of coverage because an individual no longer resides, lives, or works in 
the service area (whether or not within the choice of the individual);
    (C) In the case of coverage offered through an HMO, or other 
arrangement, in the group market that does not provide benefits to 
individuals who no longer reside, live, or work in a service area, loss 
of coverage because an individual no longer resides, lives, or works in 
the service area (whether or not within the choice of the individual), 
and no other benefit package is available to the individual; and
    (D) A situation in which a plan no longer offers any benefits to the 
class of similarly situated individuals (as described in 
Sec. 2590.702(d)) that includes the individual.
    (ii) Termination of employer contributions. In the case of an 
employee or dependent who has coverage that is not COBRA continuation 
coverage, the conditions of this paragraph (a)(3)(ii) are satisfied at 
the time employer contributions towards the employee's or dependent's 
coverage terminate. Employer contributions include contributions by any 
current or former employer that was contributing to coverage for the 
employee or dependent.
    (iii) Exhaustion of COBRA continuation coverage. In the case of an 
employee or dependent who has coverage that is COBRA continuation 
coverage, the conditions of this paragraph (a)(3)(iii) are satisfied at 
the time the COBRA continuation coverage is exhausted. For purposes of 
this paragraph (a)(3)(iii), an individual who satisfies the conditions 
for special enrollment of paragraph (a)(3)(i) of this section, does not 
enroll, and instead elects and exhausts COBRA continuation coverage 
satisfies the conditions of this paragraph (a)(3)(iii). (Exhaustion of 
COBRA continuation coverage is defined in Sec. 2590.701-2.)
    (iv) Written statement. A plan may require an employee declining 
coverage (for the employee or any dependent of the employee) to state in 
writing whether the coverage is being declined due to other health 
coverage only if, at or before the time the employee declines coverage, 
the employee is provided with notice of the requirement to provide the 
statement (and the consequences of the employee's failure to provide the 
statement). If a plan requires such a statement, and an employee does 
not provide it, the plan is not required to provide special enrollment 
to the employee or any dependent of the employee under this paragraph 
(a)(3). A plan must treat an employee as having satisfied the plan 
requirement permitted under this paragraph (a)(3)(iv) if the employee 
provides a written statement that coverage was being declined because 
the employee or dependent had other coverage; a plan cannot require 
anything more for the employee to satisfy the plan's requirement to 
provide a written statement. (For example, the plan cannot require that 
the statement be notarized.)
    (v) The rules of this paragraph (a)(3) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual D enrolls in a group health plan 
maintained by Employer Y. At the time D enrolls, Y pays 70 percent of 
the cost of employee coverage and D pays the rest. Y announces that 
beginning January 1, Y will no longer make employer contributions 
towards the coverage. Employees may maintain coverage, however, if they 
pay the total cost of the coverage.
    (ii) Conclusion. In this Example 1, employer contributions towards 
D's coverage ceased on January 1 and the conditions of paragraph 
(a)(3)(ii) of this section are satisfied on this date (regardless of 
whether D elects to pay the total cost and continue coverage under Y's 
plan).
    Example 2. (i) Facts. A group health plan provides coverage through 
two options--Option 1 and Option 2. Employees can enroll in either 
option only within 30 days of hire or on January 1 of each year. 
Employee A is eligible for both options and enrolls in Option 1. 
Effective July 1 the plan terminates coverage under Option 1 and the 
plan does not create an immediate open enrollment opportunity into 
Option 2.
    (ii) Conclusion. In this Example 2, A has experienced a loss of 
eligibility for coverage that satisfies paragraph (a)(3)(i) of this 
section, and has satisfied the other conditions

[[Page 749]]

for special enrollment under paragraph (a)(2)(i) of this section. 
Therefore, if A satisfies the other conditions of this paragraph (a), 
the plan must permit A to enroll in Option 2 as a special enrollee. (A 
may also be eligible to enroll in another group health plan, such as a 
plan maintained by the employer of A's spouse, as a special enrollee.) 
The outcome would be the same if Option 1 was terminated by an issuer 
and the plan made no other coverage available to A.
    Example 3. (i) Facts. Individual C is covered under a group health 
plan maintained by Employer X. While covered under X's plan, C was 
eligible for but did not enroll in a plan maintained by Employer Z, the 
employer of C's spouse. C terminates employment with X and loses 
eligibility for coverage under X's plan. C has a special enrollment 
right to enroll in Z's plan, but C instead elects COBRA continuation 
coverage under X's plan. C exhausts COBRA continuation coverage under 
X's plan and requests special enrollment in Z's plan.
    (ii) Conclusion. In this Example 3, C has satisfied the conditions 
for special enrollment under paragraph (a)(3)(iii) of this section, and 
has satisfied the other conditions for special enrollment under 
paragraph (a)(2)(i) of this section. The special enrollment right that C 
had into Z's plan immediately after the loss of eligibility for coverage 
under X's plan was an offer of coverage under Z's plan. When C later 
exhausts COBRA coverage under X's plan, C has a second special 
enrollment right in Z's plan.

    (4) Applying for special enrollment and effective date of coverage--
(i) A plan or issuer must allow an employee a period of at least 30 days 
after an event described in paragraph (a)(3) of this section to request 
enrollment (for the employee or the employee's dependent).
    (ii) Coverage must begin no later than the first day of the first 
calendar month beginning after the date the plan or issuer receives the 
request for special enrollment.
    (b) Special enrollment with respect to certain dependent 
beneficiaries--(1) In general. A group health plan, and a health 
insurance issuer offering health insurance coverage in connection with a 
group health plan, that makes coverage available with respect to 
dependents is required to permit individuals described in paragraph 
(b)(2) of this section to be enrolled for coverage in a benefit package 
under the terms of the plan. Paragraph (b)(3) of this section describes 
the required special enrollment period and the date by which coverage 
must begin. 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) Individuals eligible for special enrollment. An individual is 
described in this paragraph (b)(2) if the individual is otherwise 
eligible for coverage in a benefit package under the plan and if the 
individual is described in paragraph (b)(2)(i), (ii), (iii), (iv), (v), 
or (vi) of this section.
    (i) Current employee only. A current employee is described in this 
paragraph (b)(2)(i) if a person becomes a dependent of the individual 
through marriage, birth, adoption, or placement for adoption.
    (ii) Spouse of a participant only. An individual is described in 
this paragraph (b)(2)(ii) if either--
    (A) The individual becomes the spouse of a participant; or
    (B) The individual is a spouse of a participant and a child becomes 
a dependent of the participant through birth, adoption, or placement for 
adoption.
    (iii) Current employee and spouse. A current employee and an 
individual who is or becomes a spouse of such an employee, are described 
in this paragraph (b)(2)(iii) if either--
    (A) The employee and the spouse become married; or
    (B) The employee and spouse are married and a child becomes a 
dependent of the employee through birth, adoption, or placement for 
adoption.
    (iv) Dependent of a participant only. An individual is described in 
this paragraph (b)(2)(iv) if the individual is a dependent (as defined 
in Sec. 2590.701-2) of a participant and the individual has become a 
dependent of the participant through marriage, birth, adoption, or 
placement for adoption.
    (v) Current employee and a new dependent. A current employee and an 
individual who is a dependent of the employee, are described in this 
paragraph (b)(2)(v) if the individual becomes a dependent of the 
employee through marriage, birth, adoption, or placement for adoption.
    (vi) Current employee, spouse, and a new dependent. A current 
employee, the employee's spouse, and the employee's

[[Page 750]]

dependent are described in this paragraph (b)(2)(vi) if the dependent 
becomes a dependent of the employee through marriage, birth, adoption, 
or placement for adoption.
    (3) Applying for special enrollment and effective date of coverage--
(i) Request. A plan or issuer must allow an individual a period of at 
least 30 days after the date of the marriage, birth, adoption, or 
placement for adoption (or, if dependent coverage is not generally made 
available at the time of the marriage, birth, adoption, or placement for 
adoption, a period of at least 30 days after the date the plan makes 
dependent coverage generally available) to request enrollment (for the 
individual or the individual's dependent).
    (ii) Reasonable procedures for special enrollment. [Reserved]
    (iii) Date coverage must begin--(A) Marriage. In the case of 
marriage, coverage must begin no later than the first day of the first 
calendar month beginning after the date the plan or issuer receives the 
request for special enrollment.
    (B) Birth, adoption, or placement for adoption. Coverage must begin 
in the case of a dependent's birth on the date of birth and in the case 
of a dependent's adoption or placement for adoption no later than the 
date of such adoption or placement for adoption (or, if dependent 
coverage is not made generally available at the time of the birth, 
adoption, or placement for adoption, the date the plan makes dependent 
coverage available).
    (4) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer maintains a group health plan that 
offers all employees employee-only coverage, employee-plus-spouse 
coverage, or family coverage. Under the terms of the plan, any employee 
may elect to enroll when first hired (with coverage beginning on the 
date of hire) or during an annual open enrollment period held each 
December (with coverage beginning the following January 1). Employee A 
is hired on September 3. A is married to B, and they have no children. 
On March 15 in the following year a child C is born to A and B. Before 
that date, A and B have not been enrolled in the plan.
    (ii) Conclusion. In this Example 1, the conditions for special 
enrollment of an employee with a spouse and new dependent under 
paragraph (b)(2)(vi) of this section are satisfied. If A satisfies the 
conditions of paragraph (b)(3) of this section for requesting enrollment 
timely, the plan will satisfy this paragraph (b) if it allows A to 
enroll either with employee-only coverage, with employee-plus-spouse 
coverage (for A and B), or with family coverage (for A, B, and C). The 
plan must allow whatever coverage is chosen to begin on March 15, the 
date of C's birth.
    Example 2. (i) Facts. Individual D works for Employer X. X maintains 
a group health plan with two benefit packages--an HMO option and an 
indemnity option. Self-only and family coverage are available under both 
options. D enrolls for self-only coverage in the HMO option. Then, a 
child, E, is placed for adoption with D. Within 30 days of the placement 
of E for adoption, D requests enrollment for D and E under the plan's 
indemnity option.
    (ii) Conclusion. In this Example 2, D and E satisfy the conditions 
for special enrollment under paragraphs (b)(2)(v) and (b)(3) of this 
section. Therefore, the plan must allow D and E to enroll in the 
indemnity coverage, effective as of the date of the placement for 
adoption.

    (c) Notice of special enrollment. At or before the time an employee 
is initially offered the opportunity to enroll in a group health plan, 
the plan must furnish the employee with a notice of special enrollment 
that complies with the requirements of this paragraph (c).
    (1) Description of special enrollment rights. The notice of special 
enrollment must include a description of special enrollment rights. The 
following model language may be used to satisfy this requirement:

    If you are declining enrollment for yourself or your dependents 
(including your spouse) because of other health insurance or group 
health plan coverage, you may be able to enroll yourself and your 
dependents in this plan if you or your dependents lose eligibility for 
that other coverage (or if the employer stops contributing towards your 
or your dependents' other coverage). However, you must request 
enrollment within [insert ``30 days'' or any longer period that applies 
under the plan] after your or your dependents' other coverage ends (or 
after the employer stops contributing toward the other coverage).
    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. However, you must request enrollment 
within [insert ``30 days'' or any longer period that applies under the 
plan] after the marriage, birth, adoption, or placement for adoption.

[[Page 751]]

    To request special enrollment or obtain more information, contact 
[insert the name, title, telephone number, and any additional contact 
information of the appropriate plan representative].

    (2) Additional information that may be required. The notice of 
special enrollment must also include, if applicable, the notice 
described in paragraph (a)(3)(iv) of this section (the notice required 
to be furnished to an individual declining coverage if the plan requires 
the reason for declining coverage to be in writing).
    (d) Treatment of special enrollees--(1) If an individual requests 
enrollment while the individual is entitled to special enrollment under 
either paragraph (a) or (b) of this section, the individual is a special 
enrollee, even if the request for enrollment coincides with a late 
enrollment opportunity under the plan. Therefore, the individual cannot 
be treated as a late enrollee.
    (2) Special enrollees must be offered all the benefit packages 
available to similarly situated individuals who enroll when first 
eligible. For this purpose, any difference in benefits or cost-sharing 
requirements for different individuals constitutes a different benefit 
package. In addition, a special enrollee cannot be required to pay more 
for coverage than a similarly situated individual who enrolls in the 
same coverage when first eligible.
    (3) The rules of this section are illustrated by the following 
example:

    Example. (i) Facts. Employer Y maintains a group health plan that 
has an enrollment period for late enrollees every November 1 through 
November 30 with coverage effective the following January 1. On October 
18, Individual B loses coverage under another group health plan and 
satisfies the requirements of paragraphs (a)(2), (3), and (4) of this 
section. B submits a completed application for coverage on November 2.
    (ii) Conclusion. In this Example, B is a special enrollee. 
Therefore, even though B's request for enrollment coincides with an open 
enrollment period, B's coverage is required to be made effective no 
later than December 1 (rather than the plan's January 1 effective date 
for late enrollees).

[69 FR 78763, Dec. 30, 2004, as amended at 79 FR 10309, Feb. 24, 2014]



Sec. 2590.701-7  HMO affiliation period as an alternative to a 
preexisting condition exclusion.

    The rules for HMO affiliation periods have been superseded by the 
prohibition on preexisting condition exclusions. See Sec. 2590.715-2704 
for rules prohibiting the imposition of a preexisting condition 
exclusion.

[79 FR 10309, Feb. 24, 2014]



Sec. 2590.701-8  Interaction With the Family and Medical Leave Act. [Reserved]



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. 2590.702-1(a)(3) of 
this Part.
    (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.
    (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

[[Page 752]]

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 (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 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 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

[[Page 753]]

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 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 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 
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 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 ERISA, the Affordable Care 
Act (including the requirements related to essential health benefits), 
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 $10,000 annual 
limit on a specific covered benefit that is not an essential health 
benefit 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 coverage of the specific, non-essential 
health benefit up to $10,000 is 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 $500 deductible on 
all benefits 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 $2,000 deductible on benefits for the 
treatment of AIDS, effective before the beginning of the next plan year.
    (ii) Conclusion. The facts of this Example 2 strongly suggest that 
the plan modification is directed at B based on B's claim. Absent 
outweighing evidence to the contrary, the plan violates this paragraph 
(b)(2)(i).
    Example 3. (i) Facts. A group health plan applies for a group health 
policy offered by an 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

[[Page 754]]

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 $2,000 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. (However, applying a lifetime limit on TMJ may violate 
Sec. 2590.715-2711, if TMJ coverage is an essential health benefit, 
depending on the essential health benefits benchmark plan as defined in 
45 CFR 156.20. This example does not address whether the plan provision 
is permissible under any other applicable law, including PHS Act section 
2711 or the Americans with Disabilities Act.)
    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. Additionally, this plan provision is prohibited 
under Sec. 2590.715-2711 because it imposes a lifetime limit on 
essential health benefits.
    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) Exception for wellness programs. A group health plan or group 
health insurance issuer may vary benefits, including cost-sharing 
mechanisms (such as a deductible, copayment, or coinsurance), based on 
whether an individual has met the standards of a wellness program that 
satisfies the requirements of paragraph (f) of this section.
    (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). This rule 
applies in the case of an injury resulting from a medical condition even 
if the condition is not diagnosed before the injury.
    (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 excludes benefits for self-
inflicted injuries or

[[Page 755]]

injuries sustained in connection with attempted suicide. Because of 
depression, Individual D attempts suicide. As a result, D sustains 
injuries and is hospitalized for treatment of the injuries. Under 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.)

    (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 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. But see Sec. 2590.702-1(b) of 
this Part, which prohibits adjustments in group premium or contribution 
rates based on genetic information.
    (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. (However, 
if the issuer used genetic information in computing the group rate, it 
would violate Sec. 2590.702-1(b) of this Part.)

    (3) Exception for wellness programs. Notwithstanding paragraphs 
(c)(1) and (2) of this section, a plan or issuer may vary the amount of 
premium or contribution it requires similarly situated individuals to 
pay based on whether an individual has met the standards of a wellness 
program that satisfies the requirements of paragraph (f) of this 
section.

[[Page 756]]

    (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 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 (for example, 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 
usual 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

[[Page 757]]

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 children. However, 
coverage is made available to a child only if the child is under age 26 
(or under age 29 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 children 
differently by imposing an age limitation on children, but not on 
spouses, is permitted under this paragraph (d). Specifically, the 
distinction between spouses and 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 children who are under 
age 26 (or full-time students under age 29) as a group of similarly 
situated individuals separate from those who are age 26 or older (or age 
29 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.
    (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 higher 
deductible 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:


[[Page 758]]


    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. State law cannot change the obligation of Issuer N under this 
section. However, under State law Issuer M may also be responsible for 
providing benefits to such a dependent. In a case in which Issuer N has 
an obligation under this section to provide benefits and Issuer M has an 
obligation under State law to provide benefits, any State laws designed 
to prevent more than 100% reimbursement, such as State coordination-of-
benefits laws, continue to apply.

    (2) Actively-at-work and continuous service provisions--(i) General 
rule--(A) Under the rules of paragraphs (b) and (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. (In 
addition, any eligibility provision that is time-based must comply with 
the requirements of PHS Act section 2708 and its implementing 
regulations.)

    (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

[[Page 759]]

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 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.)

[[Page 760]]

    (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) Nondiscriminatory wellness programs--in general. A wellness 
program is a program of health promotion or disease prevention. 
Paragraphs (b)(2)(ii) and (c)(3) of this section provide exceptions to 
the general prohibitions against discrimination based on a health factor 
for plan provisions that vary benefits (including cost-sharing 
mechanisms) or the premium or contribution for similarly situated 
individuals in connection with a wellness program that satisfies the 
requirements of this paragraph (f).
    (1) Definitions. The definitions in this paragraph (f)(1) govern in 
applying the provisions of this paragraph (f).
    (i) Reward. Except where expressly provided otherwise, references in 
this section to an individual obtaining a reward include both obtaining 
a reward (such as a discount or rebate of a premium or contribution, a 
waiver of all or part of a cost-sharing mechanism, an additional 
benefit, or any financial or other incentive) and avoiding a penalty 
(such as the absence of a premium surcharge or other financial or 
nonfinancial disincentive). References in this section to a plan 
providing a reward include both providing a reward (such as a discount 
or rebate of a premium or contribution, a waiver of all or part of a 
cost-sharing mechanism, an additional benefit, or any financial or other 
incentive) and imposing a penalty (such as a surcharge or other 
financial or nonfinancial disincentive).
    (ii) Participatory wellness programs. If none of the conditions for 
obtaining a reward under a wellness program is based on an individual 
satisfying a standard that is related to a health factor (or if a 
wellness program does not provide a reward), the wellness program is a 
participatory wellness program. Examples of participatory wellness 
programs are:
    (A) A program that reimburses employees for all or part of the cost 
for membership in a fitness center.
    (B) A diagnostic testing program that provides a reward for 
participation in that program and does not base any part of the reward 
on outcomes.
    (C) A program that encourages preventive care through the waiver of 
the copayment or deductible requirement under a group health plan for 
the costs of, for example, prenatal care or well-baby visits. (Note 
that, with respect to non-grandfathered plans, Sec. 2590.715-2713 of 
this part requires benefits for certain preventive health services 
without the imposition of cost sharing.)
    (D) A program that reimburses employees for the costs of 
participating, or that otherwise provides a reward for participating, in 
a smoking cessation program without regard to whether the employee quits 
smoking.
    (E) A program that provides a reward to employees for attending a 
monthly, no-cost health education seminar.
    (F) A program that provides a reward to employees who complete a 
health risk assessment regarding current health status, without any 
further action (educational or otherwise) required by the employee with 
regard to the health issues identified as part of the assessment. (See 
also Sec. 2590.702-1 for rules prohibiting collection of genetic 
information.)
    (iii) Health-contingent wellness programs. A health-contingent 
wellness program is a program that requires an individual to satisfy a 
standard related to a health factor to obtain a reward (or requires an 
individual to undertake more than a similarly situated individual based 
on a health factor in order to obtain the same reward). A health-
contingent wellness program may be an activity-only wellness program or 
an outcome-based wellness program.
    (iv) Activity-only wellness programs. An activity-only wellness 
program is a type of health-contingent wellness program that requires an 
individual to

[[Page 761]]

perform or complete an activity related to a health factor in order to 
obtain a reward but does not require the individual to attain or 
maintain a specific health outcome. Examples include walking, diet, or 
exercise programs, which some individuals may be unable to participate 
in or complete (or have difficulty participating in or completing) due 
to a health factor, such as severe asthma, pregnancy, or a recent 
surgery. See paragraph (f)(3) of this section for requirements 
applicable to activity-only wellness programs.
    (v) Outcome-based wellness programs. An outcome-based wellness 
program is a type of health-contingent wellness program that requires an 
individual to attain or maintain a specific health outcome (such as not 
smoking or attaining certain results on biometric screenings) in order 
to obtain a reward. To comply with the rules of this paragraph (f), an 
outcome-based wellness program typically has two tiers. That is, for 
individuals who do not attain or maintain the specific health outcome, 
compliance with an educational program or an activity may be offered as 
an alternative to achieve the same reward. This alternative pathway, 
however, does not mean that the overall program, which has an outcome-
based component, is not an outcome-based wellness program. That is, if a 
measurement, test, or screening is used as part of an initial standard 
and individuals who meet the standard are granted the reward, the 
program is considered an outcome-based wellness program. For example, if 
a wellness program tests individuals for specified medical conditions or 
risk factors (including biometric screening such as testing for high 
cholesterol, high blood pressure, abnormal body mass index, or high 
glucose level) and provides a reward to individuals identified as within 
a normal or healthy range for these medical conditions or risk factors, 
while requiring individuals who are identified as outside the normal or 
healthy range (or at risk) to take additional steps (such as meeting 
with a health coach, taking a health or fitness course, adhering to a 
health improvement action plan, complying with a walking or exercise 
program, or complying with a health care provider's plan of care) to 
obtain the same reward, the program is an outcome-based wellness 
program. See paragraph (f)(4) of this section for requirements 
applicable to outcome-based wellness programs.
    (2) Requirement for participatory wellness programs. A participatory 
wellness program, as described in paragraph (f)(1)(ii) of this section, 
does not violate the provisions of this section only if participation in 
the program is made available to all similarly situated individuals, 
regardless of health status.
    (3) Requirements for activity-only wellness programs. A health-
contingent wellness program that is an activity-only wellness program, 
as described in paragraph (f)(1)(iv) of this section, does not violate 
the provisions of this section only if all of the following requirements 
are satisfied:
    (i) Frequency of opportunity to qualify. The program must give 
individuals eligible for the program the opportunity to qualify for the 
reward under the program at least once per year.
    (ii) Size of reward. The reward for the activity-only wellness 
program, together with the reward for other health-contingent wellness 
programs with respect to the plan, must not exceed the applicable 
percentage (as defined in paragraph (f)(5) of this section) of the total 
cost of employee-only coverage under the plan. However, if, in addition 
to employees, any class of dependents (such as spouses, or spouses and 
dependent children) may participate in the wellness program, the reward 
must not exceed the applicable percentage of the total cost of the 
coverage in which an employee and any dependents are enrolled. For 
purposes of this paragraph (f)(3)(ii), the cost of coverage is 
determined based on the total amount of employer and employee 
contributions towards the cost of coverage for the benefit package under 
which the employee is (or the employee and any dependents are) receiving 
coverage.
    (iii) Reasonable design. The program must be reasonably designed to 
promote health or prevent disease. A program satisfies this standard if 
it has a reasonable chance of improving the

[[Page 762]]

health of, or preventing disease in, participating individuals, and it 
is not overly burdensome, is not a subterfuge for discriminating based 
on a health factor, and is not highly suspect in the method chosen to 
promote health or prevent disease. This determination is based on all 
the relevant facts and circumstances.
    (iv) Uniform availability and reasonable alternative standards. The 
full reward under the activity-only wellness program must be available 
to all similarly situated individuals.
    (A) Under this paragraph (f)(3)(iv), a reward under an activity-only 
wellness program is not available to all similarly situated individuals 
for a period unless the program meets both of the following 
requirements:
    (1) The program allows a reasonable alternative standard (or waiver 
of the otherwise applicable standard) for obtaining the reward for any 
individual for whom, for that period, it is unreasonably difficult due 
to a medical condition to satisfy the otherwise applicable standard; and
    (2) The program allows a reasonable alternative standard (or waiver 
of the otherwise applicable standard) for obtaining the reward for any 
individual for whom, for that period, it is medically inadvisable to 
attempt to satisfy the otherwise applicable standard.
    (B) While plans and issuers are not required to determine a 
particular reasonable alternative standard in advance of an individual's 
request for one, if an individual is described in either paragraph 
(f)(3)(iv)(A)(1) or (2) of this section, a reasonable alternative 
standard must be furnished by the plan or issuer upon the individual's 
request or the condition for obtaining the reward must be waived.
    (C) All the facts and circumstances are taken into account in 
determining whether a plan or issuer has furnished a reasonable 
alternative standard, including but not limited to the following:
    (1) If the reasonable alternative standard is completion of an 
educational program, the plan or issuer must make the educational 
program available or assist the employee in finding such a program 
(instead of requiring an individual to find such a program unassisted), 
and may not require an individual to pay for the cost of the program.
    (2) The time commitment required must be reasonable (for example, 
requiring attendance nightly at a one-hour class would be unreasonable).
    (3) If the reasonable alternative standard is a diet program, the 
plan or issuer is not required to pay for the cost of food but must pay 
any membership or participation fee.
    (4) If an individual's personal physician states that a plan 
standard (including, if applicable, the recommendations of the plan's 
medical professional) is not medically appropriate for that individual, 
the plan or issuer must provide a reasonable alternative standard that 
accommodates the recommendations of the individual's personal physician 
with regard to medical appropriateness. Plans and issuers may impose 
standard cost sharing under the plan or coverage for medical items and 
services furnished pursuant to the physician's recommendations.
    (D) To the extent that a reasonable alternative standard under an 
activity-only wellness program is, itself, an activity-only wellness 
program, it must comply with the requirements of this paragraph (f)(3) 
in the same manner as if it were an initial program standard. (Thus, for 
example, if a plan or issuer provides a walking program as a reasonable 
alternative standard to a running program, individuals for whom it is 
unreasonably difficult due to a medical condition to complete the 
walking program (or for whom it is medically inadvisable to attempt to 
complete the walking program) must be provided a reasonable alternative 
standard to the walking program.) To the extent that a reasonable 
alternative standard under an activity-only wellness program is, itself, 
an outcome-based wellness program, it must comply with the requirements 
of paragraph (f)(4) of this section, including paragraph (f)(4)(iv)(D).
    (E) If reasonable under the circumstances, a plan or issuer may seek 
verification, such as a statement from an individual's personal 
physician, that a health factor makes it unreasonably difficult for the 
individual to satisfy,

[[Page 763]]

or medically inadvisable for the individual to attempt to satisfy, the 
otherwise applicable standard of an activity-only wellness program. 
Plans and issuers may seek verification with respect to requests for a 
reasonable alternative standard for which it is reasonable to determine 
that medical judgment is required to evaluate the validity of the 
request.
    (v) Notice of availability of reasonable alternative standard. The 
plan or issuer must disclose in all plan materials describing the terms 
of an activity-only wellness program the availability of a reasonable 
alternative standard to qualify for the reward (and, if applicable, the 
possibility of waiver of the otherwise applicable standard), including 
contact information for obtaining a reasonable alternative standard and 
a statement that recommendations of an individual's personal physician 
will be accommodated. If plan materials merely mention that such a 
program is available, without describing its terms, this disclosure is 
not required. Sample language is provided in paragraph (f)(6) of this 
section, as well as in certain examples of this section.
    (vi) Example. The provisions of this paragraph (f)(3) are 
illustrated by the following example:

    Example. (i) Facts. A group health plan provides a reward to 
individuals who participate in a reasonable specified walking program. 
If it is unreasonably difficult due to a medical condition for an 
individual to participate (or if it is medically inadvisable for an 
individual to attempt to participate), the plan will waive the walking 
program requirement and provide the reward. All materials describing the 
terms of the walking program disclose the availability of the waiver.
    (ii) Conclusion. In this Example, the program satisfies the 
requirements of paragraph (f)(3)(iii) of this section because the 
walking program is reasonably designed to promote health and prevent 
disease. The program satisfies the requirements of paragraph (f)(3)(iv) 
of this section because the reward under the program is available to all 
similarly situated individuals. It accommodates individuals for whom it 
is unreasonably difficult to participate in the walking program due to a 
medical condition (or for whom it would be medically inadvisable to 
attempt to participate) by providing them with the reward even if they 
do not participate in the walking program (that is, by waiving the 
condition). The plan also complies with the disclosure requirement of 
paragraph (f)(3)(v) of this section. Thus, the plan satisfies paragraphs 
(f)(3)(iii), (iv), and (v) of this section.

    (4) Requirements for outcome-based wellness programs. A health-
contingent wellness program that is an outcome-based wellness program, 
as described in paragraph (f)(1)(v) of this section, does not violate 
the provisions of this section only if all of the following requirements 
are satisfied:
    (i) Frequency of opportunity to qualify. The program must give 
individuals eligible for the program the opportunity to qualify for the 
reward under the program at least once per year.
    (ii) Size of reward. The reward for the outcome-based wellness 
program, together with the reward for other health-contingent wellness 
programs with respect to the plan, must not exceed the applicable 
percentage (as defined in paragraph (f)(5) of this section) of the total 
cost of employee-only coverage under the plan. However, if, in addition 
to employees, any class of dependents (such as spouses, or spouses and 
dependent children) may participate in the wellness program, the reward 
must not exceed the applicable percentage of the total cost of the 
coverage in which an employee and any dependents are enrolled. For 
purposes of this paragraph (f)(4)(ii), the cost of coverage is 
determined based on the total amount of employer and employee 
contributions towards the cost of coverage for the benefit package under 
which the employee is (or the employee and any dependents are) receiving 
coverage.
    (iii) Reasonable design. The program must be reasonably designed to 
promote health or prevent disease. A program satisfies this standard if 
it has a reasonable chance of improving the health of, or preventing 
disease in, participating individuals, and it is not overly burdensome, 
is not a subterfuge for discriminating based on a health factor, and is 
not highly suspect in the method chosen to promote health or prevent 
disease. This determination is based on all the relevant facts and 
circumstances. To ensure that an outcome-based wellness program is 
reasonably designed to improve health and does not act as a subterfuge 
for underwriting or reducing benefits based on a health factor, a 
reasonable alternative

[[Page 764]]

standard to qualify for the reward must be provided to any individual 
who does not meet the initial standard based on a measurement, test, or 
screening that is related to a health factor, as explained in paragraph 
(f)(4)(iv) of this section.
    (iv) Uniform availability and reasonable alternative standards. The 
full reward under the outcome-based wellness program must be available 
to all similarly situated individuals.
    (A) Under this paragraph (f)(4)(iv), a reward under an outcome-based 
wellness program is not available to all similarly situated individuals 
for a period unless the program allows a reasonable alternative standard 
(or waiver of the otherwise applicable standard) for obtaining the 
reward for any individual who does not meet the initial standard based 
on the measurement, test, or screening, as described in this paragraph 
(f)(4)(iv).
    (B) While plans and issuers are not required to determine a 
particular reasonable alternative standard in advance of an individual's 
request for one, if an individual is described in paragraph 
(f)(4)(iv)(A) of this section, a reasonable alternative standard must be 
furnished by the plan or issuer upon the individual's request or the 
condition for obtaining the reward must be waived.
    (C) All the facts and circumstances are taken into account in 
determining whether a plan or issuer has furnished a reasonable 
alternative standard, including but not limited to the following:
    (1) If the reasonable alternative standard is completion of an 
educational program, the plan or issuer must make the educational 
program available or assist the employee in finding such a program 
(instead of requiring an individual to find such a program unassisted), 
and may not require an individual to pay for the cost of the program.
    (2) The time commitment required must be reasonable (for example, 
requiring attendance nightly at a one-hour class would be unreasonable).
    (3) If the reasonable alternative standard is a diet program, the 
plan or issuer is not required to pay for the cost of food but must pay 
any membership or participation fee.
    (4) If an individual's personal physician states that a plan 
standard (including, if applicable, the recommendations of the plan's 
medical professional) is not medically appropriate for that individual, 
the plan or issuer must provide a reasonable alternative standard that 
accommodates the recommendations of the individual's personal physician 
with regard to medical appropriateness. Plans and issuers may impose 
standard cost sharing under the plan or coverage for medical items and 
services furnished pursuant to the physician's recommendations.
    (D) To the extent that a reasonable alternative standard under an 
outcome-based wellness program is, itself, an activity-only wellness 
program, it must comply with the requirements of paragraph (f)(3) of 
this section in the same manner as if it were an initial program 
standard. To the extent that a reasonable alternative standard under an 
outcome-based wellness program is, itself, another outcome-based 
wellness program, it must comply with the requirements of this paragraph 
(f)(4), subject to the following special provisions:
    (1) The reasonable alternative standard cannot be a requirement to 
meet a different level of the same standard without additional time to 
comply that takes into account the individual's circumstances. For 
example, if the initial standard is to achieve a BMI less than 30, the 
reasonable alternative standard cannot be to achieve a BMI less than 31 
on that same date. However, if the initial standard is to achieve a BMI 
less than 30, a reasonable alternative standard for the individual could 
be to reduce the individual's BMI by a small amount or small percentage, 
over a realistic period of time, such as within a year.
    (2) An individual must be given the opportunity to comply with the 
recommendations of the individual's personal physician as a second 
reasonable alternative standard to meeting the reasonable alternative 
standard defined by the plan or issuer, but only if the physician joins 
in the request. The

[[Page 765]]

individual can make a request to involve a personal physician's 
recommendations at any time and the personal physician can adjust the 
physician's recommendations at any time, consistent with medical 
appropriateness.
    (E) It is not reasonable to seek verification, such as a statement 
from an individual's personal physician, under an outcome-based wellness 
program that a health factor makes it unreasonably difficult for the 
individual to satisfy, or medically inadvisable for the individual to 
attempt to satisfy, the otherwise applicable standard as a condition of 
providing a reasonable alternative to the initial standard. However, if 
a plan or issuer provides an alternative standard to the otherwise 
applicable measurement, test, or screening that involves an activity 
that is related to a health factor, then the rules of paragraph (f)(3) 
of this section for activity-only wellness programs apply to that 
component of the wellness program and the plan or issuer may, if 
reasonable under the circumstances, seek verification that it is 
unreasonably difficult due to a medical condition for an individual to 
perform or complete the activity (or it is medically inadvisable to 
attempt to perform or complete the activity). (For example, if an 
outcome-based wellness program requires participants to maintain a 
certain healthy weight and provides a diet and exercise program for 
individuals who do not meet the targeted weight, a plan or issuer may 
seek verification, as described in paragraph (f)(3)(iv)(D) of this 
section, if reasonable under the circumstances, that a second reasonable 
alternative standard is needed for certain individuals because, for 
those individuals, it would be unreasonably difficult due to a medical 
condition to comply, or medically inadvisable to attempt to comply, with 
the diet and exercise program, due to a medical condition.)
    (v) Notice of availability of reasonable alternative standard. The 
plan or issuer must disclose in all plan materials describing the terms 
of an outcome-based wellness program, and in any disclosure that an 
individual did not satisfy an initial outcome-based standard, the 
availability of a reasonable alternative standard to qualify for the 
reward (and, if applicable, the possibility of waiver of the otherwise 
applicable standard), including contact information for obtaining a 
reasonable alternative standard and a statement that recommendations of 
an individual's personal physician will be accommodated. If plan 
materials merely mention that such a program is available, without 
describing its terms, this disclosure is not required. Sample language 
is provided in paragraph (f)(6) of this section, as well as in certain 
examples of this section.
    (vi) Examples. The provisions of this paragraph (f)(4) are 
illustrated by the following examples:

    Example 1--Cholesterol screening with reasonable alternative 
standard to work with personal physician. (i) Facts. A group health plan 
offers a reward to participants who achieve a count under 200 on a total 
cholesterol test. If a participant does not achieve the targeted 
cholesterol count, the plan allows the participant to develop an 
alternative cholesterol action plan in conjunction with the 
participant's personal physician that may include recommendations for 
medication and additional screening. The plan allows the physician to 
modify the standards, as medically necessary, over the year. (For 
example, if a participant develops asthma or depression, requires 
surgery and convalescence, or some other medical condition or 
consideration makes completion of the original action plan inadvisable 
or unreasonably difficult, the physician may modify the original action 
plan.) All plan materials describing the terms of the program include 
the following statement: ``Your health plan wants to help you take 
charge of your health. Rewards are available to all employees who 
participate in our Cholesterol Awareness Wellness Program. If your total 
cholesterol count is under 200, you will receive the reward. If not, you 
will still have an opportunity to qualify for the reward. We will work 
with you and your doctor to find a Health Smart program that is right 
for you.'' In addition, when any individual participant receives 
notification that his or her cholesterol count is 200 or higher, the 
notification includes the following statement: ``Your plan offers a 
Health Smart program under which we will work with you and your doctor 
to try to lower your cholesterol. If you complete this program, you will 
qualify for a reward. Please contact us at [contact information] to get 
started.''
    (ii) Conclusion. In this Example 1, the program is an outcome-based 
wellness program because the initial standard requires an individual to 
attain or maintain a specific health

[[Page 766]]

outcome (a certain cholesterol level) to obtain a reward. The program 
satisfies the requirements of paragraph (f)(4)(iii) of this section 
because the cholesterol program is reasonably designed to promote health 
and prevent disease. The program satisfies the requirements of paragraph 
(f)(4)(iv) of this section because it makes available to all 
participants who do not meet the cholesterol standard a reasonable 
alternative standard to qualify for the reward. Lastly, the plan also 
discloses in all materials describing the terms of the program and in 
any disclosure that an individual did not satisfy the initial outcome-
based standard the availability of a reasonable alternative standard 
(including contact information and the individual's ability to involve 
his or her personal physician), as required by paragraph (f)(4)(v) of 
this section. Thus, the program satisfies the requirements of paragraphs 
(f)(4)(iii), (iv), and (v) of this section.
    Example 2--Cholesterol screening with plan alternative and no 
opportunity for personal physician involvement. (i) Facts. Same facts as 
Example 1, except that the wellness program's physician or nurse 
practitioner (rather than the individual's personal physician) 
determines the alternative cholesterol action plan. The plan does not 
provide an opportunity for a participant's personal physician to modify 
the action plan if it is not medically appropriate for that individual.
    (ii) Conclusion. In this Example 2, the wellness program does not 
satisfy the requirements of paragraph (f)(4)(iii) of this section 
because the program does not accommodate the recommendations of the 
participant's personal physician with regard to medical appropriateness, 
as required under paragraph (f)(4)(iv)(C)(3) of this section. Thus, the 
program is not reasonably designed under paragraph (f)(4)(iii) of this 
section and is not available to all similarly situated individuals under 
paragraph (f)(4)(iv) of this section. The notice also does not provide 
all the content required under paragraph (f)(4)(v) of this section.
    Example 3--Cholesterol screening with plan alternative that can be 
modified by personal physician. (i) Facts. Same facts as Example 2, 
except that if a participant's personal physician disagrees with any 
part of the action plan, the personal physician may modify the action 
plan at any time, and the plan discloses this to participants.
    (ii) Conclusion. In this Example 3, the wellness program satisfies 
the requirements of paragraph (f)(4)(iii) of this section because the 
participant's personal physician may modify the action plan determined 
by the wellness program's physician or nurse practitioner at any time if 
the physician states that the recommendations are not medically 
appropriate, as required under paragraph (f)(4)(iv)(C)(3) of this 
section. Thus, the program is reasonably designed under paragraph 
(f)(4)(iii) of this section and is available to all similarly situated 
individuals under paragraph (f)(4)(iv) of this section. The notice, 
which includes a statement that recommendations of an individual's 
personal physician will be accommodated, also complies with paragraph 
(f)(4)(v) of this section.
    Example 4--BMI screening with walking program alternative. (i) 
Facts. A group health plan will provide a reward to participants who 
have a body mass index (BMI) that is 26 or lower, determined shortly 
before the beginning of the year. Any participant who does not meet the 
target BMI is given the same discount if the participant complies with 
an exercise program that consists of walking 150 minutes a week. Any 
participant for whom it is unreasonably difficult due to a medical 
condition to comply with this walking program (and any participant for 
whom it is medically inadvisable to attempt to comply with the walking 
program) during the year is given the same discount if the participant 
satisfies an alternative standard that is reasonable taking into 
consideration the participant's medical situation, is not unreasonably 
burdensome or impractical to comply with, and is otherwise reasonably 
designed based on all the relevant facts and circumstances. All plan 
materials describing the terms of the wellness program include the 
following statement: ``Fitness is Easy! Start Walking! Your health plan 
cares about your health. If you are considered overweight because you 
have a BMI of over 26, our Start Walking program will help you lose 
weight and feel better. We will help you enroll. (**If your doctor says 
that walking isn't right for you, that's okay too. We will work with you 
(and, if you wish, your own doctor) to develop a wellness program that 
is.)'' Participant E is unable to achieve a BMI that is 26 or lower 
within the plan's timeframe and receives notification that complies with 
paragraph (f)(4)(v) of this section. Nevertheless, it is unreasonably 
difficult due to a medical condition for E to comply with the walking 
program. E proposes a program based on the recommendations of E's 
physician. The plan agrees to make the same discount available to E that 
is available to other participants in the BMI program or the alternative 
walking program, but only if E actually follows the physician's 
recommendations.
    (ii) Conclusion. In this Example 4, the program is an outcome-based 
wellness program because the initial standard requires an individual to 
attain or maintain a specific health outcome (a certain BMI level) to 
obtain a reward. The program satisfies the requirements of paragraph 
(f)(4)(iii) of this section because it is reasonably designed to promote 
health and prevent disease. The program also satisfies the requirements 
of paragraph (f)(4)(iv) of this section because it makes

[[Page 767]]

available to all individuals who do not satisfy the BMI standard a 
reasonable alternative standard to qualify for the reward (in this case, 
a walking program that is not unreasonably burdensome or impractical for 
individuals to comply with and that is otherwise reasonably designed 
based on all the relevant facts and circumstances). In addition, the 
walking program is, itself, an activity-only standard and the plan 
complies with the requirements of paragraph (f)(3) of this section 
(including the requirement of paragraph (f)(3)(iv) that, if there are 
individuals for whom it is unreasonably difficult due to a medical 
condition to comply, or for whom it is medically inadvisable to attempt 
to comply, with the walking program, the plan provide a reasonable 
alternative to those individuals). Moreover, the plan satisfies the 
requirements of paragraph (f)(4)(v) of this section because it 
discloses, in all materials describing the terms of the program and in 
any disclosure that an individual did not satisfy the initial outcome-
based standard, the availability of a reasonable alternative standard 
(including contact information and the individual's option to involve 
his or her personal physician) to qualify for the reward or the 
possibility of waiver of the otherwise applicable standard. Thus, the 
program satisfies the requirements of paragraphs (f)(4)(iii), (iv), and 
(v) of this section.
    Example 5--BMI screening with alternatives available to either lower 
BMI or meet personal physician's recommendations. (i) Facts. Same facts 
as Example 4 except that, with respect to any participant who does not 
meet the target BMI, instead of a walking program, the participant is 
expected to reduce BMI by one point. At any point during the year upon 
request, any individual can obtain a second reasonable alternative 
standard, which is compliance with the recommendations of the 
participant's personal physician regarding weight, diet, and exercise as 
set forth in a treatment plan that the physician recommends or to which 
the physician agrees. The participant's personal physician is permitted 
to change or adjust the treatment plan at any time and the option of 
following the participant's personal physician's recommendations is 
clearly disclosed.
    (ii) Conclusion. In this Example 5, the reasonable alternative 
standard to qualify for the reward (the alternative BMI standard 
requiring a one-point reduction) does not make the program unreasonable 
under paragraph (f)(4)(iii) or (iv) of this section because the program 
complies with paragraph (f)(4)(iv)(C)(4) of this section by allowing a 
second reasonable alternative standard to qualify for the reward 
(compliance with the recommendations of the participant's personal 
physician, which can be changed or adjusted at any time). Accordingly, 
the program continues to satisfy the applicable requirements of 
paragraph (f) of this section.
    Example 6--Tobacco use surcharge with smoking cessation program 
alternative. (i) Facts. In conjunction with an annual open enrollment 
period, a group health plan provides a premium differential based on 
tobacco use, determined using a health risk assessment. The following 
statement is included in all plan materials describing the tobacco 
premium differential: ``Stop smoking today! We can help! If you are a 
smoker, we offer a smoking cessation program. If you complete the 
program, you can avoid this surcharge.'' The plan accommodates 
participants who smoke by facilitating their enrollment in a smoking 
cessation program that requires participation at a time and place that 
are not unreasonably burdensome or impractical for participants, and 
that is otherwise reasonably designed based on all the relevant facts 
and circumstances, and discloses contact information and the 
individual's option to involve his or her personal physician. The plan 
pays for the cost of participation in the smoking cessation program. Any 
participant can avoid the surcharge for the plan year by participating 
in the program, regardless of whether the participant stops smoking, but 
the plan can require a participant who wants to avoid the surcharge in a 
subsequent year to complete the smoking cessation program again.
    (ii) Conclusion. In this Example 6, the premium differential 
satisfies the requirements of paragraphs (f)(4)(iii), (iv), and (v). The 
program is an outcome-based wellness program because the initial 
standard for obtaining a reward is dependent on the results of a health 
risk assessment (a measurement, test, or screening). The program is 
reasonably designed under paragraph (f)(4)(iii) because the plan 
provides a reasonable alternative standard (as required under paragraph 
(f)(4)(iv) of this section) to qualify for the reward to all tobacco 
users (a smoking cessation program). The plan discloses, in all 
materials describing the terms of the program, the availability of the 
reasonable alternative standard (including contact information and the 
individual's option to involve his or her personal physician). Thus, the 
program satisfies the requirements of paragraphs (f)(4)(iii), (iv), and 
(v) of this section.
    Example 7--Tobacco use surcharge with alternative program requiring 
actual cessation. (i) Facts. Same facts as Example 6, except the plan 
does not provide participant F with the reward in subsequent years 
unless F actually stops smoking after participating in the tobacco 
cessation program.
    (ii) Conclusion. In this Example 7, the program is not reasonably 
designed under paragraph (f)(4)(iii) of this section and does not 
provide a reasonable alternative standard as required under paragraph 
(f)(4)(iv) of this section. The plan cannot cease to provide a 
reasonable alternative standard merely because the participant did not 
stop smoking

[[Page 768]]

after participating in a smoking cessation program. The plan must 
continue to offer a reasonable alternative standard whether it is the 
same or different (such as a new recommendation from F's personal 
physician or a new nicotine replacement therapy).
    Example 8--Tobacco use surcharge with smoking cessation program 
alternative that is not reasonable. (i) Facts. Same facts as Example 6, 
except the plan does not facilitate participant F's enrollment in a 
smoking cessation program. Instead the plan advises F to find a program, 
pay for it, and provide a certificate of completion to the plan.
    (ii) Conclusion. In this Example 8, the requirement for F to find 
and pay for F's own smoking cessation program means that the alternative 
program is not reasonable. Accordingly, the plan has not offered a 
reasonable alternative standard that complies with paragraphs 
(f)(4)(iii) and (iv) of this section and the program fails to satisfy 
the requirements of paragraph (f) of this section.

    (5) Applicable percentage--(i) For purposes of this paragraph (f), 
the applicable percentage is 30 percent, except that the applicable 
percentage is increased by an additional 20 percentage points (to 50 
percent) to the extent that the additional percentage is in connection 
with a program designed to prevent or reduce tobacco use.
    (ii) The rules of this paragraph (f)(5) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan. The 
annual premium for employee-only coverage is $6,000 (of which the 
employer pays $4,500 per year and the employee pays $1,500 per year). 
The plan offers employees a health-contingent wellness program with 
several components, focused on exercise, blood sugar, weight, 
cholesterol, and blood pressure. The reward for compliance is an annual 
premium rebate of $600.
    (ii) Conclusion. In this Example 1, the reward for the wellness 
program, $600, does not exceed the applicable percentage of 30 percent 
of the total annual cost of employee-only coverage, $1,800. ($6,000  x  
30% = $1,800.)
    Example 2. (i) Facts. Same facts as Example 1, except the wellness 
program is exclusively a tobacco prevention program. Employees who have 
used tobacco in the last 12 months and who are not enrolled in the 
plan's tobacco cessation program are charged a $1,000 premium surcharge 
(in addition to their employee contribution towards the coverage). 
(Those who participate in the plan's tobacco cessation program are not 
assessed the $1,000 surcharge.)
    (ii) Conclusion. In this Example 2, the reward for the wellness 
program (absence of a $1,000 surcharge), does not exceed the applicable 
percentage of 50 percent of the total annual cost of employee-only 
coverage, $3,000. ($6,000  x  50% = $3,000.)
    Example 3. (i) Facts. Same facts as Example 1, except that, in 
addition to the $600 reward for compliance with the health-contingent 
wellness program, the plan also imposes an additional $2,000 tobacco 
premium surcharge on employees who have used tobacco in the last 12 
months and who are not enrolled in the plan's tobacco cessation program. 
(Those who participate in the plan's tobacco cessation program are not 
assessed the $2,000 surcharge.)
    (ii) Conclusion. In this Example 3, the total of all rewards 
(including absence of a surcharge for participating in the tobacco 
program) is $2,600 ($600 + $2,000 = $2,600), which does not exceed the 
applicable percentage of 50 percent of the total annual cost of 
employee-only coverage ($3,000); and, tested separately, the $600 reward 
for the wellness program unrelated to tobacco use does not exceed the 
applicable percentage of 30 percent of the total annual cost of 
employee-only coverage ($1,800).
    Example 4. (i) Facts. An employer sponsors a group health plan. The 
total annual premium for employee-only coverage (including both employer 
and employee contributions towards the coverage) is $5,000. The plan 
provides a $250 reward to employees who complete a health risk 
assessment, without regard to the health issues identified as part of 
the assessment. The plan also offers a Healthy Heart program, which is a 
health-contingent wellness program, with an opportunity to earn a $1,500 
reward.
    (ii) Conclusion. In this Example 4, even though the total reward for 
all wellness programs under the plan is $1,750 ($250 + $1,500 = $1,750, 
which exceeds the applicable percentage of 30 percent of the cost of the 
annual premium for employee-only coverage ($5,000  x  30% = $1,500)), 
only the reward offered for compliance with the health-contingent 
wellness program ($1,500) is taken into account in determining whether 
the rules of this paragraph (f)(5) are met. (The $250 reward is offered 
in connection with a participatory wellness program and therefore is not 
taken into account.) Accordingly, the health-contingent wellness program 
offers a reward that does not exceed the applicable percentage of 30 
percent of the total annual cost of employee-only coverage.

    (6) Sample language. The following language, or substantially 
similar language, can be used to satisfy the notice requirement of 
paragraphs (f)(3)(v) or (f)(4)(v) of this section: ``Your health plan is 
committed to helping you achieve your best health. Rewards for 
participating in a wellness program are available to all employees. If 
you think

[[Page 769]]

you might be unable to meet a standard for a reward under this wellness 
program, you might qualify for an opportunity to earn the same reward by 
different means. Contact us at [insert contact information] and we will 
work with you (and, if you wish, with your doctor) to find a wellness 
program with the same reward that is right for you in light of your 
health status.''

    (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:

    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 26. However, dependent children who are disabled are 
eligible for coverage beyond age 26.
    (ii) Conclusion. In this Example 1, the plan provision allowing 
coverage for disabled dependent children beyond age 26 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:


[[Page 770]]


    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 other laws, including those that require accurate disclosures 
and prohibit intentional misrepresentation.
    (i) Applicability dates. This section applies for plan years 
beginning on or after July 1, 2007.

[71 FR 75038, Dec. 13, 2006, as amended at 74 FR 51683, Oct. 7, 2009; 78 
FR 33181, June 3, 2013; 79 FR 10309, Feb. 24, 2014]



Sec. 2590.702-1  Additional requirements prohibiting discrimination 
based on genetic information.

    (a) Definitions. Unless otherwise provided, the definitions in this 
paragraph (a) govern in applying the provisions of this section.
    (1) Collect means, with respect to information, to request, require, 
or purchase such information.
    (2) Family member means, with respect to an individual--
    (i) A dependent (as defined for purposes of Sec. 2590.701-2 of this 
Part) of the individual; or
    (ii) Any other person who is a first-degree, second-degree, third-
degree, or fourth-degree relative of the individual or of a dependent of 
the individual. Relatives by affinity (such as by marriage or adoption) 
are treated the same as relatives by consanguinity (that is, relatives 
who share a common biological ancestor). In determining the degree of 
the relationship, relatives by less than full consanguinity (such as 
half-siblings, who share only one parent) are treated the same as 
relatives by full consanguinity (such as siblings who share both 
parents).
    (A) First-degree relatives include parents, spouses, siblings, and 
children.
    (B) Second-degree relatives include grandparents, grandchildren, 
aunts, uncles, nephews, and nieces.
    (C) Third-degree relatives include great-grandparents, great-
grandchildren, great aunts, great uncles, and first cousins.
    (D) Fourth-degree relatives include great-great grandparents, great-
great grandchildren, and children of first cousins.
    (3) Genetic information means--(i) Subject to paragraphs (a)(3)(ii) 
and (a)(3)(iii) of this section, with respect to an individual, 
information about--
    (A) The individual's genetic tests (as defined in paragraph (a)(5) 
of this section);
    (B) The genetic tests of family members of the individual;
    (C) The manifestation (as defined in paragraph (a)(6) of this 
section) of a disease or disorder in family members of the individual; 
or
    (D) Any request for, or receipt of, genetic services (as defined in 
paragraph (a)(4) of this section), or participation in clinical research 
which includes genetic services, by the individual or any family member 
of the individual.
    (ii) The term genetic information does not include information about 
the sex or age of any individual.
    (iii) The term genetic information includes--
    (A) With respect to a pregnant woman (or a family member of the 
pregnant woman), genetic information

[[Page 771]]

of any fetus carried by the pregnant woman; and
    (B) With respect to an individual (or a family member of the 
individual) who is utilizing an assisted reproductive technology, 
genetic information of any embryo legally held by the individual or 
family member.
    (4) Genetic services means--
    (i) A genetic test, as defined in paragraph (a)(5) of this section;
    (ii) Genetic counseling (including obtaining, interpreting, or 
assessing genetic information); or
    (iii) Genetic education.
    (5)(i) Genetic test means an analysis of human DNA, RNA, 
chromosomes, proteins, or metabolites, if the analysis detects 
genotypes, mutations, or chromosomal changes. However, a genetic test 
does not include an analysis of proteins or metabolites that is directly 
related to a manifested disease, disorder, or pathological condition. 
Accordingly, a test to determine whether an individual has a BRCA1 or 
BRCA2 variant is a genetic test. Similarly, a test to determine whether 
an individual has a genetic variant associated with hereditary 
nonpolyposis colorectal cancer is a genetic test. However, an HIV test, 
complete blood count, cholesterol test, liver function test, or test for 
the presence of alcohol or drugs is not a genetic test.
    (ii) The rules of this paragraph (a)(5) are illustrated by the 
following example:

    Example. (i) Facts. Individual A is a newborn covered under a group 
health plan. A undergoes a phenylketonuria (PKU) screening, which 
measures the concentration of a metabolite, phenylalanine, in A's blood. 
In PKU, a mutation occurs in the phenylalanine hydroxylase (PAH) gene 
which contains instructions for making the enzyme needed to break down 
the amino acid phenylalanine. Individuals with the mutation, who have a 
deficiency in the enzyme to break down phenylalanine, have high 
concentrations of phenylalanine.
    (ii) Conclusion. In this Example, the PKU screening is a genetic 
test with respect to A because the screening is an analysis of 
metabolites that detects a genetic mutation.

    (6)(i) Manifestation or manifested means, with respect to a disease, 
disorder, or pathological condition, that an individual has been or 
could reasonably be diagnosed with the disease, disorder, or 
pathological condition by a health care professional with appropriate 
training and expertise in the field of medicine involved. For purposes 
of this section, a disease, disorder, or pathological condition is not 
manifested if a diagnosis is based principally on genetic information.
    (ii) The rules of this paragraph (a)(6) are illustrated by the 
following examples:

    Example 1. (i) Facts. Individual A has a family medical history of 
diabetes. A begins to experience excessive sweating, thirst, and 
fatigue. A's physician examines A and orders blood glucose testing 
(which is not a genetic test). Based on the physician's examination, A's 
symptoms, and test results that show elevated levels of blood glucose, 
A's physician diagnoses A as having adult onset diabetes mellitus (Type 
2 diabetes).
    (ii) Conclusion. In this Example 1, A has been diagnosed by a health 
care professional with appropriate training and expertise in the field 
of medicine involved. The diagnosis is not based principally on genetic 
information. Thus, Type 2 diabetes is manifested with respect to A.
    Example 2. (i) Facts. Individual B has several family members with 
colon cancer. One of them underwent genetic testing which detected a 
mutation in the MSH2 gene associated with hereditary nonpolyposis 
colorectal cancer (HNPCC). B's physician, a health care professional 
with appropriate training and expertise in the field of medicine 
involved, recommends that B undergo a targeted genetic test to look for 
the specific mutation found in B's relative to determine if B has an 
elevated risk for cancer. The genetic test with respect to B showed that 
B also carries the mutation and is at increased risk to develop 
colorectal and other cancers associated with HNPCC. B has a colonoscopy 
which indicates no signs of disease, and B has no symptoms.
    (ii) Conclusion. In this Example 2, because B has no signs or 
symptoms of colorectal cancer, B has not been and could not reasonably 
be diagnosed with HNPCC. Thus, HNPCC is not manifested with respect to 
B.
    Example 3. (i) Facts. Same facts as Example 2, except that B's 
colonoscopy and subsequent tests indicate the presence of HNPCC. Based 
on the colonoscopy and subsequent test results, B's physician makes a 
diagnosis of HNPCC.
    (ii) Conclusion. In this Example 3, HNPCC is manifested with respect 
to B because a health care professional with appropriate training and 
expertise in the field of medicine involved has made a diagnosis that is 
not based principally on genetic information.

[[Page 772]]

    Example 4. (i) Facts. Individual C has a family member that has been 
diagnosed with Huntington's Disease. A genetic test indicates that C has 
the Huntington's Disease gene variant. At age 42, C begins suffering 
from occasional moodiness and disorientation, symptoms which are 
associated with Huntington's Disease. C is examined by a neurologist (a 
physician with appropriate training and expertise for diagnosing 
Huntington's Disease). The examination includes a clinical neurological 
exam. The results of the examination do not support a diagnosis of 
Huntington's Disease.
    (ii) Conclusion. In this Example 4, C is not and could not 
reasonably be diagnosed with Huntington's Disease by a health care 
professional with appropriate training and expertise. Therefore, 
Huntington's Disease is not manifested with respect to C.
    Example 5. (i) Facts. Same facts as Example 4, except that C 
exhibits additional neurological and behavioral symptoms, and the 
results of the examination support a diagnosis of Huntington's Disease 
with respect to C.
    (ii) Conclusion. In this Example 5, C could reasonably be diagnosed 
with Huntington's Disease by a health care professional with appropriate 
training and expertise. Therefore, Huntington's Disease is manifested 
with respect to C.

    (7) Underwriting purposes has the meaning given in paragraph (d)(1) 
of this section.
    (b) No group-based discrimination based on genetic information--(1) 
In general. For purposes of this section, a group health plan, and a 
health insurance issuer offering health insurance coverage in connection 
with a group health plan, must not adjust premium or contribution 
amounts for the plan, or any group of similarly situated individuals 
under the plan, on the basis of genetic information. For this purpose, 
``similarly situated individuals'' are those described in 
Sec. 2590.702(d) of this Part.
    (2) Rule of construction. Nothing in paragraph (b)(1) of this 
section (or in paragraph (d)(1) or (d)(2) of this section) limits the 
ability of a health insurance issuer offering health insurance coverage 
in connection with a group health plan to increase the premium for a 
group health plan or a group of similarly situated individuals under the 
plan based on the manifestation of a disease or disorder of an 
individual who is enrolled in the plan. In such a case, however, the 
manifestation of a disease or disorder in one individual cannot also be 
used as genetic information about other group members to further 
increase the premium for a group health plan or a group of similarly 
situated individuals under the plan.
    (3) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan that 
provides coverage through 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 and 
other health status information of the individuals, including genetic 
information. The issuer finds that three individuals covered under the 
plan had unusually high claims experience. In addition, the issuer finds 
that the genetic information of two other individuals indicates the 
individuals have a higher probability of developing certain illnesses 
although the illnesses are not manifested at this time. The issuer 
quotes the plan a higher per-participant rate because of both the 
genetic information and the higher claims experience.
    (ii) Conclusion. In this Example 1, the issuer violates the 
provisions of this paragraph (b) because the issuer adjusts the premium 
based on genetic information. However, if the adjustment related solely 
to claims experience, the adjustment would not violate the requirements 
of this section (nor would it violate the requirements of paragraph (c) 
of Sec. 2590.702 of this Part, which prohibits discrimination in 
individual premiums or contributions based on a health factor but 
permits increases in the group rate based on a health factor).
    Example 2. (i) Facts. An employer sponsors a group health plan that 
provides coverage through 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 and 
other health status information of the individuals, including genetic 
information. The issuer finds that Employee A has made claims for 
treatment of polycystic kidney disease. A also has two dependent 
children covered under the plan. The issuer quotes the plan a higher 
per-participant rate because of both A's claims experience and the 
family medical history of A's children (that is, the fact that A has the 
disease).
    (ii) Conclusion. In this Example 2, the issuer violates the 
provisions of this paragraph (b) because, by taking the likelihood that 
A's children may develop polycystic kidney disease into account in 
computing the rate for the plan, the issuer adjusts the premium based on 
genetic information relating to a

[[Page 773]]

condition that has not been manifested in A's children. However, it is 
permissible for the issuer to increase the premium based on A's claims 
experience.

    (c) Limitation on requesting or requiring genetic testing--(1) 
General rule. Except as otherwise provided in this paragraph (c), a 
group health plan, and a health insurance issuer offering health 
insurance coverage in connection with a group health plan, must not 
request or require an individual or a family member of the individual to 
undergo a genetic test.
    (2) Health care professional may recommend a genetic test. Nothing 
in paragraph (c)(1) of this section limits the authority of a health 
care professional who is providing health care services to an individual 
to request that the individual undergo a genetic test.
    (3) Examples. The rules of paragraphs (c)(1) and (2) of this section 
are illustrated by the following examples:

    Example 1. (i) Facts. Individual A goes to a physician for a routine 
physical examination. The physician reviews A's family medical history 
and A informs the physician that A's mother has been diagnosed with 
Huntington's Disease. The physician advises A that Huntington's Disease 
is hereditary and recommends that A undergo a genetic test.
    (ii) Conclusion. In this Example 1, the physician is a health care 
professional who is providing health care services to A. Therefore, the 
physician's recommendation that A undergo the genetic test does not 
violate this paragraph (c).
    Example 2. (i) Facts. Individual B is covered by a health 
maintenance organization (HMO). B is a child being treated for leukemia. 
B's physician, who is employed by the HMO, is considering a treatment 
plan that includes six-mercaptopurine, a drug for treating leukemia in 
most children. However, the drug could be fatal if taken by a small 
percentage of children with a particular gene variant. B's physician 
recommends that B undergo a genetic test to detect this variant before 
proceeding with this course of treatment.
    (ii) Conclusion. In this Example 2, even though the physician is 
employed by the HMO, the physician is nonetheless a health care 
professional who is providing health care services to B. Therefore, the 
physician's recommendation that B undergo the genetic test does not 
violate this paragraph (c).

    (4) Determination regarding payment. (i) In general. As provided in 
this paragraph (c)(4), nothing in paragraph (c)(1) of this section 
precludes a plan or issuer from obtaining and using the results of a 
genetic test in making a determination regarding payment. For this 
purpose, ``payment'' has the meaning given such term in 45 CFR 164.501 
of the privacy regulations issued under the Health Insurance Portability 
and Accountability Act. Thus, if a plan or issuer conditions payment for 
an item or service based on its medical appropriateness and the medical 
appropriateness of the item or service depends on the genetic makeup of 
a patient, then the plan or issuer is permitted to condition payment for 
the item or service on the outcome of a genetic test. The plan or issuer 
may also refuse payment if the patient does not undergo the genetic 
test.
    (ii) Limitation. A plan or issuer is permitted to request only the 
minimum amount of information necessary to make a determination 
regarding payment. The minimum amount of information necessary is 
determined in accordance with the minimum necessary standard in 45 CFR 
164.502(b) of the privacy regulations issued under the Health Insurance 
Portability and Accountability Act.
    (iii) Examples. See paragraph (e) of this section for examples 
illustrating the rules of this paragraph (c)(4), as well as other 
provisions of this section.
    (5) Research exception. Notwithstanding paragraph (c)(1) of this 
section, a plan or issuer may request, but not require, that a 
participant or beneficiary undergo a genetic test if all of the 
conditions of this paragraph (c)(5) are met:
    (i) Research in accordance with Federal regulations and applicable 
State or local law or regulations. The plan or issuer makes the request 
pursuant to research, as defined in 45 CFR 46.102(d), that complies with 
45 CFR Part 46 or equivalent Federal regulations, and any applicable 
State or local law or regulations for the protection of human subjects 
in research.
    (ii) Written request for participation in research. The plan or 
issuer makes the request in writing, and the request clearly indicates 
to each participant or beneficiary (or, in the case of a minor child, to 
the legal guardian of the beneficiary) that--

[[Page 774]]

    (A) Compliance with the request is voluntary; and
    (B) Noncompliance will have no effect on eligibility for benefits 
(as described in Sec. 2590.702(b)(1) of this Part) or premium or 
contribution amounts.
    (iii) Prohibition on underwriting. No genetic information collected 
or acquired under this paragraph (c)(5) can be used for underwriting 
purposes (as described in paragraph (d)(1) of this section).
    (iv) Notice to Federal agencies. The plan or issuer completes a copy 
of the ``Notice of Research Exception under the Genetic Information 
Nondiscrimination Act'' authorized by the Secretary and provides the 
notice to the address specified in the instructions thereto.
    (d) Prohibitions on collection of genetic information--(1) For 
underwriting purposes--(i) General rule. A group health plan, and a 
health insurance issuer offering health insurance coverage in connection 
with a group health plan, must not collect (as defined in paragraph 
(a)(1) of this section) genetic information for underwriting purposes. 
See paragraph (e) of this section for examples illustrating the rules of 
this paragraph (d)(1), as well as other provisions of this section.
    (ii) Underwriting purposes defined. Subject to paragraph (d)(1)(iii) 
of this section, underwriting purposes means, with respect to any group 
health plan, or health insurance coverage offered in connection with a 
group health plan--
    (A) Rules for, or determination of, eligibility (including 
enrollment and continued eligibility) for benefits under the plan or 
coverage as described in Sec. 2590.702(b)(1)(ii) of this Part (including 
changes in deductibles or other cost-sharing mechanisms in return for 
activities such as completing a health risk assessment or participating 
in a wellness program);
    (B) The computation of premium or contribution amounts under the 
plan or coverage (including discounts, rebates, payments in kind, or 
other premium differential mechanisms in return for activities such as 
completing a health risk assessment or participating in a wellness 
program);
    (C) The application of any preexisting condition exclusion under the 
plan or coverage; and
    (D) Other activities related to the creation, renewal, or 
replacement of a contract of health insurance or health benefits.
    (iii) Medical appropriateness. If an individual seeks a benefit 
under a group health plan or health insurance coverage, the plan or 
coverage may limit or exclude the benefit based on whether the benefit 
is medically appropriate, and the determination of whether the benefit 
is medically appropriate is not within the meaning of underwriting 
purposes. Accordingly, if an individual seeks a benefit under the plan 
and the plan or issuer conditions the benefit based on its medical 
appropriateness and the medical appropriateness of the benefit depends 
on genetic information of the individual, then the plan or issuer is 
permitted to condition the benefit on the genetic information. A plan or 
issuer is permitted to request only the minimum amount of genetic 
information necessary to determine medical appropriateness. The plan or 
issuer may deny the benefit if the patient does not provide the genetic 
information required to determine medical appropriateness. If an 
individual is not seeking a benefit, the medical appropriateness 
exception of this paragraph (d)(1)(iii) to the definition of 
underwriting purposes does not apply. See paragraph (e) of this section 
for examples illustrating the medical appropriateness provisions of this 
paragraph (d)(1)(iii), as well as other provisions of this section.
    (2) Prior to or in connection with enrollment. (i) In general. A 
group health plan, and a health insurance issuer offering health 
insurance coverage in connection with a group health plan, must not 
collect genetic information with respect to any individual prior to that 
individual's effective date of coverage under that plan or coverage, nor 
in connection with the rules for eligibility (as defined in 
Sec. 2590.702(b)(1)(ii) of this Part) that apply to that individual. 
Whether or not an individual's information is collected prior to that 
individual's effective date of coverage is determined at the time of 
collection.

[[Page 775]]

    (ii) Incidental collection exception--(A) In general. If a group 
health plan, or a health insurance issuer offering health insurance 
coverage in connection with a group health plan, obtains genetic 
information incidental to the collection of other information concerning 
any individual, the collection is not a violation of this paragraph 
(d)(2), as long as the collection is not for underwriting purposes in 
violation of paragraph (d)(1) of this section.
    (B) Limitation. The incidental collection exception of this 
paragraph (d)(2)(ii) does not apply in connection with any collection 
where it is reasonable to anticipate that health information will be 
received, unless the collection explicitly states that genetic 
information should not be provided.
    (3) Examples. The rules of this paragraph (d) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan provides a premium 
reduction to enrollees who complete a health risk assessment. The health 
risk assessment is requested to be completed after enrollment. Whether 
or not it is completed or what responses are given on it has no effect 
on an individual's enrollment status, or on the enrollment status of 
members of the individual's family. The health risk assessment includes 
questions about the individual's family medical history.
    (ii) Conclusion. In this Example 1, the health risk assessment 
includes a request for genetic information (that is, the individual's 
family medical history). Because completing the health risk assessment 
results in a premium reduction, the request for genetic information is 
for underwriting purposes. Consequently, the request violates the 
prohibition on the collection of genetic information in paragraph (d)(1) 
of this section.
    Example 2. (i) Facts. The same facts as Example 1, except there is 
no premium reduction or any other reward for completing the health risk 
assessment.
    (ii) Conclusion. In this Example 2, the request is not for 
underwriting purposes, nor is it prior to or in connection with 
enrollment. Therefore, it does not violate the prohibition on the 
collection of genetic information in this paragraph (d).
    Example 3. (i) Facts. A group health plan requests that enrollees 
complete a health risk assessment prior to enrollment, and includes 
questions about the individual's family medical history. There is no 
reward or penalty for completing the health risk assessment.
    (ii) Conclusion. In this Example 3, because the health risk 
assessment includes a request for genetic information (that is, the 
individual's family medical history), and requests the information prior 
to enrollment, the request violates the prohibition on the collection of 
genetic information in paragraph (d)(2) of this section. Moreover, 
because it is a request for genetic information, it is not an incidental 
collection under paragraph (d)(2)(ii) of this section.
    Example 4. (i) Facts. The facts are the same as in Example 1, except 
there is no premium reduction or any other reward given for completion 
of the health risk assessment. However, certain people completing the 
health risk assessment may become eligible for additional benefits under 
the plan by being enrolled in a disease management program based on 
their answers to questions about family medical history. Other people 
may become eligible for the disease management program based solely on 
their answers to questions about their individual medical history.
    (ii) Conclusion. In this Example 4, the request for information 
about an individual's family medical history could result in the 
individual being eligible for benefits for which the individual would 
not otherwise be eligible. Therefore, the questions about family medical 
history on the health risk assessment are a request for genetic 
information for underwriting purposes and are prohibited under this 
paragraph (d). Although the plan conditions eligibility for the disease 
management program based on determinations of medical appropriateness, 
the exception for determinations of medical appropriateness does not 
apply because the individual is not seeking benefits.
    Example 5. (i) Facts. A group health plan requests enrollees to 
complete two distinct health risk assessments (HRAs) after and unrelated 
to enrollment. The first HRA instructs the individual to answer only for 
the individual and not for the individual's family. The first HRA does 
not ask about any genetic tests the individual has undergone or any 
genetic services the individual has received. The plan offers a reward 
for completing the first HRA. The second HRA asks about family medical 
history and the results of genetic tests the individual has undergone. 
The plan offers no reward for completing the second HRA and the 
instructions make clear that completion of the second HRA is wholly 
voluntary and will not affect the reward given for completion of the 
first HRA.
    (ii) Conclusion. In this Example 5, no genetic information is 
collected in connection with the first HRA, which offers a reward, and 
no benefits or other rewards are conditioned on the request for genetic 
information in the second HRA. Consequently, the request for genetic 
information in the second HRA is not for underwriting purposes, and the 
two HRAs do not violate the prohibition

[[Page 776]]

on the collection of genetic information in this paragraph (d).
    Example 6. (i) Facts. A group health plan waives its annual 
deductible for enrollees who complete an HRA. The HRA is requested to be 
completed after enrollment. Whether or not the HRA is completed or what 
responses are given on it has no effect on an individual's enrollment 
status, or on the enrollment status of members of the individual's 
family. The HRA does not include any direct questions about the 
individual's genetic information (including family medical history). 
However, the last question reads, ``Is there anything else relevant to 
your health that you would like us to know or discuss with you?''
    (ii) Conclusion. In this Example 6, the plan's request for medical 
information does not explicitly state that genetic information should 
not be provided. Therefore, any genetic information collected in 
response to the question is not within the incidental collection 
exception and is prohibited under this paragraph (d).
    Example 7. (i) Facts. Same facts as Example 6, except that the last 
question goes on to state, ``In answering this question, you should not 
include any genetic information. That is, please do not include any 
family medical history or any information related to genetic testing, 
genetic services, genetic counseling, or genetic diseases for which you 
believe you may be at risk.''
    (ii) Conclusion. In this Example 7, the plan's request for medical 
information explicitly states that genetic information should not be 
provided. Therefore, any genetic information collected in response to 
the question is within the incidental collection exception. However, the 
plan may not use any genetic information it obtains incidentally for 
underwriting purposes.
    Example 8. (i) Facts. Issuer M acquires Issuer N. M requests N's 
records, stating that N should not provide genetic information and 
should review the records to excise any genetic information. N assembles 
the data requested by M and, although N reviews it to delete genetic 
information, the data from a specific region included some individuals' 
family medical history. Consequently, M receives genetic information 
about some of N's covered individuals.
    (ii) Conclusion. In this Example 8, M's request for health 
information explicitly stated that genetic information should not be 
provided. Therefore, the collection of genetic information was within 
the incidental collection exception. However, M may not use the genetic 
information it obtained incidentally for underwriting purposes.

    (e) Examples regarding determinations of medical appropriateness. 
The application of the rules of paragraphs (c) and (d) of this section 
to plan or issuer determinations of medical appropriateness is 
illustrated by the following examples:

    Example 1. (i) Facts. Individual A's group health plan covers 
genetic testing for celiac disease for individuals who have family 
members with this condition. After A's son is diagnosed with celiac 
disease, A undergoes a genetic test and promptly submits a claim for the 
test to A's issuer for reimbursement. The issuer asks A to provide the 
results of the genetic test before the claim is paid.
    (ii) Conclusion. In this Example 1, under the rules of paragraph 
(c)(4) of this section the issuer is permitted to request only the 
minimum amount of information necessary to make a decision regarding 
payment. Because the results of the test are not necessary for the 
issuer to make a decision regarding the payment of A's claim, the 
issuer's request for the results of the genetic test violates paragraph 
(c) of this section.
    Example 2. (i) Facts. Individual B's group health plan covers a 
yearly mammogram for participants and beneficiaries starting at age 40, 
or at age 30 for those with increased risk for breast cancer, including 
individuals with BRCA1 or BRCA2 gene mutations. B is 33 years old and 
has the BRCA2 mutation. B undergoes a mammogram and promptly submits a 
claim to B's plan for reimbursement. Following an established policy, 
the plan asks B for evidence of increased risk of breast cancer, such as 
the results of a genetic test or a family history of breast cancer, 
before the claim for the mammogram is paid. This policy is applied 
uniformly to all similarly situated individuals and is not directed at 
individuals based on any genetic information.
    (ii) Conclusion. In this Example 2, the plan does not violate 
paragraphs (c) or (d) of this section. Under paragraph (c), the plan is 
permitted to request and use the results of a genetic test to make a 
determination regarding payment, provided the plan requests only the 
minimum amount of information necessary. Because the medical 
appropriateness of the mammogram depends on the genetic makeup of the 
patient, the minimum amount of information necessary includes the 
results of the genetic test. Similarly, the plan does not violate 
paragraph (d) of this section because the plan is permitted to request 
genetic information in making a determination regarding the medical 
appropriateness of a claim if the genetic information is necessary to 
make the determination (and if the genetic information is not used for 
underwriting purposes).
    Example 3. (i) Facts. Individual C was previously diagnosed with and 
treated for breast cancer, which is currently in remission. In 
accordance with the recommendation of C's physician, C has been taking a 
regular dose of tamoxifen to help prevent a recurrence.

[[Page 777]]

C's group health plan adopts a new policy requiring patients taking 
tamoxifen to undergo a genetic test to ensure that tamoxifen is 
medically appropriate for their genetic makeup. In accordance with, at 
the time, the latest scientific research, tamoxifen is not helpful in up 
to 7 percent of breast cancer patients, those with certain variations of 
the gene for making the CYP2D6 enzyme. If a patient has a 
gene variant making tamoxifen not medically appropriate, the plan does 
not pay for the tamoxifen prescription.
    (ii) Conclusion. In this Example 3, the plan does not violate 
paragraph (c) of this section if it conditions future payments for the 
tamoxifen prescription on C's undergoing a genetic test to determine 
what genetic markers C has for making the CYP2D6 enzyme. Nor 
does the plan violate paragraph (c) of this section if the plan refuses 
future payment if the results of the genetic test indicate that 
tamoxifen is not medically appropriate for C.
    Example 4. (i) Facts. A group health plan offers a diabetes disease 
management program to all similarly situated individuals for whom it is 
medically appropriate based on whether the individuals have or are at 
risk for diabetes. The program provides enhanced benefits related only 
to diabetes for individuals who qualify for the program. The plan sends 
out a notice to all participants that describes the diabetes disease 
management program and explains the terms for eligibility. Individuals 
interested in enrolling in the program are advised to contact the plan 
to demonstrate that they have diabetes or that they are at risk for 
diabetes. For individuals who do not currently have diabetes, genetic 
information may be used to demonstrate that an individual is at risk.
    (ii) Conclusion. In this Example 4, the plan may condition benefits 
under the disease management program upon a showing by an individual 
that the individual is at risk for diabetes, even if such showing may 
involve genetic information, provided that the plan requests genetic 
information only when necessary to make a determination regarding 
whether the disease management program is medically appropriate for the 
individual and only requests the minimum amount of information necessary 
to make that determination.
    Example 5. (i) Facts. Same facts as Example 4, except that the plan 
includes a questionnaire that asks about the occurrence of diabetes in 
members of the individual's family as part of the notice describing the 
disease management program.
    (ii) Conclusion. In this Example 5, the plan violates the 
requirements of paragraph (d)(1) of this section because the requests 
for genetic information are not limited to those situations in which it 
is necessary to make a determination regarding whether the disease 
management program is medically appropriate for the individuals.
    Example 6. (i) Facts. Same facts as Example 4, except the disease 
management program provides an enhanced benefit in the form of a lower 
annual deductible to individuals under the program; the lower deductible 
applies with respect to all medical expenses incurred by the individual. 
Thus, whether or not a claim relates to diabetes, the individual is 
provided with a lower deductible based on the individual providing the 
plan with genetic information.
    (ii) Conclusion. In this Example 6, because the enhanced benefits 
include benefits not related to the determination of medical 
appropriateness, making available the enhanced benefits is within the 
meaning of underwriting purposes. Accordingly, the plan may not request 
or require genetic information (including family history information) in 
determining eligibility for enhanced benefits under the program because 
such a request would be for underwriting purposes and would violate 
paragraph (d)(1) of this section.
    (f) Applicability date. This section applies for plan years 
beginning on or after December 7, 2009.

[74 FR 51683, Oct. 7, 2009]



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, unless otherwise noted. 
Redesignated at 65 FR 62142, Dec. 27, 2000.



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

[[Page 778]]

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) Facts. A pregnant woman covered under a group health 
plan goes into labor and is admitted to the hospital at 10 p.m. on June 
11. She gives birth by vaginal delivery at 6 a.m. on June 12.
    (ii) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 is 
prohibited from requiring that a physician or other health care provider 
obtain authorization from the plan or issuer for prescribing the 
hospital length of stay specified in 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) Facts. In the case of a delivery by cesarean 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) Conclusion. 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 cesarean 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. Therefore, a plan, hospital, managed care organization, 
or other issuer is not an attending provider.
    (iv) Example. The rules of this paragraph (a)(5) are illustrated by 
the following example:

    Example. (i) Facts. 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 cesarean section. On the 
third day after the delivery, the attending provider for the

[[Page 779]]

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) Conclusion. 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.
    (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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 
specified in 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) Facts. 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 cesarean 
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) Conclusion. 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, 
the requirement to obtain precertification from the plan based on 
medical necessity for a hospital length of stay within the 96-hour 
period 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

[[Page 780]]

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 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 specified in 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) (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 cesarean 
section.
    (ii) The state law requires the coverage to provide for maternity 
and pediatric care in accordance with guidelines that relate to care 
following childbirth 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

[[Page 781]]

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 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) Facts. 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 cesarean section.
    (ii) Conclusion. 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) Facts. 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 and 
pediatric care in accordance with guidelines that relate to care 
following childbirth established by the American College of 
Obstetricians and Gynecologists and the American Academy of Pediatrics.
    (ii) Conclusion. 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) Applicability date. 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, 2009.

[73 FR 62422, Oct. 20, 2008]



Sec. 2590.712  Parity in mental health and substance use disorder
benefits.

    (a) Meaning of terms. For purposes of this section, except where the 
context clearly indicates otherwise, the following terms have the 
meanings indicated:
    Aggregate lifetime dollar limit means a dollar limitation on the 
total amount of specified benefits that may be paid under a group health 
plan (or health insurance coverage offered in connection with such a 
plan) for any coverage unit.
    Annual dollar limit means a dollar limitation on the total amount of 
specified benefits that may be paid in a 12-month period under a group 
health plan (or health insurance coverage offered in connection with 
such a plan) for any coverage unit.
    Coverage unit means coverage unit as described in paragraph 
(c)(1)(iv) of this section.
    Cumulative financial requirements are financial requirements that 
determine whether or to what extent benefits are provided based on 
accumulated amounts and include deductibles and out-of-pocket maximums. 
(However, cumulative financial requirements do not include aggregate 
lifetime or annual dollar limits because these two terms are excluded 
from the meaning of financial requirements.)
    Cumulative quantitative treatment limitations are treatment 
limitations that

[[Page 782]]

determine whether or to what extent benefits are provided based on 
accumulated amounts, such as annual or lifetime day or visit limits.
    Financial requirements include deductibles, copayments, coinsurance, 
or out-of-pocket maximums. Financial requirements do not include 
aggregate lifetime or annual dollar limits.
    Medical/surgical benefits means benefits with respect to items or 
services for medical conditions or surgical procedures, as defined under 
the terms of the plan or health insurance coverage and in accordance 
with applicable Federal and State law, but does not include mental 
health or substance use disorder benefits. Any condition defined by the 
plan or coverage as being or as not being a medical/surgical condition 
must be defined to be consistent with generally recognized independent 
standards of current medical practice (for example, the most current 
version of the International Classification of Diseases (ICD) or State 
guidelines).
    Mental health benefits means benefits with respect to items or 
services for mental health conditions, as defined under the terms of the 
plan or health insurance coverage and in accordance with applicable 
Federal and State law. Any condition defined by the plan or coverage as 
being or as not being a mental health condition must be defined to be 
consistent with generally recognized independent standards of current 
medical practice (for example, the most current version of the 
Diagnostic and Statistical Manual of Mental Disorders (DSM), the most 
current version of the ICD, or State guidelines).
    Substance use disorder benefits means benefits with respect to items 
or services for substance use disorders, as defined under the terms of 
the plan or health insurance coverage and in accordance with applicable 
Federal and State law. Any disorder defined by the plan as being or as 
not being a substance use disorder must be defined to be consistent with 
generally recognized independent standards of current medical practice 
(for example, the most current version of the DSM, the most current 
version of the ICD, or State guidelines).
    Treatment limitations include limits on benefits based on the 
frequency of treatment, number of visits, days of coverage, days in a 
waiting period, or other similar limits on the scope or duration of 
treatment. Treatment limitations include both quantitative treatment 
limitations, which are expressed numerically (such as 50 outpatient 
visits per year), and nonquantitative treatment limitations, which 
otherwise limit the scope or duration of benefits for treatment under a 
plan or coverage. (See paragraph (c)(4)(ii) of this section for an 
illustrative list of nonquantitative treatment limitations.) A permanent 
exclusion of all benefits for a particular condition or disorder, 
however, is not a treatment limitation for purposes of this definition.
    (b) Parity requirements with respect to aggregate lifetime and 
annual dollar limits. This paragraph (b) details the application of the 
parity requirements with respect to aggregate lifetime and annual dollar 
limits. This paragraph (b) does not address the provisions of PHS Act 
section 2711, as incorporated in ERISA section 715 and Code section 
9815, which prohibit imposing lifetime and annual limits on the dollar 
value of essential health benefits. For more information, see 29 CFR 
2590.715-2711.
    (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 or substance use disorder benefits must comply with 
paragraph (b)(2), (b)(3), or (b)(5) of this section.
    (ii) Exception. The rule in paragraph (b)(1)(i) of this section does 
not apply if a plan (or health insurance coverage) satisfies the 
requirements of paragraph (f) or (g) of this section (relating to 
exemptions for small employers and for increased cost).
    (2) Plan with no limit or limits on less than one-third of all 
medical/surgical benefits. If a plan (or health insurance coverage) does 
not include an aggregate lifetime or annual dollar limit on any medical/
surgical benefits or includes an aggregate lifetime or annual dollar 
limit that applies to less than one-third of all medical/surgical 
benefits, it may not impose an aggregate lifetime

[[Page 783]]

or annual dollar limit, respectively, on mental health or substance use 
disorder benefits.
    (3) Plan with a limit on at least two-thirds of all medical/surgical 
benefits. If a plan (or health insurance coverage) includes an aggregate 
lifetime or annual dollar limit on at least two-thirds of all medical/
surgical benefits, it must either--
    (i) Apply the aggregate lifetime or annual dollar limit both to the 
medical/surgical benefits to which the limit would otherwise apply and 
to mental health or substance use disorder benefits in a manner that 
does not distinguish between the medical/surgical benefits and mental 
health or substance use disorder benefits; or
    (ii) Not include an aggregate lifetime or annual dollar limit on 
mental health or substance use disorder benefits that is less than the 
aggregate lifetime or annual dollar limit, respectively, on medical/
surgical benefits. (For cumulative limits other than aggregate lifetime 
or annual dollar limits, see paragraph (c)(3)(v) of this section 
prohibiting separately accumulating cumulative financial requirements or 
cumulative quantitative treatment limitations.)
    (4) 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 an aggregate 
lifetime or annual dollar 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 dollar limits). Any reasonable method may be used to 
determine whether the dollar amount 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.
    (5) Plan not described in paragraph (b)(2) or (b)(3) of this 
section--(i) In general. A group health plan (or health insurance 
coverage) that is not described in paragraph (b)(2) or (b)(3) of this 
section with respect to aggregate lifetime or annual dollar limits on 
medical/surgical benefits, must either--
    (A) Impose no aggregate lifetime or annual dollar limit, as 
appropriate, on mental health or substance use disorder benefits; or
    (B) Impose an aggregate lifetime or annual dollar limit on mental 
health or substance use disorder 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 dollar 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)(5)(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 dollar 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)(5), the weighting 
applicable to any category of medical/surgical benefits is determined in 
the manner set forth in paragraph (b)(4) of this section for determining 
one-third or two-thirds of all medical/surgical benefits.
    (c) Parity requirements with respect to financial requirements and 
treatment limitations--(1) Clarification of terms--(i) Classification of 
benefits. When reference is made in this paragraph (c) to a 
classification of benefits, the term ``classification'' means a 
classification as described in paragraph (c)(2)(ii) of this section.
    (ii) Type of financial requirement or treatment limitation. When 
reference is made in this paragraph (c) to a type of financial 
requirement or treatment limitation, the reference to type means its 
nature. Different types of financial

[[Page 784]]

requirements include deductibles, copayments, coinsurance, and out-of-
pocket maximums. Different types of quantitative treatment limitations 
include annual, episode, and lifetime day and visit limits. See 
paragraph (c)(4)(ii) of this section for an illustrative list of 
nonquantitative treatment limitations.
    (iii) Level of a type of financial requirement or treatment 
limitation. When reference is made in this paragraph (c) to a level of a 
type of financial requirement or treatment limitation, level refers to 
the magnitude of the type of financial requirement or treatment 
limitation. For example, different levels of coinsurance include 20 
percent and 30 percent; different levels of a copayment include $15 and 
$20; different levels of a deductible include $250 and $500; and 
different levels of an episode limit include 21 inpatient days per 
episode and 30 inpatient days per episode.
    (iv) Coverage unit. When reference is made in this paragraph (c) to 
a coverage unit, coverage unit refers to the way in which a plan (or 
health insurance coverage) groups individuals for purposes of 
determining benefits, or premiums or contributions. For example, 
different coverage units include self-only, family, and employee-plus-
spouse.
    (2) General parity requirement--(i) General rule. 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 or substance use disorder benefits may not apply any 
financial requirement or treatment limitation to mental health or 
substance use disorder benefits in any classification that is more 
restrictive than the predominant financial requirement or treatment 
limitation of that type applied to substantially all medical/surgical 
benefits in the same classification. Whether a financial requirement or 
treatment limitation is a predominant financial requirement or treatment 
limitation that applies to substantially all medical/surgical benefits 
in a classification is determined separately for each type of financial 
requirement or treatment limitation. The application of the rules of 
this paragraph (c)(2) to financial requirements and quantitative 
treatment limitations is addressed in paragraph (c)(3) of this section; 
the application of the rules of this paragraph (c)(2) to nonquantitative 
treatment limitations is addressed in paragraph (c)(4) of this section.
    (ii) Classifications of benefits used for applying rules--(A) In 
general. If a plan (or health insurance coverage) provides mental health 
or substance use disorder benefits in any classification of benefits 
described in this paragraph (c)(2)(ii), mental health or substance use 
disorder benefits must be provided in every classification in which 
medical/surgical benefits are provided. In determining the 
classification in which a particular benefit belongs, a plan (or health 
insurance issuer) must apply the same standards to medical/surgical 
benefits and to mental health or substance use disorder benefits. To the 
extent that a plan (or health insurance coverage) provides benefits in a 
classification and imposes any separate financial requirement or 
treatment limitation (or separate level of a financial requirement or 
treatment limitation) for benefits in the classification, the rules of 
this paragraph (c) apply separately with respect to that classification 
for all financial requirements or treatment limitations (illustrated in 
examples in paragraph (c)(2)(ii)(C) of this section). The following 
classifications of benefits are the only classifications used in 
applying the rules of this paragraph (c):
    (1) Inpatient, in-network. Benefits furnished on an inpatient basis 
and within a network of providers established or recognized under a plan 
or health insurance coverage. See special rules for plans with multiple 
network tiers in paragraph (c)(3)(iii) of this section.
    (2) Inpatient, out-of-network. Benefits furnished on an inpatient 
basis and outside any network of providers established or recognized 
under a plan or health insurance coverage. This classification includes 
inpatient benefits under a plan (or health insurance coverage) that has 
no network of providers.
    (3) Outpatient, in-network. Benefits furnished on an outpatient 
basis and within a network of providers established or recognized under 
a plan or health insurance coverage. See special

[[Page 785]]

rules for office visits and plans with multiple network tiers in 
paragraph (c)(3)(iii) of this section.
    (4) Outpatient, out-of-network. Benefits furnished on an outpatient 
basis and outside any network of providers established or recognized 
under a plan or health insurance coverage. This classification includes 
outpatient benefits under a plan (or health insurance coverage) that has 
no network of providers. See special rules for office visits in 
paragraph (c)(3)(iii) of this section.
    (5) Emergency care. Benefits for emergency care.
    (6) Prescription drugs. Benefits for prescription drugs. See special 
rules for multi-tiered prescription drug benefits in paragraph 
(c)(3)(iii) of this section.
    (B) Application to out-of-network providers. See paragraph 
(c)(2)(ii)(A) of this section, under which a plan (or health insurance 
coverage) that provides mental health or substance use disorder benefits 
in any classification of benefits must provide mental health or 
substance use disorder benefits in every classification in which 
medical/surgical benefits are provided, including out-of-network 
classifications.
    (C) Examples. The rules of this paragraph (c)(2)(ii) are illustrated 
by the following examples. In each example, the group health plan is 
subject to the requirements of this section and provides both medical/
surgical benefits and mental health and substance use disorder benefits.

    Example 1. (i) Facts. A group health plan offers inpatient and 
outpatient benefits and does not contract with a network of providers. 
The plan imposes a $500 deductible on all benefits. For inpatient 
medical/surgical benefits, the plan imposes a coinsurance requirement. 
For outpatient medical/surgical benefits, the plan imposes copayments. 
The plan imposes no other financial requirements or treatment 
limitations.
    (ii) Conclusion. In this Example 1, because the plan has no network 
of providers, all benefits provided are out-of-network. Because 
inpatient, out-of-network medical/surgical benefits are subject to 
separate financial requirements from outpatient, out-of-network medical/
surgical benefits, the rules of this paragraph (c) apply separately with 
respect to any financial requirements and treatment limitations, 
including the deductible, in each classification.
    Example 2. (i) Facts. A plan imposes a $500 deductible on all 
benefits. The plan has no network of providers. The plan generally 
imposes a 20 percent coinsurance requirement with respect to all 
benefits, without distinguishing among inpatient, outpatient, emergency 
care, or prescription drug benefits. The plan imposes no other financial 
requirements or treatment limitations.
    (ii) Conclusion. In this Example 2, because the plan does not impose 
separate financial requirements (or treatment limitations) based on 
classification, the rules of this paragraph (c) apply with respect to 
the deductible and the coinsurance across all benefits.
    Example 3. (i) Facts. Same facts as Example 2, except the plan 
exempts emergency care benefits from the 20 percent coinsurance 
requirement. The plan imposes no other financial requirements or 
treatment limitations.
    (ii) Conclusion. In this Example 3, because the plan imposes 
separate financial requirements based on classifications, the rules of 
this paragraph (c) apply with respect to the deductible and the 
coinsurance separately for--
    (A) Benefits in the emergency care classification; and
    (B) All other benefits.
    Example 4. (i) Facts. Same facts as Example 2, except the plan also 
imposes a preauthorization requirement for all inpatient treatment in 
order for benefits to be paid. No such requirement applies to outpatient 
treatment.
    (ii) Conclusion. In this Example 4, because the plan has no network 
of providers, all benefits provided are out-of-network. Because the plan 
imposes a separate treatment limitation based on classifications, the 
rules of this paragraph (c) apply with respect to the deductible and 
coinsurance separately for--
    (A) Inpatient, out-of-network benefits; and
    (B) All other benefits.

    (3) Financial requirements and quantitative treatment limitations--
(i) Determining ``substantially all'' and ``predominant''--(A) 
Substantially all. For purposes of this paragraph (c), a type of 
financial requirement or quantitative treatment limitation is considered 
to apply to substantially all medical/surgical benefits in a 
classification of benefits if it applies to at least two-thirds of all 
medical/surgical benefits in that classification. (For this purpose, 
benefits expressed as subject to a zero level of a type of financial 
requirement are treated as benefits not subject to that type of 
financial requirement, and benefits expressed as subject to a 
quantitative treatment limitation that is unlimited are treated as 
benefits not subject to that type of quantitative

[[Page 786]]

treatment limitation.) If a type of financial requirement or 
quantitative treatment limitation does not apply to at least two-thirds 
of all medical/surgical benefits in a classification, then that type 
cannot be applied to mental health or substance use disorder benefits in 
that classification.
    (B) Predominant--(1) If a type of financial requirement or 
quantitative treatment limitation applies to at least two-thirds of all 
medical/surgical benefits in a classification as determined under 
paragraph (c)(3)(i)(A) of this section, the level of the financial 
requirement or quantitative treatment limitation that is considered the 
predominant level of that type in a classification of benefits is the 
level that applies to more than one-half of medical/surgical benefits in 
that classification subject to the financial requirement or quantitative 
treatment limitation.
    (2) If, with respect to a type of financial requirement or 
quantitative treatment limitation that applies to at least two-thirds of 
all medical/surgical benefits in a classification, there is no single 
level that applies to more than one-half of medical/surgical benefits in 
the classification subject to the financial requirement or quantitative 
treatment limitation, the plan (or health insurance issuer) may combine 
levels until the combination of levels applies to more than one-half of 
medical/surgical benefits subject to the financial requirement or 
quantitative treatment limitation in the classification. The least 
restrictive level within the combination is considered the predominant 
level of that type in the classification. (For this purpose, a plan may 
combine the most restrictive levels first, with each less restrictive 
level added to the combination until the combination applies to more 
than one-half of the benefits subject to the financial requirement or 
treatment limitation.)
    (C) Portion based on plan payments. For purposes of this paragraph 
(c), the determination of the portion of medical/surgical benefits in a 
classification of benefits subject to a financial requirement or 
quantitative treatment limitation (or subject to any level of a 
financial requirement or quantitative treatment limitation) is based on 
the dollar amount of all plan payments for medical/surgical benefits in 
the classification 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 financial requirement or 
quantitative treatment limitation).
    (D) Clarifications for certain threshold requirements. For any 
deductible, the dollar amount of plan payments includes all plan 
payments with respect to claims that would be subject to the deductible 
if it had not been satisfied. For any out-of-pocket maximum, the dollar 
amount of plan payments includes all plan payments associated with out-
of-pocket payments that are taken into account towards the out-of-pocket 
maximum as well as all plan payments associated with out-of-pocket 
payments that would have been made towards the out-of-pocket maximum if 
it had not been satisfied. Similar rules apply for any other thresholds 
at which the rate of plan payment changes. (See also PHS Act section 
2707(b) and Affordable Care Act section 1302(c), which establish 
limitations on annual deductibles for non-grandfathered health plans in 
the small group market and annual limitations on out-of-pocket maximums 
for all non-grandfathered health plans.)
    (E) Determining the dollar amount of plan payments. Subject to 
paragraph (c)(3)(i)(D) of this section, any reasonable method may be 
used to determine the dollar amount expected to be paid under a plan for 
medical/surgical benefits subject to a financial requirement or 
quantitative treatment limitation (or subject to any level of a 
financial requirement or quantitative treatment limitation).
    (ii) Application to different coverage units. If a plan (or health 
insurance coverage) applies different levels of a financial requirement 
or quantitative treatment limitation to different coverage units in a 
classification of medical/surgical benefits, the predominant level that 
applies to substantially all medical/surgical benefits in the 
classification is determined separately for each coverage unit.
    (iii) Special rules--(A) Multi-tiered prescription drug benefits. If 
a plan (or health insurance coverage) applies different levels of 
financial requirements

[[Page 787]]

to different tiers of prescription drug benefits based on reasonable 
factors determined in accordance with the rules in paragraph (c)(4)(i) 
of this section (relating to requirements for nonquantitative treatment 
limitations) and without regard to whether a drug is generally 
prescribed with respect to medical/surgical benefits or with respect to 
mental health or substance use disorder benefits, the plan (or health 
insurance coverage) satisfies the parity requirements of this paragraph 
(c) with respect to prescription drug benefits. Reasonable factors 
include cost, efficacy, generic versus brand name, and mail order versus 
pharmacy pick-up.
    (B) Multiple network tiers. If a plan (or health insurance coverage) 
provides benefits through multiple tiers of in-network providers (such 
as an in-network tier of preferred providers with more generous cost-
sharing to participants than a separate in-network tier of participating 
providers), the plan may divide its benefits furnished on an in-network 
basis into sub-classifications that reflect network tiers, if the 
tiering is based on reasonable factors determined in accordance with the 
rules in paragraph (c)(4)(i) of this section (such as quality, 
performance, and market standards) and without regard to whether a 
provider provides services with respect to medical/surgical benefits or 
mental health or substance use disorder benefits. After the sub-
classifications are established, the plan or issuer may not impose any 
financial requirement or treatment limitation on mental health or 
substance use disorder benefits in any sub-classification that is more 
restrictive than the predominant financial requirement or treatment 
limitation that applies to substantially all medical/surgical benefits 
in the sub-classification using the methodology set forth in paragraph 
(c)(3)(i) of this section.
    (C) Sub-classifications permitted for office visits, separate from 
other outpatient services. For purposes of applying the financial 
requirement and treatment limitation rules of this paragraph (c), a plan 
or issuer may divide its benefits furnished on an outpatient basis into 
the two sub-classifications described in this paragraph (c)(3)(iii)(C). 
After the sub-classifications are established, the plan or issuer may 
not impose any financial requirement or quantitative treatment 
limitation on mental health or substance use disorder benefits in any 
sub-classification that is more restrictive than the predominant 
financial requirement or quantitative treatment limitation that applies 
to substantially all medical/surgical benefits in the sub-classification 
using the methodology set forth in paragraph (c)(3)(i) of this section. 
Sub-classifications other than these special rules, such as separate 
sub-classifications for generalists and specialists, are not permitted. 
The two sub-classifications permitted under this paragraph 
(c)(3)(iii)(C) are:
    (1) Office visits (such as physician visits), and
    (2) All other outpatient items and services (such as outpatient 
surgery, facility charges for day treatment centers, laboratory charges, 
or other medical items).
    (iv) Examples. The rules of paragraphs (c)(3)(i), (c)(3)(ii), and 
(c)(3)(iii) of this section are illustrated by the following examples. 
In each example, the group health plan is subject to the requirements of 
this section and provides both medical/surgical benefits and mental 
health and substance use disorder benefits.

    Example 1. (i) Facts. For inpatient, out-of-network medical/surgical 
benefits, a group health plan imposes five levels of coinsurance. Using 
a reasonable method, the plan projects its payments for the upcoming 
year as follows:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Coinsurance rate................          0%         10%         15%         20%         30%  Total.
Projected payments..............       $200x       $100x       $450x       $100x       $150x  $1,000x.
Percent of total plan costs.....         20%         10%         45%         10%         15%
Percent subject to coinsurance           N/A       12.5%      56.25%       12.5%      18.75%  ..................
 level.                                           (100x/      (450x/      (100x/      (150x/
                                                   800x)       800x)       800x)       800x)
----------------------------------------------------------------------------------------------------------------


[[Page 788]]


The plan projects plan costs of $800x to be subject to coinsurance 
($100x + $450x + $100x + $150x = $800x). Thus, 80 percent ($800x/
$1,000x) of the benefits are projected to be subject to coinsurance, and 
56.25 percent of the benefits subject to coinsurance are projected to be 
subject to the 15 percent coinsurance level.
    (ii) Conclusion. In this Example 1, the two-thirds threshold of the 
substantially all standard is met for coinsurance because 80 percent of 
all inpatient, out-of-network medical/surgical benefits are subject to 
coinsurance. Moreover, the 15 percent coinsurance is the predominant 
level because it is applicable to more than one-half of inpatient, out-
of-network medical/surgical benefits subject to the coinsurance 
requirement. The plan may not impose any level of coinsurance with 
respect to inpatient, out-of-network mental health or substance use 
disorder benefits that is more restrictive than the 15 percent level of 
coinsurance.
    Example 2. (i) Facts. For outpatient, in-network medical/surgical 
benefits, a plan imposes five different copayment levels. Using a 
reasonable method, the plan projects payments for the upcoming year as 
follows:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Copayment amount.............           $0          $10          $15          $20          $50  Total.
Projected payments...........        $200x        $200x        $200x        $300x        $100x  $1,000x.
Percent of total plan costs..          20%          20%          20%          30%          10%
Percent subject to copayments          N/A          25%          25%        37.5%        12.5%  ................
                                            (200x/800x)  (200x/800x)  (300x/800x)  (100x/800x)
----------------------------------------------------------------------------------------------------------------


The plan projects plan costs of $800x to be subject to copayments ($200x 
+ $200x + $300x + $100x = $800x). Thus, 80 percent ($800x/$1,000x) of 
the benefits are projected to be subject to a copayment.
    (ii) Conclusion. In this Example 2, the two-thirds threshold of the 
substantially all standard is met for copayments because 80 percent of 
all outpatient, in-network medical/surgical benefits are subject to a 
copayment. Moreover, there is no single level that applies to more than 
one-half of medical/surgical benefits in the classification subject to a 
copayment (for the $10 copayment, 25%; for the $15 copayment, 25%; for 
the $20 copayment, 37.5%; and for the $50 copayment, 12.5%). The plan 
can combine any levels of copayment, including the highest levels, to 
determine the predominant level that can be applied to mental health or 
substance use disorder benefits. If the plan combines the highest levels 
of copayment, the combined projected payments for the two highest 
copayment levels, the $50 copayment and the $20 copayment, are not more 
than one-half of the outpatient, in-network medical/surgical benefits 
subject to a copayment because they are exactly one-half ($300x + $100x 
= $400x; $400x/$800x = 50%). The combined projected payments for the 
three highest copayment levels--the $50 copayment, the $20 copayment, 
and the $15 copayment--are more than one-half of the outpatient, in-
network medical/surgical benefits subject to the copayments ($100x + 
$300x + $200x = $600x; $600x/$800x = 75%). Thus, the plan may not impose 
any copayment on outpatient, in-network mental health or substance use 
disorder benefits that is more restrictive than the least restrictive 
copayment in the combination, the $15 copayment.
    Example 3. (i) Facts. A plan imposes a $250 deductible on all 
medical/surgical benefits for self-only coverage and a $500 deductible 
on all medical/surgical benefits for family coverage. The plan has no 
network of providers. For all medical/surgical benefits, the plan 
imposes a coinsurance requirement. The plan imposes no other financial 
requirements or treatment limitations.
    (ii) Conclusion. In this Example 3, because the plan has no network 
of providers, all benefits are provided out-of-network. Because self-
only and family coverage are subject to different deductibles, whether 
the deductible applies to substantially all medical/surgical benefits is 
determined separately for self-only medical/surgical benefits and family 
medical/surgical benefits. Because the coinsurance is applied without 
regard to coverage units, the predominant coinsurance that applies to 
substantially all medical/surgical benefits is determined without regard 
to coverage units.
    Example 4. (i) Facts. A plan applies the following financial 
requirements for prescription drug benefits. The requirements are 
applied without regard to whether a drug is generally prescribed with 
respect to medical/surgical benefits or with respect to mental health or 
substance use disorder benefits. Moreover, the process for certifying a 
particular drug as ``generic'', ``preferred brand name'', ``non-
preferred brand name'', or ``specialty'' complies with the rules of 
paragraph (c)(4)(i) of this section (relating to requirements for 
nonquantitative treatment limitations).

[[Page 789]]



----------------------------------------------------------------------------------------------------------------
                                            Tier 1             Tier 2             Tier 3             Tier 4
----------------------------------------------------------------------------------------------------------------
                                                                              Non-preferred
                                                                             brand name drugs
          Tier description              Generic drugs     Preferred brand    (which may have    Specialty drugs
                                                             name drugs      Tier 1 or Tier 2
                                                                              alternatives)
----------------------------------------------------------------------------------------------------------------
Percent paid by plan................                90%                80%                60%                50%
----------------------------------------------------------------------------------------------------------------

    (ii) Conclusion. In this Example 4, the financial requirements that 
apply to prescription drug benefits are applied without regard to 
whether a drug is generally prescribed with respect to medical/surgical 
benefits or with respect to mental health or substance use disorder 
benefits; the process for certifying drugs in different tiers complies 
with paragraph (c)(4) of this section; and the bases for establishing 
different levels or types of financial requirements are reasonable. The 
financial requirements applied to prescription drug benefits do not 
violate the parity requirements of this paragraph (c)(3).
    Example 5. (i) Facts. A plan has two-tiers of network of providers: 
a preferred provider tier and a participating provider tier. Providers 
are placed in either the preferred tier or participating tier based on 
reasonable factors determined in accordance with the rules in paragraph 
(c)(4)(i) of this section, such as accreditation, quality and 
performance measures (including customer feedback), and relative 
reimbursement rates. Furthermore, provider tier placement is determined 
without regard to whether a provider specializes in the treatment of 
mental health conditions or substance use disorders, or medical/surgical 
conditions. The plan divides the in-network classifications into two 
sub-classifications (in-network/preferred and in-network/participating). 
The plan does not impose any financial requirement or treatment 
limitation on mental health or substance use disorder benefits in either 
of these sub-classifications that is more restrictive than the 
predominant financial requirement or treatment limitation that applies 
to substantially all medical/surgical benefits in each sub-
classification.
    (ii) Conclusion. In this Example 5, the division of in-network 
benefits into sub-classifications that reflect the preferred and 
participating provider tiers does not violate the parity requirements of 
this paragraph (c)(3).
    Example 6. (i) Facts. With respect to outpatient, in-network 
benefits, a plan imposes a $25 copayment for office visits and a 20 
percent coinsurance requirement for outpatient surgery. The plan divides 
the outpatient, in-network classification into two sub-classifications 
(in-network office visits and all other outpatient, in-network items and 
services). The plan or issuer does not impose any financial requirement 
or quantitative treatment limitation on mental health or substance use 
disorder benefits in either of these sub-classifications that is more 
restrictive than the predominant financial requirement or quantitative 
treatment limitation that applies to substantially all medical/surgical 
benefits in each sub-classification.
    (ii) Conclusion. In this Example 6, the division of outpatient, in-
network benefits into sub-classifications for office visits and all 
other outpatient, in-network items and services does not violate the 
parity requirements of this paragraph (c)(3).
    Example 7. (i) Facts. Same facts as Example 6, but for purposes of 
determining parity, the plan divides the outpatient, in-network 
classification into outpatient, in-network generalists and outpatient, 
in-network specialists.
    (ii) Conclusion. In this Example 7, the division of outpatient, in-
network benefits into any sub-classifications other than office visits 
and all other outpatient items and services violates the requirements of 
paragraph (c)(3)(iii)(C) of this section.

    (v) No separate cumulative financial requirements or cumulative 
quantitative treatment limitations--(A) A group health plan (or health 
insurance coverage offered in connection with a group health plan) may 
not apply any cumulative financial requirement or cumulative 
quantitative treatment limitation for mental health or substance use 
disorder benefits in a classification that accumulates separately from 
any established for medical/surgical benefits in the same 
classification.
    (B) The rules of this paragraph (c)(3)(v) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan imposes a combined annual 
$500 deductible on all medical/surgical, mental health, and substance 
use disorder benefits.
    (ii) Conclusion. In this Example 1, the combined annual deductible 
complies with the requirements of this paragraph (c)(3)(v).
    Example 2. (i) Facts. A plan imposes an annual $250 deductible on 
all medical/surgical benefits and a separate annual $250 deductible on 
all mental health and substance use disorder benefits.
    (ii) Conclusion. In this Example 2, the separate annual deductible 
on mental health and

[[Page 790]]

substance use disorder benefits violates the requirements of this 
paragraph (c)(3)(v).
    Example 3. (i) Facts. A plan imposes an annual $300 deductible on 
all medical/surgical benefits and a separate annual $100 deductible on 
all mental health or substance use disorder benefits.
    (ii) Conclusion. In this Example 3, the separate annual deductible 
on mental health and substance use disorder benefits violates the 
requirements of this paragraph (c)(3)(v).
    Example 4. (i) Facts. A plan generally imposes a combined annual 
$500 deductible on all benefits (both medical/surgical benefits and 
mental health and substance use disorder benefits) except prescription 
drugs. Certain benefits, such as preventive care, are provided without 
regard to the deductible. The imposition of other types of financial 
requirements or treatment limitations varies with each classification. 
Using reasonable methods, the plan projects its payments for medical/
surgical benefits in each classification for the upcoming year as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                              Benefits subject                   Percent subject
                       Classification                           to deductible   Total benefits    to deductible
----------------------------------------------------------------------------------------------------------------
Inpatient, in-network.......................................           $1,800x         $2,000x                90
Inpatient, out-of-network...................................            1,000x          1,000x               100
Outpatient, in-network......................................            1,400x          2,000x                70
Outpatient, out-of-network..................................            1,880x          2,000x                94
Emergency care..............................................              300x            500x                60
----------------------------------------------------------------------------------------------------------------

    (ii) Conclusion. In this Example 4, the two-thirds threshold of the 
substantially all standard is met with respect to each classification 
except emergency care because in each of those other classifications at 
least two-thirds of medical/surgical benefits are subject to the $500 
deductible. Moreover, the $500 deductible is the predominant level in 
each of those other classifications because it is the only level. 
However, emergency care mental health and substance use disorder 
benefits cannot be subject to the $500 deductible because it does not 
apply to substantially all emergency care medical/surgical benefits.

    (4) Nonquantitative treatment limitations--(i) General rule. A group 
health plan (or health insurance coverage) may not impose a 
nonquantitative treatment limitation with respect to mental health or 
substance use disorder benefits in any classification unless, under the 
terms of the plan (or health insurance coverage) as written and in 
operation, any processes, strategies, evidentiary standards, or other 
factors used in applying the nonquantitative treatment limitation to 
mental health or substance use disorder benefits in the classification 
are comparable to, and are applied no more stringently than, the 
processes, strategies, evidentiary standards, or other factors used in 
applying the limitation with respect to medical/surgical benefits in the 
classification.
    (ii) Illustrative list of nonquantitative treatment limitations. 
Nonquantitative treatment limitations include--
    (A) Medical management standards limiting or excluding benefits 
based on medical necessity or medical appropriateness, or based on 
whether the treatment is experimental or investigative;
    (B) Formulary design for prescription drugs;
    (C) For plans with multiple network tiers (such as preferred 
providers and participating providers), network tier design;
    (D) Standards for provider admission to participate in a network, 
including reimbursement rates;
    (E) Plan methods for determining usual, customary, and reasonable 
charges;
    (F) Refusal to pay for higher-cost therapies until it can be shown 
that a lower-cost therapy is not effective (also known as fail-first 
policies or step therapy protocols);
    (G) Exclusions based on failure to complete a course of treatment; 
and
    (H) Restrictions based on geographic location, facility type, 
provider specialty, and other criteria that limit the scope or duration 
of benefits for services provided under the plan or coverage.
    (iii) Examples. The rules of this paragraph (c)(4) are illustrated 
by the following examples. In each example, the group health plan is 
subject to the requirements of this section and provides both medical/
surgical benefits and

[[Page 791]]

mental health and substance use disorder benefits.

    Example 1. (i) Facts. A plan requires prior authorization from the 
plan's utilization reviewer that a treatment is medically necessary for 
all inpatient medical/surgical benefits and for all inpatient mental 
health and substance use disorder benefits. In practice, inpatient 
benefits for medical/surgical conditions are routinely approved for 
seven days, after which a treatment plan must be submitted by the 
patient's attending provider and approved by the plan. On the other 
hand, for inpatient mental health and substance use disorder benefits, 
routine approval is given only for one day, after which a treatment plan 
must be submitted by the patient's attending provider and approved by 
the plan.
    (ii) Conclusion. In this Example 1, the plan violates the rules of 
this paragraph (c)(4) because it is applying a stricter nonquantitative 
treatment limitation in practice to mental health and substance use 
disorder benefits than is applied to medical/surgical benefits.
    Example 2. (i) Facts. A plan applies concurrent review to inpatient 
care where there are high levels of variation in length of stay (as 
measured by a coefficient of variation exceeding 0.8). In practice, the 
application of this standard affects 60 percent of mental health 
conditions and substance use disorders, but only 30 percent of medical/
surgical conditions.
    (ii) Conclusion. In this Example 2, the plan complies with the rules 
of this paragraph (c)(4) because the evidentiary standard used by the 
plan is applied no more stringently for mental health and substance use 
disorder benefits than for medical/surgical benefits, even though it 
results in an overall difference in the application of concurrent review 
for mental health conditions or substance use disorders than for 
medical/surgical conditions.
    Example 3. (i) Facts. A plan requires prior approval that a course 
of treatment is medically necessary for outpatient, in-network medical/
surgical, mental health, and substance use disorder benefits and uses 
comparable criteria in determining whether a course of treatment is 
medically necessary. For mental health and substance use disorder 
treatments that do not have prior approval, no benefits will be paid; 
for medical/surgical treatments that do not have prior approval, there 
will only be a 25 percent reduction in the benefits the plan would 
otherwise pay.
    (ii) Conclusion. In this Example 3, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--medical necessity--is applied both to mental health and 
substance use disorder benefits and to medical/surgical benefits for 
outpatient, in-network services, it is not applied in a comparable way. 
The penalty for failure to obtain prior approval for mental health and 
substance use disorder benefits is not comparable to the penalty for 
failure to obtain prior approval for medical/surgical benefits.
    Example 4. (i) Facts. A plan generally covers medically appropriate 
treatments. For both medical/surgical benefits and mental health and 
substance use disorder benefits, evidentiary standards used in 
determining whether a treatment is medically appropriate (such as the 
number of visits or days of coverage) are based on recommendations made 
by panels of experts with appropriate training and experience in the 
fields of medicine involved. The evidentiary standards are applied in a 
manner that is based on clinically appropriate standards of care for a 
condition.
    (ii) Conclusion. In this Example 4, the plan complies with the rules 
of this paragraph (c)(4) because the processes for developing the 
evidentiary standards used to determine medical appropriateness and the 
application of these standards to mental health and substance use 
disorder benefits are comparable to and are applied no more stringently 
than for medical/surgical benefits. This is the result even if the 
application of the evidentiary standards does not result in similar 
numbers of visits, days of coverage, or other benefits utilized for 
mental health conditions or substance use disorders as it does for any 
particular medical/surgical condition.
    Example 5. (i) Facts. A plan generally covers medically appropriate 
treatments. In determining whether prescription drugs are medically 
appropriate, the plan automatically excludes coverage for antidepressant 
drugs that are given a black box warning label by the Food and Drug 
Administration (indicating the drug carries a significant risk of 
serious adverse effects). For other drugs with a black box warning 
(including those prescribed for other mental health conditions and 
substance use disorders, as well as for medical/surgical conditions), 
the plan will provide coverage if the prescribing physician obtains 
authorization from the plan that the drug is medically appropriate for 
the individual, based on clinically appropriate standards of care.
    (ii) Conclusion. In this Example 5, the plan violates the rules of 
this paragraph (c)(4). Although the standard for applying a 
nonquantitative treatment limitation is the same for both mental health 
and substance use disorder benefits and medical/surgical benefits--
whether a drug has a black box warning--it is not applied in a 
comparable manner. The plan's unconditional exclusion of antidepressant 
drugs given a black box warning is not comparable to the conditional 
exclusion for other drugs with a black box warning.

[[Page 792]]

    Example 6. (i) Facts. An employer maintains both a major medical 
plan and an employee assistance program (EAP). The EAP provides, among 
other benefits, a limited number of mental health or substance use 
disorder counseling sessions. Participants are eligible for mental 
health or substance use disorder benefits under the major medical plan 
only after exhausting the counseling sessions provided by the EAP. No 
similar exhaustion requirement applies with respect to medical/surgical 
benefits provided under the major medical plan.
    (ii) Conclusion. In this Example 6, limiting eligibility for mental 
health and substance use disorder benefits only after EAP benefits are 
exhausted is a nonquantitative treatment limitation subject to the 
parity requirements of this paragraph (c). Because no comparable 
requirement applies to medical/surgical benefits, the requirement may 
not be applied to mental health or substance use disorder benefits.
    Example 7. (i) Facts. Training and State licensing requirements 
often vary among types of providers. A plan applies a general standard 
that any provider must meet the highest licensing requirement related to 
supervised clinical experience under applicable State law in order to 
participate in the plan's provider network. Therefore, the plan requires 
master's-level mental health therapists to have post-degree, supervised 
clinical experience but does not impose this requirement on master's-
level general medical providers because the scope of their licensure 
under applicable State law does require clinical experience. In 
addition, the plan does not require post-degree, supervised clinical 
experience for psychiatrists or Ph.D. level psychologists since their 
licensing already requires supervised training.
    (ii) Conclusion. In this Example 7, the plan complies with the rules 
of this paragraph (c)(4). The requirement that master's-level mental 
health therapists must have supervised clinical experience to join the 
network is permissible, as long as the plan consistently applies the 
same standard to all providers even though it may have a disparate 
impact on certain mental health providers.
    Example 8. (i) Facts. A plan considers a wide array of factors in 
designing medical management techniques for both mental health and 
substance use disorder benefits and medical/surgical benefits, such as 
cost of treatment; high cost growth; variability in cost and quality; 
elasticity of demand; provider discretion in determining diagnosis, or 
type or length of treatment; clinical efficacy of any proposed treatment 
or service; licensing and accreditation of providers; and claim types 
with a high percentage of fraud. Based on application of these factors 
in a comparable fashion, prior authorization is required for some (but 
not all) mental health and substance use disorder benefits, as well as 
for some medical/surgical benefits, but not for others. For example, the 
plan requires prior authorization for: outpatient surgery; speech, 
occupational, physical, cognitive and behavioral therapy extending for 
more than six months; durable medical equipment; diagnostic imaging; 
skilled nursing visits; home infusion therapy; coordinated home care; 
pain management; high-risk prenatal care; delivery by cesarean section; 
mastectomy; prostate cancer treatment; narcotics prescribed for more 
than seven days; and all inpatient services beyond 30 days. The evidence 
considered in developing its medical management techniques includes 
consideration of a wide array of recognized medical literature and 
professional standards and protocols (including comparative 
effectiveness studies and clinical trials). This evidence and how it was 
used to develop these medical management techniques is also well 
documented by the plan.
    (ii) Conclusion. In this Example 8, the plan complies with the rules 
of this paragraph (c)(4). Under the terms of the plan as written and in 
operation, the processes, strategies, evidentiary standards, and other 
factors considered by the plan in implementing its prior authorization 
requirement with respect to mental health and substance use disorder 
benefits are comparable to, and applied no more stringently than, those 
applied with respect to medical/surgical benefits.
    Example 9. (i) Facts. A plan generally covers medically appropriate 
treatments. The plan automatically excludes coverage for inpatient 
substance use disorder treatment in any setting outside of a hospital 
(such as a freestanding or residential treatment center). For inpatient 
treatment outside of a hospital for other conditions (including 
freestanding or residential treatment centers prescribed for mental 
health conditions, as well as for medical/surgical conditions), the plan 
will provide coverage if the prescribing physician obtains authorization 
from the plan that the inpatient treatment is medically appropriate for 
the individual, based on clinically appropriate standards of care.
    (ii) Conclusion. In this Example 9, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--medical appropriateness--is applied to both mental health 
and substance use disorder benefits and medical/surgical benefits, the 
plan's unconditional exclusion of substance use disorder treatment in 
any setting outside of a hospital is not comparable to the conditional 
exclusion of inpatient treatment outside of a hospital for other 
conditions.
    Example 10. (i) Facts. A plan generally provides coverage for 
medically appropriate medical/surgical benefits as well as mental health 
and substance use disorder benefits. The plan excludes coverage for 
inpatient,

[[Page 793]]

out-of-network treatment of chemical dependency when obtained outside of 
the State where the policy is written. There is no similar exclusion for 
medical/surgical benefits within the same classification.
    (ii) Conclusion. In this Example 10, the plan violates the rules of 
this paragraph (c)(4). The plan is imposing a nonquantitative treatment 
limitation that restricts benefits based on geographic location. Because 
there is no comparable exclusion that applies to medical/surgical 
benefits, this exclusion may not be applied to mental health or 
substance use disorder benefits.
    Example 11. (i) Facts. A plan requires prior authorization for all 
outpatient mental health and substance use disorder services after the 
ninth visit and will only approve up to five additional visits per 
authorization. With respect to outpatient medical/surgical benefits, the 
plan allows an initial visit without prior authorization. After the 
initial visit, the plan pre-approves benefits based on the individual 
treatment plan recommended by the attending provider based on that 
individual's specific medical condition. There is no explicit, 
predetermined cap on the amount of additional visits approved per 
authorization.
    (ii) Conclusion. In this Example 11, the plan violates the rules of 
this paragraph (c)(4). Although the same nonquantitative treatment 
limitation--prior authorization to determine medical appropriateness--is 
applied to both mental health and substance use disorder benefits and 
medical/surgical benefits for outpatient services, it is not applied in 
a comparable way. While the plan is more generous with respect to the 
number of visits initially provided without pre-authorization for mental 
health benefits, treating all mental health conditions and substance use 
disorders in the same manner, while providing for individualized 
treatment of medical conditions, is not a comparable application of this 
nonquantitative treatment limitation.

    (5) Exemptions. The rules of this paragraph (c) do not apply if a 
group health plan (or health insurance coverage) satisfies the 
requirements of paragraph (f) or (g) of this section (relating to 
exemptions for small employers and for increased cost).
    (d) Availability of plan information--(1) Criteria for medical 
necessity determinations. The criteria for medical necessity 
determinations made under a group health plan with respect to mental 
health or substance use disorder benefits (or health insurance coverage 
offered in connection with the plan with respect to such benefits) must 
be made available by the plan administrator (or the health insurance 
issuer offering such coverage) to any current or potential participant, 
beneficiary, or contracting provider upon request.
    (2) Reason for any denial. The reason for any denial under a group 
health plan (or health insurance coverage offered in connection with 
such plan) of reimbursement or payment for services with respect to 
mental health or substance use disorder benefits in the case of any 
participant or beneficiary must be made available by the plan 
administrator (or the health insurance issuer offering such coverage) to 
the participant or beneficiary in a form and manner consistent with the 
requirements of Sec. 2560.503-1 of this chapter for group health plans.
    (3) Provisions of other law. Compliance with the disclosure 
requirements in paragraphs (d)(1) and (d)(2) of this section is not 
determinative of compliance with any other provision of applicable 
Federal or State law. In particular, in addition to those disclosure 
requirements, provisions of other applicable law require disclosure of 
information relevant to medical/surgical, mental health, and substance 
use disorder benefits. For example, ERISA section 104 and 
Sec. 2520.104b-1 of this chapter provide that, for plans subject to 
ERISA, instruments under which the plan is established or operated must 
generally be furnished to plan participants within 30 days of request. 
Instruments under which the plan is established or operated include 
documents with information on medical necessity criteria for both 
medical/surgical benefits and mental health and substance use disorder 
benefits, as well as the processes, strategies, evidentiary standards, 
and other factors used to apply a nonquantitative treatment limitation 
with respect to medical/surgical benefits and mental health or substance 
use disorder benefits under the plan. In addition, Secs. 2560.503-1 and 
2590.715-2719 of this chapter set forth rules regarding claims and 
appeals, including the right of claimants (or their authorized 
representative) upon appeal of an adverse benefit determination (or a 
final internal adverse benefit determination) to 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

[[Page 794]]

claim for benefits. This includes documents with information on medical 
necessity criteria for both medical/surgical benefits and mental health 
and substance use disorder benefits, as well as the processes, 
strategies, evidentiary standards, and other factors used to apply a 
nonquantitative treatment limitation with respect to medical/surgical 
benefits and mental health or substance use disorder benefits under the 
plan.
    (e) Applicability--(1) Group health plans. The requirements of this 
section apply to a group health plan offering medical/surgical benefits 
and mental health or substance use disorder benefits. If, under an 
arrangement or arrangements to provide medical care benefits by an 
employer or employee organization (including for this purpose a joint 
board of trustees of a multiemployer trust affiliated with one or more 
multiemployer plans), any participant (or beneficiary) can 
simultaneously receive coverage for medical/surgical benefits and 
coverage for mental health or substance use disorder benefits, then the 
requirements of this section (including the exemption provisions in 
paragraph (g) of this section) apply separately with respect to each 
combination of medical/surgical benefits and of mental health or 
substance use disorder benefits that any participant (or beneficiary) 
can simultaneously receive from that employer's or employee 
organization's arrangement or arrangements to provide medical care 
benefits, and all such combinations are considered for purposes of this 
section to be a single group health plan.
    (2) Health insurance issuers. The requirements of this section apply 
to a health insurance issuer offering health insurance coverage for 
mental health or substance use disorder benefits in connection with a 
group health plan subject to paragraph (e)(1) of this section.
    (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 substance use disorder benefits, and the provision of 
benefits by a plan (or health insurance coverage) for one or more mental 
health conditions or substance use disorders does not require the plan 
or health insurance coverage under this section to provide benefits for 
any other mental health condition or substance use disorder;
    (ii) Require a group health plan (or health insurance issuer 
offering coverage in connection with a group health plan) that provides 
coverage for mental health or substance use disorder benefits only to 
the extent required under PHS Act section 2713 to provide additional 
mental health or substance use disorder benefits in any classification 
in accordance with this section; or
    (iii) Affect the terms and conditions relating to the amount, 
duration, or scope of mental health or substance use disorder benefits 
under the plan (or health insurance coverage) except as specifically 
provided in paragraphs (b) and (c) of this section.
    (4) Coordination with EHB requirements. Nothing in paragraph (f) or 
(g) of this section changes the requirements of 45 CFR 147.150 and 45 
CFR 156.115, providing that a health insurance issuer offering non-
grandfathered health insurance coverage in the individual or small group 
market providing mental health and substance use disorder services, 
including behavioral health treatment services, as part of essential 
health benefits required under 45 CFR 156.110(a)(5) and 156.115(a), must 
comply with the provisions of 45 CFR 146.136 to satisfy the requirement 
to provide essential health benefits.
    (f) 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 (f), 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 (or one in the case of an employer residing in a 
State that permits small groups to include a single individual) but not 
more than 50 employees on business days during the preceding calendar 
year. See section 732(a) of ERISA and

[[Page 795]]

Sec. 2590.732(b), 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 
(f)(1) of this section--
    (i) All persons treated as a single employer under subsections (b), 
(c), (m), and (o) of section 414 of the Code 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.
    (g) Increased cost exemption--(1) In general. If the application of 
this section to a group health plan (or health insurance coverage 
offered in connection with such plans) results in an increase for the 
plan year involved of the actual total cost of coverage with respect to 
medical/surgical benefits and mental health and substance use disorder 
benefits as determined and certified under paragraph (g)(3) of this 
section by an amount that exceeds the applicable percentage described in 
paragraph (g)(2) of this section of the actual total plan costs, the 
provisions of this section shall not apply to such plan (or coverage) 
during the following plan year, and such exemption shall apply to the 
plan (or coverage) for one plan year. An employer or issuer may elect to 
continue to provide mental health and substance use disorder benefits in 
compliance with this section with respect to the plan or coverage 
involved regardless of any increase in total costs.
    (2) Applicable percentage. With respect to a plan or coverage, the 
applicable percentage described in this paragraph (g) is--
    (i) 2 percent in the case of the first plan year in which this 
section is applied to the plan or coverage; and
    (ii) 1 percent in the case of each subsequent plan year.
    (3) Determinations by actuaries--(i) Determinations as to increases 
in actual costs under a plan or coverage that are attributable to 
implementation of the requirements of this section shall be made and 
certified by a qualified and licensed actuary who is a member in good 
standing of the American Academy of Actuaries. All such determinations 
must be based on the formula specified in paragraph (g)(4) of this 
section and shall be in a written report prepared by the actuary.
    (ii) The written report described in paragraph (g)(3)(i) of this 
section shall be maintained by the group health plan or health insurance 
issuer, along with all supporting documentation relied upon by the 
actuary, for a period of six years following the notification made under 
paragraph (g)(6) of this section.
    (4) Formula. The formula to be used to make the determination under 
paragraph (g)(3)(i) of this section is expressed mathematically as 
follows:

[(E1 ^ E0)/T0] ^D >k

    (i) E1 is the actual total cost of coverage with respect 
to mental health and substance use disorder benefits for the base 
period, including claims paid by the plan or issuer with respect to 
mental health and substance use disorder benefits and administrative 
costs (amortized over time) attributable to providing these benefits 
consistent with the requirements of this section.
    (ii) E0 is the actual total cost of coverage with respect 
to mental health and substance use disorder benefits for the length of 
time immediately before the base period (and that is equal in length to 
the base period), including claims paid by the plan or issuer with 
respect to mental health and substance use disorder benefits and 
administrative costs (amortized over time) attributable to providing 
these benefits.
    (iii) T0 is the actual total cost of coverage with 
respect to all benefits during the base period.
    (iv) k is the applicable percentage of increased cost specified in 
paragraph

[[Page 796]]

(g)(2) of this section that will be expressed as a fraction for purposes 
of this formula.
    (v) D is the average change in spending that is calculated by 
applying the formula (E1 ^ E0)/T0 to 
mental health and substance use disorder spending in each of the five 
prior years and then calculating the average change in spending.
    (5) Six month determination. If a group health plan or health 
insurance issuer seeks an exemption under this paragraph (g), 
determinations under paragraph (g)(3) of this section shall be made 
after such plan or coverage has complied with this section for at least 
the first 6 months of the plan year involved.
    (6) Notification. A group health plan or health insurance issuer 
that, based on the certification described under paragraph (g)(3) of 
this section, qualifies for an exemption under this paragraph (g), and 
elects to implement the exemption, must notify participants and 
beneficiaries covered under the plan, the Secretary, and the appropriate 
State agencies of such election.
    (i) Participants and beneficiaries--(A) Content of notice. The 
notice to participants and beneficiaries must include the following 
information:
    (1) A statement that the plan or issuer 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 or issuer 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 (g)(6)(i)(A)(3) of this 
section) and the plan sponsor's employer identification number (EIN).
    (6) The effective date of such exemption.
    (7) A statement regarding the ability of participants and 
beneficiaries to contact the plan administrator or health insurance 
issuer to see how benefits may be affected as a result of the plan's or 
issuer's election of the exemption.
    (8) A statement regarding the availability, upon request and free of 
charge, of a summary of the information on which the exemption is based 
(as required under paragraph (g)(6)(i)(D) of this section).
    (B) Use of summary of material reductions in covered services or 
benefits. A plan or issuer may satisfy the requirements of paragraph 
(g)(6)(i)(A) of this section by providing participants and beneficiaries 
(in accordance with paragraph (g)(6)(i)(C) of this section) with a 
summary of material reductions in covered services or benefits 
consistent with Sec. 2520.104b-3(d) of this chapter that also includes 
the information specified in paragraph (g)(6)(i)(A) of this section. 
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 (g)(6)(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 (29 U.S.C. 1024(b)(1)) and 
its implementing regulations (for example, first-class mail). If the 
notice is provided to the participant and any beneficiaries at the 
participant's last known address, then the requirements of this 
paragraph (g)(6)(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) 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. (For purposes of this paragraph (g), an individual 
who is not a participant or beneficiary and who presents a notice 
described in paragraph (g)(6)(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 (g)(6)(i) of this section with any

[[Page 797]]

personally 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 or coverage absent amendments 
required to comply with paragraphs (b) and (c) 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 personally 
identifiable information.
    (ii) Federal agencies--(A) Content of notice. The notice to the 
Secretary must include the following information:
    (1) A description of the number of covered lives under the plan (or 
coverage) involved at the time of the notification, and as applicable, 
at the time of any prior election of the cost exemption under this 
paragraph (g) by such plan (or coverage);
    (2) For both the plan year upon which a cost exemption is sought and 
the year prior, a description of the actual total costs of coverage with 
respect to medical/surgical benefits and mental health and substance use 
disorder benefits; and
    (3) For both the plan year upon which a cost exemption is sought and 
the year prior, the actual total costs of coverage with respect to 
mental health and substance use disorder benefits under the plan.
    (B) Reporting. A group health plan, and any health insurance 
coverage offered in connection with a group health plan, 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 
(g)(6)(ii)(A) of this section identifying the benefit package to which 
the exemption applies.
    (iii) Confidentiality. A notification to the Secretary under this 
paragraph (g)(6) shall be confidential. The Secretary shall make 
available, upon request and not more than on an annual basis, an 
anonymous itemization of each notification that includes--
    (A) A breakdown of States by the size and type of employers 
submitting such notification; and
    (B) A summary of the data received under paragraph (g)(6)(ii) of 
this section.
    (iv) Audits. The Secretary may audit the books and records of a 
group health plan or a health insurance issuer relating to an exemption, 
including any actuarial reports, during the 6 year period following 
notification of such exemption under paragraph (g)(6) of this section. A 
State agency receiving a notification under paragraph (g)(6) of this 
section may also conduct such an audit with respect to an exemption 
covered by such notification.
    (h) Sale of nonparity health insurance coverage. A health insurance 
issuer may not sell a policy, certificate, or contract of insurance that 
fails to comply with paragraph (b) or (c) of this section, except to a 
plan for a year for which the plan is exempt from the requirements of 
this section because the plan meets the requirements of paragraph (f) or 
(g) of this section.
    (i) Applicability dates--(1) In general. Except as provided in 
paragraph (i)(2) of this section, this section applies to group health 
plans and health insurance issuers offering group health insurance 
coverage on the first day of the first plan year beginning on or after 
July 1, 2014. Until the applicability date, plans and issuers are 
required to continue to comply with the corresponding sections of 29 CFR 
2590.712 contained in the 29 CFR, parts 1927 to end, edition revised as 
of July 1, 2013.
    (2) Special effective date for certain collectively-bargained plans. 
For a group health plan maintained pursuant to one or more collective 
bargaining agreements ratified before October 3, 2008, the requirements 
of this section do not apply to the plan (or health insurance coverage 
offered in connection with the plan) for plan years beginning before the 
date on which the last of the collective bargaining agreements 
terminates (determined without regard to any extension agreed to after 
October 3, 2008).

[78 FR 68276, Nov. 13, 2013]

[[Page 798]]



Sec. 2590.715-1251  Preservation of right to maintain existing 
coverage.

    (a) Definition of grandfathered health plan coverage--(1) In 
general--(i) Grandfathered health plan coverage means coverage provided 
by a group health plan, or a health insurance issuer, in which an 
individual was enrolled on March 23, 2010 (for as long as it maintains 
that status under the rules of this section). A group health plan or 
group health insurance coverage does not cease to be grandfathered 
health plan coverage merely because one or more (or even all) 
individuals enrolled on March 23, 2010 cease to be covered, provided 
that the plan or group health insurance coverage has continuously 
covered someone since March 23, 2010 (not necessarily the same person, 
but at all times at least one person). In addition, subject to the 
limitation set forth in paragraph (a)(1)(ii) of this section, a group 
health plan (and any health insurance coverage offered in connection 
with the group health plan) does not cease to be a grandfathered health 
plan merely because the plan (or its sponsor) enters into a new policy, 
certificate, or contract of insurance after March 23, 2010 (for example, 
a plan enters into a contract with a new issuer or a new policy is 
issued with an existing issuer). For purposes of this section, a plan or 
health insurance coverage that provides grandfathered health plan 
coverage is referred to as a grandfathered health plan. The rules of 
this section apply separately to each benefit package made available 
under a group health plan or health insurance coverage. Accordingly, if 
any benefit package relinquishes grandfather status, it will not affect 
the grandfather status of the other benefit packages.
    (ii) Changes in group health insurance coverage. Subject to 
paragraphs (f) and (g)(2) of this section, if a group health plan 
(including a group health plan that was self-insured on March 23, 2010) 
or its sponsor enters into a new policy, certificate, or contract of 
insurance after March 23, 2010 that is effective before November 15, 
2010, then the plan ceases to be a grandfathered health plan.
    (2) Disclosure of grandfather status--(i) To maintain status as a 
grandfathered health plan, a plan or health insurance coverage must 
include a statement that the plan or coverage believes it is a 
grandfathered health plan within the meaning of section 1251 of the 
Patient Protection and Affordable Care Act, and must provide contact 
information for questions and complaints, in any summary of benefits 
provided under the plan.
    (ii) The following model language can be used to satisfy this 
disclosure requirement:

    This [group health plan or health insurance issuer] believes this 
[plan or coverage] is a ``grandfathered health plan'' under the Patient 
Protection and Affordable Care Act (the Affordable Care Act). As 
permitted by the Affordable Care Act, a grandfathered health plan can 
preserve certain basic health coverage that was already in effect when 
that law was enacted. Being a grandfathered health plan means that your 
[plan or policy] may not include certain consumer protections of the 
Affordable Care Act that apply to other plans, for example, the 
requirement for the provision of preventive health services without any 
cost sharing. However, grandfathered health plans must comply with 
certain other consumer protections in the Affordable Care Act, for 
example, the elimination of lifetime dollar limits on benefits.
    Questions regarding which protections apply and which protections do 
not apply to a grandfathered health plan and what might cause a plan to 
change from grandfathered health plan status can be directed to the plan 
administrator at [insert contact information]. [For ERISA plans, insert: 
You may also contact the Employee Benefits Security Administration, U.S. 
Department of Labor at 1-866-444-3272 or www.dol.gov/ebsa/healthreform. 
This Web site has a table summarizing which protections do and do not 
apply to grandfathered health plans.] [For individual market policies 
and nonfederal governmental plans, insert: You may also contact the U.S. 
Department of Health and Human Services at www.healthcare.gov.]

    (3)(i) Documentation of plan or policy terms on March 23, 2010. To 
maintain status as a grandfathered health plan, a group health plan, or 
group health insurance coverage, must, for as long as the plan or health 
insurance coverage takes the position that it is a grandfathered health 
plan--
    (A) Maintain records documenting the terms of the plan or health 
insurance coverage in connection with the coverage in effect on March 
23, 2010, and any other documents necessary to

[[Page 799]]

verify, explain, or clarify its status as a grandfathered health plan; 
and
    (B) Make such records available for examination upon request.
    (ii) Change in group health insurance coverage. To maintain status 
as a grandfathered health plan, a group health plan that enters into a 
new policy, certificate, or contract of insurance must provide to the 
new health insurance issuer (and the new health insurance issuer must 
require) documentation of plan terms (including benefits, cost sharing, 
employer contributions, and annual dollar limits) under the prior health 
coverage sufficient to determine whether a change causing a cessation of 
grandfathered health plan status under paragraph (g)(1) of this section 
has occurred.
    (4) Family members enrolling after March 23, 2010. With respect to 
an individual who is enrolled in a group health plan or health insurance 
coverage on March 23, 2010, grandfathered health plan coverage includes 
coverage of family members of the individual who enroll after March 23, 
2010 in the grandfathered health plan coverage of the individual.
    (b) Allowance for new employees to join current plan--(1) In 
general. Subject to paragraph (b)(2) of this section, a group health 
plan (including health insurance coverage provided in connection with 
the group health plan) that provided coverage on March 23, 2010 and has 
retained its status as a grandfathered health plan (consistent with the 
rules of this section, including paragraph (g) of this section) is 
grandfathered health plan coverage for new employees (whether newly 
hired or newly enrolled) and their families enrolling in the plan after 
March 23, 2010. Further, the addition of a new contributing employer or 
new group of employees of an existing contributing employer to a 
grandfathered multiemployer health plan will not affect the plan's 
grandfather status.
    (2) Anti-abuse rules--(i) Mergers and acquisitions. If the principal 
purpose of a merger, acquisition, or similar business restructuring is 
to cover new individuals under a grandfathered health plan, the plan 
ceases to be a grandfathered health plan.
    (ii) Change in plan eligibility. A group health plan or health 
insurance coverage (including a benefit package under a group health 
plan) ceases to be a grandfathered health plan if--
    (A) Employees are transferred into the plan or health insurance 
coverage (the transferee plan) from a plan or health insurance coverage 
under which the employees were covered on March 23, 2010 (the transferor 
plan);
    (B) Comparing the terms of the transferee plan with those of the 
transferor plan (as in effect on March 23, 2010) and treating the 
transferee plan as if it were an amendment of the transferor plan would 
cause a loss of grandfather status under the provisions of paragraph 
(g)(1) of this section; and
    (C) There was no bona fide employment-based reason to transfer the 
employees into the transferee plan. For this purpose, changing the terms 
or cost of coverage is not a bona fide employment-based reason.
    (iii) Illustrative list of bona fide employment-based reasons. For 
purposes of this paragraph (b)(2)(ii)(C), bona fide employment-based 
reasons include--
    (A) When a benefit package is being eliminated because the issuer is 
exiting the market;
    (B) When a benefit package is being eliminated because the issuer no 
longer offers the product to the employer;
    (C) When low or declining participation by plan participants in the 
benefit package makes it impractical for the plan sponsor to continue to 
offer the benefit package;
    (D) When a benefit package is eliminated from a multiemployer plan 
as agreed upon as part of the collective bargaining process; or
    (E) When a benefit package is eliminated for any reason and multiple 
benefit packages covering a significant portion of other employees 
remain available to the employees being transferred.
    (3) Examples. The rules of this paragraph (b) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan offers two benefit 
packages on March 23, 2010, Options F and G. During a subsequent open 
enrollment period, some of the employees

[[Page 800]]

enrolled in Option F on March 23, 2010 switch to Option G.
    (ii) Conclusion. In this Example 1, the group health coverage 
provided under Option G remains a grandfathered health plan under the 
rules of paragraph (b)(1) of this section because employees previously 
enrolled in Option F are allowed to enroll in Option G as new employees.
    Example 2. (i) Facts. A group health plan offers two benefit 
packages on March 23, 2010, Options H and I. On March 23, 2010, Option H 
provides coverage only for employees in one manufacturing plant. 
Subsequently, the plant is closed, and some employees in the closed 
plant are moved to another plant. The employer eliminates Option H and 
the employees that are moved are transferred to Option I. If instead of 
transferring employees from Option H to Option I, Option H was amended 
to match the terms of Option I, then Option H would cease to be a 
grandfathered health plan.
    (ii) Conclusion. In this Example 2, the plan has a bona fide 
employment-based reason to transfer employees from Option H to Option I. 
Therefore, Option I does not cease to be a grandfathered health plan.

    (c) General grandfathering rule--(1) Except as provided in 
paragraphs (d) and (e) of this section, subtitles A and C of title I of 
the Patient Protection and Affordable Care Act (and the amendments made 
by those subtitles, and the incorporation of those amendments into ERISA 
section 715 and Internal Revenue Code section 9815) do not apply to 
grandfathered health plan coverage. Accordingly, the provisions of PHS 
Act sections 2701, 2702, 2703, 2705, 2706, 2707, 2709 (relating to 
coverage for individuals participating in approved clinical trials, as 
added by section 10103 of the Patient Protection and Affordable Care 
Act), 2713, 2715A, 2716, 2717, 2719, and 2719A, as added or amended by 
the Patient Protection and Affordable Care Act, do not apply to 
grandfathered health plans. (In addition, see 45 CFR 147.140(c), which 
provides that the provisions of PHS Act section 2704, and PHS Act 
section 2711 insofar as it relates to annual dollar limits, do not apply 
to grandfathered health plans that are individual health insurance 
coverage.)
    (2) To the extent not inconsistent with the rules applicable to a 
grandfathered health plan, a grandfathered health plan must comply with 
the requirements of the PHS Act, ERISA, and the Internal Revenue Code 
applicable prior to the changes enacted by the Patient Protection and 
Affordable Care Act.
    (d) Provisions applicable to all grandfathered health plans. The 
provisions of PHS Act section 2711 insofar as it relates to lifetime 
dollar limits, and the provisions of PHS Act sections 2712, 2714, 2715, 
and 2718, apply to grandfathered health plans for plan years beginning 
on or after September 23, 2010. The provisions of PHS Act section 2708 
apply to grandfathered health plans for plan years beginning on or after 
January 1, 2014.
    (e) Applicability of PHS Act sections 2704, 2711, and 2714 to 
grandfathered group health plans and group health insurance coverage--
(1) The provisions of PHS Act section 2704 as it applies with respect to 
enrollees who are under 19 years of age, and the provisions of PHS Act 
section 2711 insofar as it relates to annual dollar limits, apply to 
grandfathered health plans that are group health plans (including group 
health insurance coverage) for plan years beginning on or after 
September 23, 2010. The provisions of PHS Act section 2704 apply 
generally to grandfathered health plans that are group health plans 
(including group health insurance coverage) for plan years beginning on 
or after January 1, 2014.
    (2) For plan years beginning before January 1, 2014, the provisions 
of PHS Act section 2714 apply in the case of an adult child with respect 
to a grandfathered health plan that is a group health plan only if the 
adult child is not eligible to enroll in an eligible employer-sponsored 
health plan (as defined in section 5000A(f)(2) of the Internal Revenue 
Code) other than a grandfathered health plan of a parent. For plan years 
beginning on or after January 1, 2014, the provisions of PHS Act section 
2714 apply with respect to a grandfathered health plan that is a group 
health plan without regard to whether an adult child is eligible to 
enroll in any other coverage.
    (f) Effect on collectively bargained plans--In general. In the case 
of health insurance coverage maintained pursuant to one or more 
collective bargaining agreements between employee representatives and 
one or more employers that was ratified before March

[[Page 801]]

23, 2010, the coverage is grandfathered health plan coverage at least 
until the date on which the last of the collective bargaining agreements 
relating to the coverage that was in effect on March 23, 2010 
terminates. Any coverage amendment made pursuant to a collective 
bargaining agreement relating to the coverage that amends the coverage 
solely to conform to any requirement added by subtitles A and C of title 
I of the Patient Protection and Affordable Care Act (and the amendments 
made by those subtitles, and the incorporation of those amendments into 
ERISA section 715 and Internal Revenue Code section 9815) is not treated 
as a termination of the collective bargaining agreement. After the date 
on which the last of the collective bargaining agreements relating to 
the coverage that was in effect on March 23, 2010 terminates, the 
determination of whether health insurance coverage maintained pursuant 
to a collective bargaining agreement is grandfathered health plan 
coverage is made under the rules of this section other than this 
paragraph (f) (comparing the terms of the health insurance coverage 
after the date the last collective bargaining agreement terminates with 
the terms of the health insurance coverage that were in effect on March 
23, 2010).
    (g) Maintenance of grandfather status--(1) Changes causing cessation 
of grandfather status. Subject to paragraph (g)(2) of this section, the 
rules of this paragraph (g)(1) describe situations in which a group 
health plan or health insurance coverage ceases to be a grandfathered 
health plan. A plan or coverage will cease to be a grandfathered health 
plan when an amendment to plan terms that results in a change described 
in this paragraph (g)(1) becomes effective, regardless of when the 
amendment was adopted. Once grandfather status is lost, it cannot be 
regained.
    (i) Elimination of benefits. The elimination of all or substantially 
all benefits to diagnose or treat a particular condition causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan. For this purpose, the elimination of benefits for any 
necessary element to diagnose or treat a condition is considered the 
elimination of all or substantially all benefits to diagnose or treat a 
particular condition. Whether or not a plan or coverage has eliminated 
substantially all benefits to diagnose or treat a particular condition 
must be determined based on all the facts and circumstances, taking into 
account the items and services provided for a particular condition under 
the plan on March 23, 2010, as compared to the benefits offered at the 
time the plan or coverage makes the benefit change effective.
    (ii) Increase in percentage cost-sharing requirement. Any increase, 
measured from March 23, 2010, in a percentage cost-sharing requirement 
(such as an individual's coinsurance requirement) causes a group health 
plan or health insurance coverage to cease to be a grandfathered health 
plan.
    (iii) Increase in a fixed-amount cost-sharing requirement other than 
a copayment. Any increase in a fixed-amount cost-sharing requirement 
other than a copayment (for example, deductible or out-of-pocket limit), 
determined as of the effective date of the increase, causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan, if the total percentage increase in the cost-sharing 
requirement measured from March 23, 2010 exceeds the maximum percentage 
increase (as defined in paragraph (g)(3)(ii) of this section).
    (iv) Increase in a fixed-amount copayment. Any increase in a fixed-
amount copayment, determined as of the effective date of the increase, 
and determined for each copayment level if a plan has different 
copayment levels for different categories of services, causes a group 
health plan or health insurance coverage to cease to be a grandfathered 
health plan, if the total increase in the copayment measured from March 
23, 2010 exceeds the greater of:
    (A) An amount equal to $5 increased by medical inflation, as defined 
in paragraph (g)(3)(i) of this section (that is, $5 times medical 
inflation, plus $5), or
    (B) The maximum percentage increase (as defined in paragraph 
(g)(3)(ii) of this section), determined by expressing the total increase 
in the copayment as a percentage.

[[Page 802]]

    (v) Decrease in contribution rate by employers and employee 
organizations--(A) Contribution rate based on cost of coverage. A group 
health plan or group health insurance coverage ceases to be a 
grandfathered health plan if the employer or employee organization 
decreases its contribution rate based on cost of coverage (as defined in 
paragraph (g)(3)(iii)(A) of this section) towards the cost of any tier 
of coverage for any class of similarly situated individuals (as 
described in Sec. 2590.702(d)) by more than 5 percentage points below 
the contribution rate for the coverage period that includes March 23, 
2010.
    (B) Contribution rate based on a formula. A group health plan or 
group health insurance coverage ceases to be a grandfathered health plan 
if the employer or employee organization decreases its contribution rate 
based on a formula (as defined in paragraph (g)(3)(iii)(B) of this 
section) towards the cost of any tier of coverage for any class of 
similarly situated individuals (as described in Sec. 2590.702(d)) by 
more than 5 percent below the contribution rate for the coverage period 
that includes March 23, 2010.
    (C) Special rules regarding decreases in contribution rates. An 
insured group health plan (or a multiemployer plan) that is a 
grandfathered health plan will not cease to be a grandfathered health 
plan based on a change in the employer contribution rate unless the 
issuer (or multiemployer plan) knows, or should know, of the change, 
provided:
    (1) Upon renewal (or, in the case of a multiemployer plan, before 
the start of a new plan year), the issuer (or multiemployer plan) 
requires relevant employers, employee organizations, or plan sponsors, 
as applicable, to make a representation regarding its contribution rate 
for the plan year covered by the renewal, as well as its contribution 
rate on March 23, 2010 (if the issuer, or multiemployer plan, does not 
already have it); and
    (2) The relevant policies, certificates, contracts of insurance, or 
plan documents disclose in a prominent and effective manner that 
employers, employee organizations, or plan sponsors, as applicable, are 
required to notify the issuer (or multiemployer plan) if the 
contribution rate changes at any point during the plan year.
    (D) Application to plans with multi-tiered coverage structures. The 
standards for employer contributions in this paragraph (g)(1)(v) apply 
on a tier-by-tier basis. Therefore, if a group health plan modifies the 
tiers of coverage it had on March 23, 2010 (for example, from self-only 
and family to a multi-tiered structure of self-only, self-plus-one, 
self-plus-two, and self-plus-three-or-more), the employer contribution 
for any new tier would be tested by comparison to the contribution rate 
for the corresponding tier on March 23, 2010. For example, if the 
employer contribution rate for family coverage was 50 percent on March 
23, 2010, the employer contribution rate for any new tier of coverage 
other than self-only (i.e., self-plus-one, self-plus-two, self-plus-
three or more) must be within 5 percentage points of 50 percent (i.e., 
at least 45 percent). If, however, the plan adds one or more new 
coverage tiers without eliminating or modifying any previous tiers and 
those new coverage tiers cover classes of individuals that were not 
covered previously under the plan, the new tiers would not be analyzed 
under the standards for changes in employer contributions. For example, 
if a plan with self-only as the sole coverage tier added a family 
coverage tier, the level of employer contributions toward the family 
coverage would not cause the plan to lose grandfather status.
    (E) Group health plans with fixed-dollar employee contributions or 
no employee contributions. A group health plan that requires either 
fixed-dollar employee contributions or no employee contributions will 
not cease to be a grandfathered health plan solely because the employer 
contribution rate changes so long as there continues to be no employee 
contributions or no increase in the fixed-dollar employee contributions 
towards the cost of coverage.
    (vi) Changes in annual limits--(A) Addition of an annual limit. A 
group health plan, or group health insurance coverage, that, on March 
23, 2010, did not impose an overall annual or lifetime limit on the 
dollar value of all benefits ceases to be a grandfathered health plan if 
the plan or health insurance

[[Page 803]]

coverage imposes an overall annual limit on the dollar value of 
benefits. (But see Sec. 2590.715-2711, which prohibits all annual dollar 
limits on essential health benefits for plan years beginning on or after 
January 1, 2014).
    (B) Decrease in limit for a plan or coverage with only a lifetime 
limit. A group health plan, or group health insurance coverage, that, on 
March 23, 2010, imposed an overall lifetime limit on the dollar value of 
all benefits but no overall annual limit on the dollar value of all 
benefits ceases to be a grandfathered health plan if the plan or health 
insurance coverage adopts an overall annual limit at a dollar value that 
is lower than the dollar value of the lifetime limit on March 23, 2010. 
(But see Sec. 2590.715-2711, which prohibits all annual dollar limits on 
essential health benefits for plan years beginning on or after January 
1, 2014).
    (C) Decrease in limit for a plan or coverage with an annual limit. A 
group health plan, or group health insurance coverage, that, on March 
23, 2010, imposed an overall annual limit on the dollar value of all 
benefits ceases to be a grandfathered health plan if the plan or health 
insurance coverage decreases the dollar value of the annual limit 
(regardless of whether the plan or health insurance coverage also 
imposed an overall lifetime limit on March 23, 2010 on the dollar value 
of all benefits). (But see Sec. 2590.715-2711, which prohibits all 
annual dollar limits on essential health benefits for plan years 
beginning on or after January 1, 2014).
    (2) Transitional rules--(i) Changes made prior to March 23, 2010. If 
a group health plan or health insurance issuer makes the following 
changes to the terms of the plan or health insurance coverage, the 
changes are considered part of the terms of the plan or health insurance 
coverage on March 23, 2010 even though they were not effective at that 
time and such changes do not cause a plan or health insurance coverage 
to cease to be a grandfathered health plan:
    (A) Changes effective after March 23, 2010 pursuant to a legally 
binding contract entered into on or before March 23, 2010;
    (B) Changes effective after March 23, 2010 pursuant to a filing on 
or before March 23, 2010 with a State insurance department; or
    (C) Changes effective after March 23, 2010 pursuant to written 
amendments to a plan that were adopted on or before March 23, 2010.
    (ii) Changes made after March 23, 2010 and adopted prior to issuance 
of regulations. If, after March 23, 2010, a group health plan or health 
insurance issuer makes changes to the terms of the plan or health 
insurance coverage and the changes are adopted prior to June 14, 2010, 
the changes will not cause the plan or health insurance coverage to 
cease to be a grandfathered health plan if the changes are revoked or 
modified effective as of the first day of the first plan year (in the 
individual market, policy year) beginning on or after September 23, 
2010, and the terms of the plan or health insurance coverage on that 
date, as modified, would not cause the plan or coverage to cease to be a 
grandfathered health plan under the rules of this section, including 
paragraph (g)(1) of this section. For this purpose, changes will be 
considered to have been adopted prior to June 14, 2010 if:
    (A) The changes are effective before that date;
    (B) The changes are effective on or after that date pursuant to a 
legally binding contract entered into before that date;
    (C) The changes are effective on or after that date pursuant to a 
filing before that date with a State insurance department; or
    (D) The changes are effective on or after that date pursuant to 
written amendments to a plan that were adopted before that date.
    (3) Definitions--(i) Medical inflation defined. For purposes of this 
paragraph (g), the term medical inflation means the increase since March 
2010 in the overall medical care component of the Consumer Price Index 
for All Urban Consumers (CPI-U) (unadjusted) published by the Department 
of Labor using the 1982-1984 base of 100. For this purpose, the increase 
in the overall medical care component is computed by subtracting 387.142 
(the overall medical care component of the CPI-U (unadjusted) published 
by the Department of Labor for March 2010, using the

[[Page 804]]

1982-1984 base of 100) from the index amount for any month in the 12 
months before the new change is to take effect and then dividing that 
amount by 387.142.
    (ii) Maximum percentage increase defined. For purposes of this 
paragraph (g), the term maximum percentage increase means medical 
inflation (as defined in paragraph (g)(3)(i) of this section), expressed 
as a percentage, plus 15 percentage points.
    (iii) Contribution rate defined. For purposes of paragraph (g)(1)(v) 
of this section:
    (A) Contribution rate based on cost of coverage. The term 
contribution rate based on cost of coverage means the amount of 
contributions made by an employer or employee organization compared to 
the total cost of coverage, expressed as a percentage. The total cost of 
coverage is determined in the same manner as the applicable premium is 
calculated under the COBRA continuation provisions of section 604 of 
ERISA, section 4980B(f)(4) of the Internal Revenue Code, and section 
2204 of the PHS Act. In the case of a self-insured plan, contributions 
by an employer or employee organization are equal to the total cost of 
coverage minus the employee contributions towards the total cost of 
coverage.
    (B) Contribution rate based on a formula. The term contribution rate 
based on a formula means, for plans that, on March 23, 2010, made 
contributions based on a formula (such as hours worked or tons of coal 
mined), the formula.
    (4) Examples. The rules of this paragraph (g) are illustrated by the 
following examples:

    Example 1. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a coinsurance requirement of 20% for inpatient surgery. The plan is 
subsequently amended to increase the coinsurance requirement to 25%.
    (ii) Conclusion. In this Example 1, the increase in the coinsurance 
requirement from 20% to 25% causes the plan to cease to be a 
grandfathered health plan.
    Example 2. (i) Facts. Before March 23, 2010, the terms of a group 
health plan provide benefits for a particular mental health condition, 
the treatment for which is a combination of counseling and prescription 
drugs. Subsequently, the plan eliminates benefits for counseling.
    (ii) Conclusion. In this Example 2, the plan ceases to be a 
grandfathered health plan because counseling is an element that is 
necessary to treat the condition. Thus the plan is considered to have 
eliminated substantially all benefits for the treatment of the 
condition.
    Example 3. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a copayment requirement of $30 per office visit for specialists. The 
plan is subsequently amended to increase the copayment requirement to 
$40. Within the 12-month period before the $40 copayment takes effect, 
the greatest value of the overall medical care component of the CPI-U 
(unadjusted) is 475.
    (ii) Conclusion. In this Example 3, the increase in the copayment 
from $30 to $40, expressed as a percentage, is 33.33% (40^30 = 10; 10  
30 = 0.3333; 0.3333 = 33.33%). Medical inflation (as defined in 
paragraph (g)(3)(i) of this section) from March 2010 is 0.2269 
(475^387.142 = 87.858; 87.858  387.142 = 0.2269). The maximum 
percentage increase permitted is 37.69% (0.2269 = 22.69%; 22.69% + 15% = 
37.69%). Because 33.33% does not exceed 37.69%, the change in the 
copayment requirement at that time does not cause the plan to cease to 
be a grandfathered health plan.
    Example 4. (i) Facts. Same facts as Example 3, except the 
grandfathered health plan subsequently increases the $40 copayment 
requirement to $45 for a later plan year. Within the 12-month period 
before the $45 copayment takes effect, the greatest value of the overall 
medical care component of the CPI-U (unadjusted) is 485.
    (ii) Conclusion. In this Example 4, the increase in the copayment 
from $30 (the copayment that was in effect on March 23, 2010) to $45, 
expressed as a percentage, is 50% (45^30 = 15; 15  30 = 0.5; 0.5 = 
50%). Medical inflation (as defined in paragraph (g)(3)(i) of this 
section) from March 2010 is 0.2527 (485^387.142 = 97.858; 97.858  
387.142 = 0.2527). The increase that would cause a plan to cease to be a 
grandfathered health plan under paragraph (g)(1)(iv) of this section is 
the greater of the maximum percentage increase of 40.27% (0.2527 = 
25.27%; 25.27% + 15% = 40.27%), or $6.26 ($5  x  0.2527 = $1.26; $1.26 + 
$5 = $6.26). Because 50% exceeds 40.27% and $15 exceeds $6.26, the 
change in the copayment requirement at that time causes the plan to 
cease to be a grandfathered health plan.
    Example 5. (i) Facts. On March 23, 2010, a grandfathered health plan 
has a copayment of $10 per office visit for primary care providers. The 
plan is subsequently amended to increase the copayment requirement to 
$15. Within the 12-month period before the $15 copayment takes effect, 
the greatest value of the overall medical care component of the CPI-U 
(unadjusted) is 415.
    (ii) Conclusion. In this Example 5, the increase in the copayment, 
expressed as a percentage, is 50% (15^10 = 5; 5  10 = 0.5; 0.5 =

[[Page 805]]

50%). Medical inflation (as defined in paragraph (g)(3) of this section) 
from March 2010 is 0.0720 (415.0^387.142 = 27.858; 27.858  387.142 = 
0.0720). The increase that would cause a plan to cease to be a 
grandfathered health plan under paragraph (g)(1)(iv) of this section is 
the greater of the maximum percentage increase of 22.20% (0.0720 = 
7.20%; 7.20% + 15% = 22.20), or $5.36 ($5  x  0.0720 = $0.36; $0.36 + $5 
= $5.36). The $5 increase in copayment in this Example 5 would not cause 
the plan to cease to be a grandfathered health plan pursuant to 
paragraph (g)(1)(iv)this section, which would permit an increase in the 
copayment of up to $5.36.
    Example 6. (i) Facts. The same facts as Example 5, except on March 
23, 2010, the grandfathered health plan has no copayment ($0) for office 
visits for primary care providers. The plan is subsequently amended to 
increase the copayment requirement to $5.
    (ii) Conclusion. In this Example 6, medical inflation (as defined in 
paragraph (g)(3)(i) of this section) from March 2010 is 0.0720 
(415.0^387.142 = 27.858; 27.858  387.142 = 0.0720). The increase that 
would cause a plan to cease to be a grandfathered health plan under 
paragraph (g)(1)(iv)(A) of this section is $5.36 ($5  x  0.0720 = $0.36; 
$0.36 + $5 = $5.36). The $5 increase in copayment in this Example 6 is 
less than the amount calculated pursuant to paragraph (g)(1)(iv)(A) of 
this section of $5.36. Thus, the $5 increase in copayment does not cause 
the plan to cease to be a grandfathered health plan.
    Example 7. (i) Facts. On March 23, 2010, a self-insured group health 
plan provides two tiers of coverage--self-only and family. The employer 
contributes 80% of the total cost of coverage for self-only and 60% of 
the total cost of coverage for family. Subsequently, the employer 
reduces the contribution to 50% for family coverage, but keeps the same 
contribution rate for self-only coverage.
    (ii) Conclusion. In this Example 7, the decrease of 10 percentage 
points for family coverage in the contribution rate based on cost of 
coverage causes the plan to cease to be a grandfathered health plan. The 
fact that the contribution rate for self-only coverage remains the same 
does not change the result.
    Example 8. (i) Facts. On March 23, 2010, a self-insured 
grandfathered health plan has a COBRA premium for the 2010 plan year of 
$5,000 for self-only coverage and $12,000 for family coverage. The 
required employee contribution for the coverage is $1,000 for self-only 
coverage and $4,000 for family coverage. Thus, the contribution rate 
based on cost of coverage for 2010 is 80% ((5,000^1,000)/5,000) for 
self-only coverage and 67% ((12,000^4,000)/12,000) for family coverage. 
For a subsequent plan year, the COBRA premium is $6,000 for self-only 
coverage and $15,000 for family coverage. The employee contributions for 
that plan year are $1,200 for self-only coverage and $5,000 for family 
coverage. Thus, the contribution rate based on cost of coverage is 80% 
((6,000^1,200)/6,000) for self-only coverage and 67% ((15,000^5,000)/
15,000) for family coverage.
    (ii) Conclusion. In this Example 8, because there is no change in 
the contribution rate based on cost of coverage, the plan retains its 
status as a grandfathered health plan. The result would be the same if 
all or part of the employee contribution was made pre-tax through a 
cafeteria plan under section 125 of the Internal Revenue Code.
    Example 9. (i) Facts. A group health plan not maintained pursuant to 
a collective bargaining agreement offers three benefit packages on March 
23, 2010. Option F is a self-insured option. Options G and H are insured 
options. Beginning July 1, 2013, the plan increases coinsurance under 
Option H from 10% to 15%.
    (ii) Conclusion. In this Example 9, the coverage under Option H is 
not grandfathered health plan coverage as of July 1, 2013, consistent 
with the (rule in paragraph (g)(1)(ii) of this section. Whether the 
coverage under Options F and G is grandfathered health plan coverage is 
determined separately under the rules of this paragraph (g).

[80 FR 72256, Nov. 18, 2015]



Sec. 2590.715-2704  Prohibition of preexisting condition exclusions.

    (a) No preexisting condition exclusions. A group health plan, or a 
health insurance issuer offering group health insurance coverage, may 
not impose any preexisting condition exclusion (as defined in 
Sec. 2590.701-2).
    (b) Examples. The rules of paragraph (a) of this section are 
illustrated by the following examples (for additional examples 
illustrating the definition of a preexisting condition exclusion, see 
Sec. 2590.701-3(a)(2)):

    Example 1. (i) Facts. A group health plan provides benefits solely 
through an insurance policy offered by Issuer P. At the expiration of 
the policy, the plan switches coverage to a policy offered by Issuer N. 
N's policy excludes benefits for oral surgery required as a result of a 
traumatic injury if the injury occurred before the effective date of 
coverage under the policy.
    (ii) Conclusion. In this Example 1, the exclusion of benefits for 
oral surgery required as a result of a traumatic injury if the injury 
occurred before the effective date of coverage is a preexisting 
condition exclusion because it operates to exclude benefits for a 
condition based on the fact that the condition was present before the 
effective date of coverage under the policy. Therefore, such an 
exclusion is prohibited.

[[Page 806]]

    Example 2. (i) Facts. Individual C applies for individual health 
insurance coverage with Issuer M. M denies C's application for coverage 
because a pre-enrollment physical revealed that C has type 2 diabetes.
    (ii) Conclusion. See Example 2 in 45 CFR 147.108(a)(2) for a 
conclusion that M's denial of C's application for coverage is a 
preexisting condition exclusion because a denial of an application for 
coverage based on the fact that a condition was present before the date 
of denial is an exclusion of benefits based on a preexisting condition. 
Therefore, such an exclusion is prohibited.

    (c) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72261, Nov. 18, 2015]



Sec. 2590.715-2705  Prohibiting discrimination against participants
and beneficiaries based on a health factor.

    (a) In general. A group health plan and a health insurance issuer 
offering group health insurance coverage must comply with the 
requirements of Sec. 2590.702 of this part.
    (b) Applicability date. This section is applicable to group health 
plans and health insurance issuers offering group health insurance 
coverage for plan years beginning on or after January 1, 2014.

[78 FR 33186, June 3, 2013]



Sec. 2590.715-2708  Prohibition on waiting periods that exceed 90 days.

    (a) General rule. A group health plan, and a health insurance issuer 
offering group health insurance coverage, must not apply any waiting 
period that exceeds 90 days, in accordance with the rules of this 
section. If, under the terms of a plan, an individual can elect coverage 
that would begin on a date that is not later than the end of the 90-day 
waiting period, this paragraph (a) is considered satisfied. Accordingly, 
in that case, a plan or issuer will not be considered to have violated 
this paragraph (a) solely because individuals take, or are permitted to 
take, additional time (beyond the end of the 90-day waiting period) to 
elect coverage.
    (b) Waiting period defined. For purposes of this part, a waiting 
period is the period that must pass before coverage for an individual 
who is otherwise eligible to enroll under the terms of a group health 
plan can become effective. If an individual enrolls as a late enrollee 
(as defined under Sec. 2590.701-2) or special enrollee (as described in 
Sec. 2590.701-6), any period before such late or special enrollment is 
not a waiting period.
    (c) Relation to a plan's eligibility criteria--(1) In general. 
Except as provided in paragraphs (c)(2) and (c)(3) of this section, 
being otherwise eligible to enroll under the terms of a group health 
plan means having met the plan's substantive eligibility conditions 
(such as, for example, being in an eligible job classification, 
achieving job-related licensure requirements specified in the plan's 
terms, or satisfying a reasonable and bona fide employment-based 
orientation period). Moreover, except as provided in paragraphs (c)(2) 
and (c)(3) of this section, nothing in this section requires a plan 
sponsor to offer coverage to any particular individual or class of 
individuals (including, for example, part-time employees). Instead, this 
section prohibits requiring otherwise eligible individuals to wait more 
than 90 days before coverage is effective. See also section 4980H of the 
Code and its implementing regulations for an applicable large employer's 
shared responsibility to provide health coverage to full-time employees.
    (2) Eligibility conditions based solely on the lapse of time. 
Eligibility conditions that are based solely on the lapse of a time 
period are permissible for no more than 90 days.
    (3) Other conditions for eligibility. Other conditions for 
eligibility under the terms of a group health plan are generally 
permissible under PHS Act section 2708, unless the condition is designed 
to avoid compliance with the 90-day waiting period limitation, 
determined in accordance with the rules of this paragraph (c)(3).
    (i) Application to variable-hour employees in cases in which a 
specified number

[[Page 807]]

of hours of service per period is a plan eligibility condition. If a 
group health plan conditions eligibility on an employee regularly having 
a specified number of hours of service per period (or working full-
time), and it cannot be determined that a newly-hired employee is 
reasonably expected to regularly work that number of hours per period 
(or work full-time), the plan may take a reasonable period of time, not 
to exceed 12 months and beginning on any date between the employee's 
start date and the first day of the first calendar month following the 
employee's start date, to determine whether the employee meets the 
plan's eligibility condition. Except in cases in which a waiting period 
that exceeds 90 days is imposed in addition to a measurement period, the 
time period for determining whether such an employee meets the plan's 
eligibility condition will not be considered to be designed to avoid 
compliance with the 90-day waiting period limitation if coverage is made 
effective no later than 13 months from the employee's start date plus, 
if the employee's start date is not the first day of a calendar month, 
the time remaining until the first day of the next calendar month.
    (ii) Cumulative service requirements. If a group health plan or 
health insurance issuer conditions eligibility on an employee's having 
completed a number of cumulative hours of service, the eligibility 
condition is not considered to be designed to avoid compliance with the 
90-day waiting period limitation if the cumulative hours-of-service 
requirement does not exceed 1,200 hours.
    (iii) Limitation on orientation periods. To ensure that an 
orientation period is not used as a subterfuge for the passage of time, 
or designed to avoid compliance with the 90-day waiting period 
limitation, an orientation period is permitted only if it does not 
exceed one month. For this purpose, one month is determined by adding 
one calendar month and subtracting one calendar day, measured from an 
employee's start date in a position that is otherwise eligible for 
coverage. For example, if an employee's start date in an otherwise 
eligible position is May 3, the last permitted day of the orientation 
period is June 2. Similarly, if an employee's start date in an otherwise 
eligible position is October 1, the last permitted day of the 
orientation period is October 31. If there is not a corresponding date 
in the next calendar month upon adding a calendar month, the last 
permitted day of the orientation period is the last day of the next 
calendar month. For example, if the employee's start date is January 30, 
the last permitted day of the orientation period is February 28 (or 
February 29 in a leap year). Similarly, if the employee's start date is 
August 31, the last permitted day of the orientation period is September 
30.
    (d) Application to rehires. A plan or issuer may treat an employee 
whose employment has terminated and who then is rehired as newly 
eligible upon rehire and, therefore, required to meet the plan's 
eligibility criteria and waiting period anew, if reasonable under the 
circumstances (for example, the termination and rehire cannot be a 
subterfuge to avoid compliance with the 90-day waiting period 
limitation).
    (e) Counting days. Under this section, all calendar days are counted 
beginning on the enrollment date (as defined in Sec. 2590.701-2), 
including weekends and holidays. A plan or issuer that imposes a 90-day 
waiting period may, for administrative convenience, choose to permit 
coverage to become effective earlier than the 91st day if the 91st day 
is a weekend or holiday.
    (f) Examples. The rules of this section are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan provides that full-time 
employees are eligible for coverage under the plan. Employee A begins 
employment as a full-time employee on January 19.
    (ii) Conclusion. In this Example 1, any waiting period for A would 
begin on January 19 and may not exceed 90 days. Coverage under the plan 
must become effective no later than April 19 (assuming February lasts 28 
days).
    Example 2. (i) Facts. A group health plan provides that only 
employees with job title M are eligible for coverage under the plan. 
Employee B begins employment with job title L on January 30.
    (ii) Conclusion. In this Example 2, B is not eligible for coverage 
under the plan, and the period while B is working with job title L and 
therefore not in an eligible class of employees, is not part of a 
waiting period under this section.

[[Page 808]]

    Example 3. (i) Facts. Same facts as in Example 2, except that B 
transfers to a new position with job title M on April 11.
    (ii) Conclusion. In this Example 3, B becomes eligible for coverage 
on April 11, but for the waiting period. Any waiting period for B begins 
on April 11 and may not exceed 90 days; therefore, coverage under the 
plan must become effective no later than July 10.
    Example 4. (i) Facts. A group health plan provides that only 
employees who have completed specified training and achieved specified 
certifications are eligible for coverage under the plan. Employee C is 
hired on May 3 and meets the plan's eligibility criteria on September 
22.
    (ii) Conclusion. In this Example 4, C becomes eligible for coverage 
on September 22, but for the waiting period. Any waiting period for C 
would begin on September 22 and may not exceed 90 days; therefore, 
coverage under the plan must become effective no later than December 21.
    Example 5. (i) Facts. A group health plan provides that employees 
are eligible for coverage after one year of service.
    (ii) Conclusion. In this Example 5, the plan's eligibility condition 
is based solely on the lapse of time and, therefore, is impermissible 
under paragraph (c)(2) of this section because it exceeds 90 days.
    Example 6. (i) Facts. Employer V's group health plan provides for 
coverage to begin on the first day of the first payroll period on or 
after the date an employee is hired and completes the applicable 
enrollment forms. Enrollment forms are distributed on an employee's 
start date and may be completed within 90 days. Employee D is hired and 
starts on October 31, which is the first day of a pay period. D 
completes the enrollment forms and submits them on the 90th day after 
D's start date, which is January 28. Coverage is made effective 7 days 
later, February 4, which is the first day of the next pay period.
    (ii) Conclusion. In this Example 6, under the terms of V's plan, 
coverage may become effective as early as October 31, depending on when 
D completes the applicable enrollment forms. Under the terms of the 
plan, when coverage becomes effective depends solely on the length of 
time taken by D to complete the enrollment materials. Therefore, under 
the terms of the plan, D may elect coverage that would begin on a date 
that does not exceed the 90-day waiting period limitation, and the plan 
complies with this section.
    Example 7. (i) Facts. Under Employer W's group health plan, only 
employees who are full-time (defined under the plan as regularly 
averaging 30 hours of service per week) are eligible for coverage. 
Employee E begins employment for Employer W on November 26 of Year 1. 
E's hours are reasonably expected to vary, with an opportunity to work 
between 20 and 45 hours per week, depending on shift availability and 
E's availability. Therefore, it cannot be determined at E's start date 
that E is reasonably expected to work full-time. Under the terms of the 
plan, variable-hour employees, such as E, are eligible to enroll in the 
plan if they are determined to be a full-time employee after a 
measurement period of 12 months that begins on the employee's start 
date. Coverage is made effective no later than the first day of the 
first calendar month after the applicable enrollment forms are received. 
E's 12-month measurement period ends November 25 of Year 2. E is 
determined to be a full-time employee and is notified of E's plan 
eligibility. If E then elects coverage, E's first day of coverage will 
be January 1 of Year 3.
    (ii) Conclusion. In this Example 7, the measurement period is 
permissible because it is not considered to be designed to avoid 
compliance with the 90-day waiting period limitation. The plan may use a 
reasonable period of time to determine whether a variable-hour employee 
is a full-time employee, provided that (a) the period of time is no 
longer than 12 months; (b) the period of time begins on a date between 
the employee's start date and the first day of the next calendar month 
(inclusive); (c) coverage is made effective no later than 13 months from 
E's start date plus, if the employee's start date is not the first day 
of a calendar month, the time remaining until the first day of the next 
calendar month; and (d) in addition to the measurement period, no more 
than 90 days elapse prior to the employee's eligibility for coverage.
    Example 8. (i) Facts. Employee F begins working 25 hours per week 
for Employer X on January 6 and is considered a part-time employee for 
purposes of X's group health plan. X sponsors a group health plan that 
provides coverage to part-time employees after they have completed a 
cumulative 1,200 hours of service. F satisfies the plan's cumulative 
hours of service condition on December 15.
    (ii) Conclusion. In this Example 8, the cumulative hours of service 
condition with respect to part-time employees is not considered to be 
designed to avoid compliance with the 90-day waiting period limitation. 
Accordingly, coverage for F under the plan must begin no later than the 
91st day after F completes 1,200 hours. (If the plan's cumulative hours-
of-service requirement was more than 1,200 hours, the requirement would 
be considered to be designed to avoid compliance with the 90-day waiting 
period limitation.)
    Example 9. (i) Facts. A multiemployer plan operating pursuant to an 
arms-length collective bargaining agreement has an eligibility provision 
that allows employees to become eligible for coverage by working a 
specified number of hours of covered employment for multiple 
contributing employers. The plan aggregates hours in a calendar quarter 
and then, if enough hours are earned, coverage

[[Page 809]]

begins the first day of the next calendar quarter. The plan also permits 
coverage to extend for the next full calendar quarter, regardless of 
whether an employee's employment has terminated.
    (ii) Conclusion. In this Example 9, these eligibility provisions are 
designed to accommodate a unique operating structure, and, therefore, 
are not considered to be designed to avoid compliance with the 90-day 
waiting period limitation, and the plan complies with this section.
    Example 10. (i) Facts. Employee G retires at age 55 after 30 years 
of employment with Employer Y with no expectation of providing further 
services to Employer Y. Three months later, Y recruits G to return to 
work as an employee providing advice and transition assistance for G's 
replacement under a one-year employment contract. Y's plan imposes a 90-
day waiting period from an employee's start date before coverage becomes 
effective.
    (ii) Conclusion. In this Example 10, Y's plan may treat G as newly 
eligible for coverage under the plan upon rehire and therefore may 
impose the 90-day waiting period with respect to G for coverage offered 
in connection with G's rehire.
    Example 11. (i) Facts. Employee H begins working full time for 
Employer Z on October 16. Z sponsors a group health plan, under which 
full time employees are eligible for coverage after they have 
successfully completed a bona fide one-month orientation period. H 
completes the orientation period on November 15.
    (ii) Conclusion. In this Example 11, the orientation period is not 
considered a subterfuge for the passage of time and is not considered to 
be designed to avoid compliance with the 90-day waiting period 
limitation. Accordingly, plan coverage for H must begin no later than 
February 14, which is the 91st day after H completes the orientation 
period. (If the orientation period was longer than one month, it would 
be considered to be a subterfuge for the passage of time and designed to 
avoid compliance with the 90-day waiting period limitation. Accordingly 
it would violate the rules of this section.)

    (g) Special rule for health insurance issuers. To the extent 
coverage under a group health plan is insured by a health insurance 
issuer, the issuer is permitted to rely on the eligibility information 
reported to it by the employer (or other plan sponsor) and will not be 
considered to violate the requirements of this section with respect to 
its administration of any waiting period, if both of the following 
conditions are satisfied:
    (1) The issuer requires the plan sponsor to make a representation 
regarding the terms of any eligibility conditions or waiting periods 
imposed by the plan sponsor before an individual is eligible to become 
covered under the terms of the plan (and requires the plan sponsor to 
update this representation with any changes), and
    (2) The issuer has no specific knowledge of the imposition of a 
waiting period that would exceed the permitted 90-day period.
    (h) No effect on other laws. Compliance with this section is not 
determinative of compliance with any other provision of State or Federal 
law (including ERISA, the Code, or other provisions of the Patient 
Protection and Affordable Care Act). See e.g., Sec. 2590.702, which 
prohibits discrimination in eligibility for coverage based on a health 
factor and Code section 4980H, which generally requires applicable large 
employers to offer coverage to full-time employees and their dependents 
or make an assessable payment.
    (i) Applicability date. The provisions of this section apply for 
plan years beginning on or after January 1, 2015. See Sec. 2590.715-1251 
providing that the prohibition on waiting periods exceeding 90 days 
applies to all group health plans and group health insurance issuers, 
including grandfathered health plans.

[79 FR 10311, Feb. 24, 2014, as amended at 79 FR 35947, June 25, 2014]



Sec. 2590.715-2711  No lifetime or annual limits.

    (a) Prohibition--(1) Lifetime limits. Except as provided in 
paragraph (b) of this section, a group health plan, or a health 
insurance issuer offering group health insurance coverage, may not 
establish any lifetime limit on the dollar amount of essential health 
benefits for any individual, whether provided in-network or out-of-
network.
    (2) Annual limits--(i) General rule. Except as provided in 
paragraphs (a)(2)(ii) and (b) of this section, a group health plan, or a 
health insurance issuer offering group health insurance coverage, may 
not establish any annual limit on the dollar amount of essential health 
benefits for any individual, whether provided in-network or out-of-
network.
    (ii) Exception for health flexible spending arrangements. A health 
flexible spending arrangement (as defined in

[[Page 810]]

section 106(c)(2) of the Internal Revenue Code) offered through a 
cafeteria plan pursuant to section 125 of the Internal Revenue Code is 
not subject to the requirement in paragraph (a)(2)(i) of this section.
    (b) Construction--(1) Permissible limits on specific covered 
benefits. The rules of this section do not prevent a group health plan, 
or a health insurance issuer offering group health insurance coverage, 
from placing annual or lifetime dollar limits with respect to any 
individual on specific covered benefits that are not essential health 
benefits to the extent that such limits are otherwise permitted under 
applicable Federal or State law. (The scope of essential health benefits 
is addressed in paragraph (c) of this section).
    (2) Condition-based exclusions. The rules of this section do not 
prevent a group health plan, or a health insurance issuer offering group 
health insurance coverage, from excluding all benefits for a condition. 
However, if any benefits are provided for a condition, then the 
requirements of this section apply. Other requirements of Federal or 
State law may require coverage of certain benefits.
    (c) Definition of essential health benefits. The term ``essential 
health benefits'' means essential health benefits under section 1302(b) 
of the Patient Protection and Affordable Care Act and applicable 
regulations. For this purpose, a group health plan or a health insurance 
issuer that is not required to provide essential health benefits under 
section 1302(b) must define ``essential health benefits'' in a manner 
that is consistent with--
    (1) One of the EHB-benchmark plans applicable in a State under 45 
CFR 156.110, and includes coverage of any additional required benefits 
that are considered essential health benefits consistent with 45 CFR 
155.170(a)(2); or
    (2) One of the three Federal Employees Health Benefits Program 
(FEHBP) plan options as defined by 45 CFR 156.100(a)(3), supplemented, 
as necessary, to meet the standards in 45 CFR 156.110.
    (d) Special rule for health reimbursement arrangements (HRAs) and 
other account-based plans--(1) In general. If an HRA or other account-
based plan is integrated with other coverage under a group health plan 
and the other group health plan coverage alone satisfies the 
requirements in paragraph (a)(2) of this section, the fact that the 
benefits under the HRA or other account-based plan are limited does not 
mean that the HRA or other account-based plan fails to meet the 
requirements of paragraph (a)(2) of this section. Similarly, if an HRA 
or other account-based plan is integrated with other coverage under a 
group health plan and the other group health plan coverage alone 
satisfies the requirements in PHS Act section 2713 and Sec. 2590.715-
2713(a)(1), the HRA or other account-based plan will not fail to meet 
the requirements of PHS Act section 2713 and Sec. 2590.715-2713(a)(1).
    (2) Integration requirements. An HRA or other account-based plan is 
integrated with a group health plan for purposes of paragraph (a)(2) of 
this section if it meets the requirements under either the integration 
method set forth in paragraph (d)(2)(i) of this section or the 
integration method set forth in paragraph (d)(2)(ii) of this section. 
Integration does not require that the HRA (or other account-based plan) 
and the group health plan with which it is integrated share the same 
plan sponsor, the same plan document, or governing instruments, or file 
a single Form 5500, if applicable. The term ``excepted benefits'' is 
used throughout the integration methods; for a definition of the term 
``excepted benefits'' see Internal Revenue Code section 9832(c), ERISA 
section 733(c), and PHS Act section 2791(c).
    (i) Integration Method: Minimum value not required. An HRA or other 
account-based plan is integrated with another group health plan for 
purposes of this paragraph if:
    (A) The plan sponsor offers a group health plan (other than the HRA 
or other account-based plan) to the employee that does not consist 
solely of excepted benefits;
    (B) The employee receiving the HRA or other account-based plan is 
actually enrolled in a group health plan (other than the HRA or other 
account-based plan) that does not consist solely of excepted benefits, 
regardless of whether the plan is offered by the same plan

[[Page 811]]

sponsor (referred to as non-HRA group coverage);
    (C) The HRA or other account-based plan is available only to 
employees who are enrolled in non-HRA group coverage, regardless of 
whether the non-HRA group coverage is offered by the plan sponsor of the 
HRA or other account-based plan (for example, the HRA may be offered 
only to employees who do not enroll in an employer's group health plan 
but are enrolled in other non-HRA group coverage, such as a group health 
plan maintained by the employer of the employee's spouse);
    (D) The benefits under the HRA or other account-based plan are 
limited to reimbursement of one or more of the following--co-payments, 
co-insurance, deductibles, and premiums under the non-HRA group 
coverage, as well as medical care (as defined under section 213(d) of 
the Internal Revenue Code) that does not constitute essential health 
benefits as defined in paragraph (c) of this section; and
    (E) Under the terms of the HRA or other account-based plan, an 
employee (or former employee) is permitted to permanently opt out of and 
waive future reimbursements from the HRA or other account-based plan at 
least annually and, upon termination of employment, either the remaining 
amounts in the HRA or other account-based plan are forfeited or the 
employee is permitted to permanently opt out of and waive future 
reimbursements from the HRA or other account-based plan.
    (ii) Integration Method: Minimum value required. An HRA or other 
account-based plan is integrated with another group health plan for 
purposes of this paragraph if:
    (A) The plan sponsor offers a group health plan (other than the HRA 
or other account-based plan) to the employee that provides minimum value 
pursuant to Code section 36B(c)(2)(C)(ii) (and its implementing 
regulations and applicable guidance);
    (B) The employee receiving the HRA or other account-based plan is 
actually enrolled in a group health plan that provides minimum value 
pursuant to section 36B(c)(2)(C)(ii) of the Internal Revenue Code (and 
applicable guidance), regardless of whether the plan is offered by the 
plan sponsor of the HRA or other account-based plan (referred to as non-
HRA MV group coverage);
    (C) The HRA or other account-based plan is available only to 
employees who are actually enrolled in non-HRA MV group coverage, 
regardless of whether the non-HRA MV group coverage is offered by the 
plan sponsor of the HRA or other account-based plan (for example, the 
HRA may be offered only to employees who do not enroll in an employer's 
group health plan but are enrolled in other non-HRA MV group coverage, 
such as a group health plan maintained by an employer of the employee's 
spouse); and
    (D) Under the terms of the HRA or other account-based plan, an 
employee (or former employee) is permitted to permanently opt out of and 
waive future reimbursements from the HRA or other account-based plan at 
least annually, and, upon termination of employment, either the 
remaining amounts in the HRA or other account-based plan are forfeited 
or the employee is permitted to permanently opt out of and waive future 
reimbursements from the HRA or other account-based plan.
    (3) Forfeiture. For purpose of integration under paragraphs 
(d)(2)(i)(E) and (d)(2)(ii)(D) of this section, forfeiture or waiver 
occurs even if the forfeited or waived amounts may be reinstated upon a 
fixed date, a participant's death, or the earlier of the two events (the 
reinstatement event). For this purpose coverage under an HRA or other 
account-based plan is considered forfeited or waived prior to a 
reinstatement event only if the participant's election to forfeit or 
waive is irrevocable, meaning that, beginning on the effective date of 
the election and through the date of the reinstatement event, the 
participant and the participant's beneficiaries have no access to 
amounts credited to the HRA or other account-based plan. This means that 
upon and after reinstatement, the reinstated amounts under the HRA or 
other account-based plan may not be used to reimburse or pay medical 
expenses incurred during the period after forfeiture and prior to 
reinstatement.
    (4) No integration with individual market coverage. A group health 
plan, including an HRA or other account-based plan, used to purchase 
coverage on the

[[Page 812]]

individual market is not integrated with that individual market coverage 
for purposes of paragraph (a)(2) of this section (or for purposes of the 
requirements of PHS Act section 2713).
    (5) Integration with Medicare parts B and D. For employers that are 
not required to offer their non-HRA group health plan coverage to 
employees who are Medicare beneficiaries, an HRA or other account-based 
plan that may be used to reimburse premiums under Medicare part B or D 
may be integrated with Medicare (and deemed to comply with PHS Act 
sections 2711 and 2713) if the following requirements are satisfied with 
respect to employees who would be eligible for the employer's non-HRA 
group health plan but for their eligibility for Medicare (and the 
integration rules under paragraphs (d)(2)(i) and (d)(2)(ii) of this 
section continue to apply to employees who are not eligible for 
Medicare):
    (i) The plan sponsor offers a group health plan (other than the HRA 
or other account-based plan and that does not consist solely of excepted 
benefits) to employees who are not eligible for Medicare;
    (ii) The employee receiving the HRA or other account-based plan is 
actually enrolled Medicare part B or D;
    (iii) The HRA or other account-based plan is available only to 
employees who are enrolled in Medicare part B or D; and
    (iv) The HRA or other account-based plan complies with paragraphs 
(d)(2)(i)(E) and (d)(2)(ii)(D) of this section.
    (6) Account-based plan. An account-based plan for purposes of this 
section is an employer-provided group health plan that provides 
reimbursements of medical expenses other than individual market policy 
premiums with the reimbursement subject to a maximum fixed dollar amount 
for a period. An HRA is a type of account-based plan.
    (e) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72261, Nov. 18, 2015, as amended at 81 FR 75325, Oct. 31, 2016]



Sec. 2590.715-2712  Rules regarding rescissions.

    (a) Prohibition on rescissions--(1) A group health plan, or a health 
insurance issuer offering group health insurance coverage, must not 
rescind coverage under the plan, or under the policy, certificate, or 
contract of insurance, with respect to an individual (including a group 
to which the individual belongs or family coverage in which the 
individual is included) once the individual is covered under the plan or 
coverage, unless the individual (or a person seeking coverage on behalf 
of the individual) performs an act, practice, or omission that 
constitutes fraud, or makes an intentional misrepresentation of material 
fact, as prohibited by the terms of the plan or coverage. A group health 
plan, or a health insurance issuer offering group health insurance 
coverage, must provide at least 30 days advance written notice to each 
participant who would be affected before coverage may be rescinded under 
this paragraph (a)(1), regardless of whether the coverage is insured or 
self-insured, or whether the rescission applies to an entire group or 
only to an individual within the group. (The rules of this paragraph 
(a)(1) apply regardless of any contestability period that may otherwise 
apply.)
    (2) For purposes of this section, a rescission is a cancellation or 
discontinuance of coverage that has retroactive effect. For example, a 
cancellation that treats a policy as void from the time of the 
individual's or group's enrollment is a rescission. As another example, 
a cancellation that voids benefits paid up to a year before the 
cancellation is also a rescission for this purpose. A cancellation or 
discontinuance of coverage is not a rescission if--
    (i) The cancellation or discontinuance of coverage has only a 
prospective effect;
    (ii) The cancellation or discontinuance of coverage is effective 
retroactively to the extent it is attributable to a failure to timely 
pay required premiums or contributions (including

[[Page 813]]

COBRA premiums) towards the cost of coverage;
    (iii) The cancellation or discontinuance of coverage is initiated by 
the individual (or by the individual's authorized representative) and 
the sponsor, employer, plan, or issuer does not, directly or indirectly, 
take action to influence the individual's decision to cancel or 
discontinue coverage retroactively or otherwise take any adverse action 
or retaliate against, interfere with, coerce, intimidate, or threaten 
the individual; or
    (iv) The cancellation or discontinuance of coverage is initiated by 
the Exchange pursuant to 45 CFR 155.430 (other than under paragraph 
(b)(2)(iii)).
    (3) The rules of this paragraph (a) are illustrated by the following 
examples:

    Example 1. (i) Facts. Individual A seeks enrollment in an insured 
group health plan. The plan terms permit rescission of coverage with 
respect to an individual if the individual engages in fraud or makes an 
intentional misrepresentation of a material fact. The plan requires A to 
complete a questionnaire regarding A's prior medical history, which 
affects setting the group rate by the health insurance issuer. The 
questionnaire complies with the other requirements of this part. The 
questionnaire includes the following question: ``Is there anything else 
relevant to your health that we should know?'' A inadvertently fails to 
list that A visited a psychologist on two occasions, six years 
previously. A is later diagnosed with breast cancer and seeks benefits 
under the plan. On or around the same time, the issuer receives 
information about A's visits to the psychologist, which was not 
disclosed in the questionnaire.
    (ii) Conclusion. In this Example 1, the plan cannot rescind A's 
coverage because A's failure to disclose the visits to the psychologist 
was inadvertent. Therefore, it was not fraudulent or an intentional 
misrepresentation of material fact.
    Example 2. (i) Facts. An employer sponsors a group health plan that 
provides coverage for employees who work at least 30 hours per week. 
Individual B has coverage under the plan as a full-time employee. The 
employer reassigns B to a part-time position. Under the terms of the 
plan, B is no longer eligible for coverage. The plan mistakenly 
continues to provide health coverage, collecting premiums from B and 
paying claims submitted by B. After a routine audit, the plan discovers 
that B no longer works at least 30 hours per week. The plan rescinds B's 
coverage effective as of the date that B changed from a full-time 
employee to a part-time employee.
    (ii) Conclusion. In this Example 2, the plan cannot rescind B's 
coverage because there was no fraud or an intentional misrepresentation 
of material fact. The plan may cancel coverage for B prospectively, 
subject to other applicable Federal and State laws.

    (b) Compliance with other requirements. Other requirements of 
Federal or State law may apply in connection with a rescission of 
coverage.
    (c) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72263, Nov. 18, 2015]



Sec. 2590.715-2713  Coverage of preventive health services.

    (a) Services--(1) In general. Beginning at the time described in 
paragraph (b) of this section and subject to Sec. 2590.715-2713A, a 
group health plan, or a health insurance issuer offering group health 
insurance coverage, must provide coverage for all of the following items 
and services, and may not impose any cost-sharing requirements (such as 
a copayment, coinsurance, or a deductible) with respect to those items 
and services:
    (i) Evidence-based items or services that have in effect a rating of 
A or B in the current recommendations of the United States Preventive 
Services Task Force with respect to the individual involved (except as 
otherwise provided in paragraph (c) of this section);
    (ii) Immunizations for routine use in children, adolescents, and 
adults that have in effect a recommendation from the Advisory Committee 
on Immunization Practices of the Centers for Disease Control and 
Prevention with respect to the individual involved (for this purpose, a 
recommendation from the Advisory Committee on Immunization Practices of 
the Centers for Disease Control and Prevention is considered in effect 
after it has been adopted

[[Page 814]]

by the Director of the Centers for Disease Control and Prevention, and a 
recommendation is considered to be for routine use if it is listed on 
the Immunization Schedules of the Centers for Disease Control and 
Prevention);
    (iii) With respect to infants, children, and adolescents, evidence-
informed preventive care and screenings provided for in comprehensive 
guidelines supported by the Health Resources and Services 
Administration; and
    (iv) With respect to women, to the extent not described in paragraph 
(a)(1)(i) of this section, evidence-informed preventive care and 
screenings provided for in binding comprehensive health plan coverage 
guidelines supported by the Health Resources and Services 
Administration, in accordance with 45 CFR 147.131(a).
    (2) Office visits--(i) If an item or service described in paragraph 
(a)(1) of this section is billed separately (or is tracked as individual 
encounter data separately) from an office visit, then a plan or issuer 
may impose cost-sharing requirements with respect to the office visit.
    (ii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is the delivery of such an item or service, then a 
plan or issuer may not impose cost-sharing requirements with respect to 
the office visit.
    (iii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is not the delivery of such an item or service, then 
a plan or issuer may impose cost-sharing requirements with respect to 
the office visit.
    (iv) The rules of this paragraph (a)(2) are illustrated by the 
following examples:

    Example 1. (i) Facts. An individual covered by a group health plan 
visits an in-network health care provider. While visiting the provider, 
the individual is screened for cholesterol abnormalities, which has in 
effect a rating of A or B in the current recommendations of the United 
States Preventive Services Task Force with respect to the individual. 
The provider bills the plan for an office visit and for the laboratory 
work of the cholesterol screening test.
    (ii) Conclusion. In this Example 1, the plan may not impose any 
cost-sharing requirements with respect to the separately-billed 
laboratory work of the cholesterol screening test. Because the office 
visit is billed separately from the cholesterol screening test, the plan 
may impose cost-sharing requirements for the office visit.
    Example 2. (i) Facts. Same facts as Example 1. As the result of the 
screening, the individual is diagnosed with hyperlipidemia and is 
prescribed a course of treatment that is not included in the 
recommendations under paragraph (a)(1) of this section.
    (ii) Conclusion. In this Example 2, because the treatment is not 
included in the recommendations under paragraph (a)(1) of this section, 
the plan is not prohibited from imposing cost-sharing requirements with 
respect to the treatment.
    Example 3. (i) Facts. An individual covered by a group health plan 
visits an in-network health care provider to discuss recurring abdominal 
pain. During the visit, the individual has a blood pressure screening, 
which has in effect a rating of A or B in the current recommendations of 
the United States Preventive Services Task Force with respect to the 
individual. The provider bills the plan for an office visit.
    (ii) Conclusion. In this Example 3, the blood pressure screening is 
provided as part of an office visit for which the primary purpose was 
not to deliver items or services described in paragraph (a)(1) of this 
section. Therefore, the plan may impose a cost-sharing requirement for 
the office visit charge.
    Example 4. (i) Facts. A child covered by a group health plan visits 
an in-network pediatrician to receive an annual physical exam described 
as part of the comprehensive guidelines supported by the Health 
Resources and Services Administration. During the office visit, the 
child receives additional items and services that are not described in 
the comprehensive guidelines supported by the Health Resources and 
Services Administration, nor otherwise described in paragraph (a)(1) of 
this section. The provider bills the plan for an office visit.
    (ii) Conclusion. In this Example 4, the service was not billed as a 
separate charge and was billed as part of an office visit. Moreover, the 
primary purpose for the visit was to deliver items and services 
described as part of the comprehensive guidelines supported by the 
Health Resources and Services Administration. Therefore, the plan may 
not impose a cost-sharing requirement with respect to the office visit.

    (3) Out-of-network providers--(i) Subject to paragraph (a)(3)(ii) of 
this section, nothing in this section requires a

[[Page 815]]

plan or issuer that has a network of providers to provide benefits for 
items or services described in paragraph (a)(1) of this section that are 
delivered by an out-of-network provider. Moreover, nothing in this 
section precludes a plan or issuer that has a network of providers from 
imposing cost-sharing requirements for items or services described in 
paragraph (a)(1) of this section that are delivered by an out-of-network 
provider.
    (ii) If a plan or issuer does not have in its network a provider who 
can provide an item or service described in paragraph (a)(1) of this 
section, the plan or issuer must cover the item or service when 
performed by an out-of-network provider, and may not impose cost sharing 
with respect to the item or service.
    (4) Reasonable medical management. Nothing prevents a plan or issuer 
from using reasonable medical management techniques to determine the 
frequency, method, treatment, or setting for an item or service 
described in paragraph (a)(1) of this section to the extent not 
specified in the relevant recommendation or guideline. To the extent not 
specified in a recommendation or guideline, a plan or issuer may rely on 
the relevant clinical evidence base and established reasonable medical 
management techniques to determine the frequency, method, treatment, or 
setting for coverage of a recommended preventive health service.
    (5) Services not described. Nothing in this section prohibits a plan 
or issuer from providing coverage for items and services in addition to 
those recommended by the United States Preventive Services Task Force or 
the Advisory Committee on Immunization Practices of the Centers for 
Disease Control and Prevention, or provided for by guidelines supported 
by the Health Resources and Services Administration, or from denying 
coverage for items and services that are not recommended by that task 
force or that advisory committee, or under those guidelines. A plan or 
issuer may impose cost-sharing requirements for a treatment not 
described in paragraph (a)(1) of this section, even if the treatment 
results from an item or service described in paragraph (a)(1) of this 
section.
    (b) Timing--(1) In general. A plan or issuer must provide coverage 
pursuant to paragraph (a)(1) of this section for plan years that begin 
on or after September 23, 2010, or, if later, for plan years that begin 
on or after the date that is one year after the date the recommendation 
or guideline is issued.
    (2) Changes in recommendations or guidelines. (i) A plan or issuer 
that is required to provide coverage for any items and services 
specified in any recommendation or guideline described in paragraph 
(a)(1) of this section on the first day of a plan year must provide 
coverage through the last day of the plan year, even if the 
recommendation or guideline changes or is no longer described in 
paragraph (a)(1) of this section, during the plan year.
    (ii) Notwithstanding paragraph (b)(2)(i) of this section, to the 
extent a recommendation or guideline described in paragraph (a)(1)(i) of 
this section that was in effect on the first day of a plan year is 
downgraded to a ``D'' rating, or any item or service associated with any 
recommendation or guideline specified in paragraph (a)(1) of this 
section is subject to a safety recall or is otherwise determined to pose 
a significant safety concern by a federal agency authorized to regulate 
the item or service during a plan year, there is no requirement under 
this section to cover these items and services through the last day of 
the plan year.
    (c) Recommendations not current. For purposes of paragraph (a)(1)(i) 
of this section, and for purposes of any other provision of law, 
recommendations of the United States Preventive Services Task Force 
regarding breast cancer screening, mammography, and prevention issued in 
or around November 2009 are not considered to be current.
    (d) Applicability date. The provisions of this section apply for 
plan years beginning on or after September 23, 2010. See Sec. 2590.715-
1251 of this part for determining the application of this section to 
grandfathered health plans (providing that these rules regarding 
coverage of preventive health services do

[[Page 816]]

not apply to grandfathered health plans).

[75 FR 41757, July 19, 2010, as amended at 76 FR 46625, Aug. 3, 2011; 78 
FR 39894, July 2, 2013; 80 FR 41345, July 14, 2015]



Sec. 2590.715-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraphs (a)(1) through (3) of 
this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under 
Sec. 2590.715-2713(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (a)(4) of this section, and 
the organization's highest governing body (such as its board of 
directors, board of trustees, or owners, if managed directly by its 
owners) has adopted a resolution or similar action, under the 
organization's applicable rules of governance and consistent with state 
law, establishing that it objects to covering some or all of the 
contraceptive services on account of the owners' sincerely held 
religious beliefs.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary or provide notice to the Secretary of Health 
and Human Services as described in paragraph (b) or (c) of this section. 
The organization must make such self-certification or notice available 
for examination upon request by the first day of the first plan year to 
which the accommodation in paragraph (b) or (c) of this section applies. 
The self-certification or notice must be executed by a person authorized 
to make the certification or notice on behalf of the organization, and 
must be maintained in a manner consistent with the record retention 
requirements under section 107 of ERISA.
    (4) A closely held for-profit entity is an entity that--
    (i) Is not a nonprofit entity;
    (ii) Has no publicly traded ownership interests (for this purpose, a 
publicly traded ownership interest is any class of common equity 
securities required to be registered under section 12 of the Securities 
Exchange Act of 1934); and
    (iii) Has more than 50 percent of the value of its ownership 
interest owned directly or indirectly by five or fewer individuals, or 
has an ownership structure that is substantially similar thereto, as of 
the date of the entity's self-certification or notice described in 
paragraph (b) or (c) of this section.
    (iv) For the purpose of the calculation in paragraph (a)(4)(iii) of 
this section, the following rules apply:
    (A) Ownership interests owned by a corporation, partnership, estate, 
or trust are considered owned proportionately by such entity's 
shareholders, partners, or beneficiaries. Ownership interests owned by a 
nonprofit entity are considered owned by a single owner.
    (B) An individual is considered to own the ownership interests 
owned, directly or indirectly, by or for his or her family. Family 
includes only brothers and sisters (including half-brothers and half-
sisters), a spouse, ancestors, and lineal descendants.
    (C) If a person holds an option to purchase ownership interests, he 
or she is considered to be the owner of those ownership interests.
    (v) A for-profit entity that seeks further information regarding 
whether it qualifies for the accommodation described in this section may 
send a letter describing its ownership structure to the Department of 
Health and Human Services. An entity must submit the letter in the 
manner described by the Department of Health and Human Services. If the 
entity does not receive a response from the Department of Health and 
Human Services to a properly submitted letter describing the entity's 
current ownership structure within 60 calendar days, as long as the 
entity maintains that structure it will be considered to meet the 
requirement set forth in paragraph (a)(4)(iii) of this section.
    (b) Contraceptive coverage--self-insured group health plans--(1) A 
group health plan established or maintained by an

[[Page 817]]

eligible organization that provides benefits on a self-insured basis 
complies for one or more plan years with any requirement under 
Sec. 2590.715-2713(a)(1)(iv) to provide contraceptive coverage if all of 
the requirements of this paragraph (b)(1) are satisfied:
    (i) The eligible organization or its plan contracts with one or more 
third party administrators.
    (ii) The eligible organization provides either a copy of the self-
certification to each third party administrator or a notice to the 
Secretary of Health and Human Services that it is an eligible 
organization and of its religious objection to coverage of all or a 
subset of contraceptive services.
    (A) When a copy of the self-certification is provided directly to a 
third party administrator, such self-certification must include notice 
that obligations of the third party administrator are set forth in 
Sec. 2510.3-16 of this chapter and this section.
    (B) When a notice is provided to the Secretary of Health and Human 
Services, the notice must include the name of the eligible organization 
and the basis on which it qualifies for an accommodation; its objection 
based on sincerely held religious beliefs to coverage of some or all 
contraceptive services (including an identification of the subset of 
contraceptive services to which coverage the eligible organization 
objects, if applicable); the plan name and type (i.e., whether it is a 
student health insurance plan within the meaning of 45 CFR 147.145(a) or 
a church plan within the meaning of ERISA section 3(33)); and the name 
and contact information for any of the plan's third party administrators 
and health insurance issuers. If there is a change in any of the 
information required to be included in the notice, the organization must 
provide updated information to the Secretary of Health and Human 
Services. The Department of Labor (working with the Department of Health 
and Human Services), shall send a separate notification to each of the 
plan's third party administrators informing the third party 
administrator that the Secretary of Health and Human Services has 
received a notice under paragraph (b)(1)(ii) of this section and 
describing the obligations of the third party administrator under 
Sec. 2510.3-16 of this chapter and this section.
    (2) If a third party administrator receives a copy of the self-
certification from an eligible organization or a notification from the 
Department of Labor, as described in paragraph (b)(1)(ii) of this 
section, and agrees to enter into or remain in a contractual 
relationship with the eligible organization or its plan to provide 
administrative services for the plan, the third party administrator 
shall provide or arrange payments for contraceptive services using one 
of the following methods--
    (i) Provide payments for contraceptive services for plan 
participants and beneficiaries without imposing any cost-sharing 
requirements (such as a copayment, coinsurance, or a deductible), or 
imposing a premium, fee, or other charge, or any portion thereof, 
directly or indirectly, on the eligible organization, the group health 
plan, or plan participants or beneficiaries; or
    (ii) Arrange for an issuer or other entity to provide payments for 
contraceptive services for plan participants and beneficiaries without 
imposing any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), or imposing a premium, fee, or other 
charge, or any portion thereof, directly or indirectly, on the eligible 
organization, the group health plan, or plan participants or 
beneficiaries.
    (3) If a third party administrator provides or arranges payments for 
contraceptive services in accordance with either paragraph (b)(2)(i) or 
(ii) of this section, the costs of providing or arranging such payments 
may be reimbursed through an adjustment to the Federally-facilitated 
Exchange user fee for a participating issuer pursuant to 45 CFR 
156.50(d).
    (4) A third party administrator may not require any documentation 
other than a copy of the self-certification from the eligible 
organization or notification from the Department of Labor described in 
paragraph (b)(1)(ii) of this section.
    (c) Contraceptive coverage--insured group health plans--(1) General 
rule. A group health plan established or maintained by an eligible 
organization that provides benefits through one or more

[[Page 818]]

group health insurance issuers complies for one or more plan years with 
any requirement under Sec. 2590.715-2713(a)(1)(iv) to provide 
contraceptive coverage if the eligible organization or group health plan 
provides either a copy of the self-certification to each issuer 
providing coverage in connection with the plan or a notice to the 
Secretary of Health and Human Services that it is an eligible 
organization and of its religious objection to coverage for all or a 
subset of contraceptive services.
    (i) When a copy of the self-certification is provided directly to an 
issuer, the issuer has sole responsibility for providing such coverage 
in accordance with Sec. 2590.715-2713. An issuer may not require any 
further documentation from the eligible organization regarding its 
status as such.
    (ii) When a notice is provided to the Secretary of Health and Human 
Services, the notice must include the name of the eligible organization 
and the basis on which it qualifies for an accommodation; its objection 
based on its sincerely held religious beliefs to coverage of some or all 
contraceptive services, as applicable (including an identification of 
the subset of contraceptive services to which coverage the eligible 
organization objects, if applicable); the plan name and type (i.e., 
whether it is a student health insurance plan within the meaning of 45 
CFR 147.145(a) or a church plan within the meaning of ERISA section 
3(33)); and the name and contact information for any of the plan's third 
party administrators and health insurance issuers. If there is a change 
in any of the information required to be included in the notice, the 
organization must provide updated information to the Secretary of Health 
and Human Services. The Department of Health and Human Services will 
send a separate notification to each of the plan's health insurance 
issuers informing the issuer that the Secretary of Health and Human 
Services has received a notice under paragraph (c)(1) of this section 
and describing the obligations of the issuer under this section.
    (2) Payments for contraceptive services--(i) A group health 
insurance issuer that receives a copy of the self-certification or 
notification described in paragraph (c)(1)(ii) of this section with 
respect to a group health plan established or maintained by an eligible 
organization in connection with which the issuer would otherwise provide 
contraceptive coverage under Sec. 2590.715-2713(a)(1)(iv) must--
    (A) Expressly exclude contraceptive coverage from the group health 
insurance coverage provided in connection with the group health plan; 
and
    (B) Provide separate payments for any contraceptive services 
required to be covered under Sec. 2590.715-2713(a)(1)(iv) for plan 
participants and beneficiaries for so long as they remain enrolled in 
the plan.
    (ii) With respect to payments for contraceptive services, the issuer 
may not impose any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), or impose any premium, fee, or other 
charge, or any portion thereof, directly or indirectly, on the eligible 
organization, the group health plan, or plan participants or 
beneficiaries. The issuer must segregate premium revenue collected from 
the eligible organization from the monies used to provide payments for 
contraceptive services. The issuer must provide payments for 
contraceptive services in a manner that is consistent with the 
requirements under sections 2706, 2709, 2711, 2713, 2719, and 2719A of 
the PHS Act, as incorporated into section 715 of ERISA. If the group 
health plan of the eligible organization provides coverage for some but 
not all of any contraceptive services required to be covered under 
Sec. 2590.715-2713(a)(1)(iv), the issuer is required to provide payments 
only for those contraceptive services for which the group health plan 
does not provide coverage. However, the issuer may provide payments for 
all contraceptive services, at the issuer's option.
    (d) Notice of availability of separate payments for contraceptive 
services--self-insured and insured group health plans. For each plan 
year to which the accommodation in paragraph (b) or (c) of this section 
is to apply, a third party administrator required to provide or arrange 
payments for contraceptive services pursuant to paragraph (b) of this

[[Page 819]]

section, and an issuer required to provide payments for contraceptive 
services pursuant to paragraph (c) of this section, must provide to plan 
participants and beneficiaries written notice of the availability of 
separate payments for contraceptive services contemporaneous with (to 
the extent possible), but separate from, any application materials 
distributed in connection with enrollment (or re-enrollment) in group 
health coverage that is effective beginning on the first day of each 
applicable plan year. The notice must specify that the eligible 
organization does not administer or fund contraceptive benefits, but 
that the third party administrator or issuer, as applicable, provides 
separate payments for contraceptive services, and must provide contact 
information for questions and complaints. The following model language, 
or substantially similar language, may be used to satisfy the notice 
requirement of this paragraph (d): ``Your employer has certified that 
your group health plan qualifies for an accommodation with respect to 
the federal requirement to cover all Food and Drug Administration-
approved contraceptive services for women, as prescribed by a health 
care provider, without cost sharing. This means that your employer will 
not contract, arrange, pay, or refer for contraceptive coverage. 
Instead, [name of third party administrator/health insurance issuer] 
will provide or arrange separate payments for contraceptive services 
that you use, without cost sharing and at no other cost, for so long as 
you are enrolled in your group health plan. Your employer will not 
administer or fund these payments. If you have any questions about this 
notice, contact [contact information for third party administrator/
health insurance issuer].''
    (e) Reliance--insured group health plans--(1) If an issuer relies 
reasonably and in good faith on a representation by the eligible 
organization as to its eligibility for the accommodation in paragraph 
(c) of this section, and the representation is later determined to be 
incorrect, the issuer is considered to comply with any requirement under 
Sec. 2590.715-2713(a)(1)(iv) to provide contraceptive coverage if the 
issuer complies with the obligations under this section applicable to 
such issuer.
    (2) A group health plan is considered to comply with any requirement 
under Sec. 2590.715-2713(a)(1)(iv) to provide contraceptive coverage if 
the plan complies with its obligations under paragraph (c) of this 
section, without regard to whether the issuer complies with the 
obligations under this section applicable to such issuer.

[78 FR 39894, July 2, 2013, as amended at 79 FR 51100, Aug. 27, 2014; 80 
FR 41345, July 14, 2015]



Sec. 2590.715-2714  Eligibility of children until at least age 26.

    (a) In general--(1) A group health plan, or a health insurance 
issuer offering group health insurance coverage, that makes available 
dependent coverage of children must make such coverage available for 
children until attainment of 26 years of age.
    (2) The rule of this paragraph (a) is illustrated by the following 
example:

    Example. (i) Facts. For the plan year beginning January 1, 2011, a 
group health plan provides health coverage for employees, employees' 
spouses, and employees' children until the child turns 26. On the 
birthday of a child of an employee, July 17, 2011, the child turns 26. 
The last day the plan covers the child is July 16, 2011.
    (ii) Conclusion. In this Example, the plan satisfies the requirement 
of this paragraph (a) with respect to the child.

    (b) Restrictions on plan definition of dependent--(1) In general. 
With respect to a child who has not attained age 26, a plan or issuer 
may not define dependent for purposes of eligibility for dependent 
coverage of children other than in terms of a relationship between a 
child and the participant. Thus, for example, a plan or issuer may not 
deny or restrict dependent coverage for a child who has not attained age 
26 based on the presence or absence of the child's financial dependency 
(upon the participant or any other person); residency with the 
participant or with any other person; whether the child lives, works, or 
resides in an HMO's service area or other network service area; marital 
status; student status; employment; eligibility for other coverage; or 
any combination of those factors. (Other requirements of Federal or

[[Page 820]]

State law, including section 609 of ERISA or section 1908 of the Social 
Security Act, may require coverage of certain children.)
    (2) Construction. A plan or issuer will not fail to satisfy the 
requirements of this section if the plan or issuer limits dependent 
child coverage to children under age 26 who are described in section 
152(f)(1) of the Code. For an individual not described in Code section 
152(f)(1), such as a grandchild or niece, a plan may impose additional 
conditions on eligibility for dependent child health coverage, such as a 
condition that the individual be a dependent for income tax purposes.
    (c) Coverage of grandchildren not required. Nothing in this section 
requires a plan or issuer to make coverage available for the child of a 
child receiving dependent coverage.
    (d) Uniformity irrespective of age. The terms of the plan or health 
insurance coverage providing dependent coverage of children cannot vary 
based on age (except for children who are age 26 or older).
    (e) Examples. The rules of paragraph (d) of this section are 
illustrated by the following examples:

    Example 1. (i) Facts. A group health plan offers a choice of self-
only or family health coverage. Dependent coverage is provided under 
family health coverage for children of participants who have not 
attained age 26. The plan imposes an additional premium surcharge for 
children who are older than age 18.
    (ii) Conclusion. In this Example 1, the plan violates the 
requirement of paragraph (d) of this section because the plan varies the 
terms for dependent coverage of children based on age.
    Example 2. (i) Facts. A group health plan offers a choice among the 
following tiers of health coverage: Self-only, self-plus-one, self-plus-
two, and self-plus-three-or-more. The cost of coverage increases based 
on the number of covered individuals. The plan provides dependent 
coverage of children who have not attained age 26.
    (ii) Conclusion. In this Example 2, the plan does not violate the 
requirement of paragraph (d) of this section that the terms of dependent 
coverage for children not vary based on age. Although the cost of 
coverage increases for tiers with more covered individuals, the increase 
applies without regard to the age of any child.
    Example 3. (i) Facts. A group health plan offers two benefit 
packages--an HMO option and an indemnity option. Dependent coverage is 
provided for children of participants who have not attained age 26. The 
plan limits children who are older than age 18 to the HMO option.
    (ii) Conclusion. In this Example 3, the plan violates the 
requirement of paragraph (d) of this section because the plan, by 
limiting children who are older than age 18 to the HMO option, varies 
the terms for dependent coverage of children based on age.
    Example 4. (i) Facts. A group health plan sponsored by a large 
employer normally charges a copayment for physician visits that do not 
constitute preventive services. The plan charges this copayment to 
individuals age 19 and over, including employees, spouses, and dependent 
children, but waives it for those under age 19.
    (ii) Conclusion. In this Example 4, the plan does not violate the 
requirement of paragraph (d) of this section that the terms of dependent 
coverage for children not vary based on age. While the requirement of 
paragraph (d) of this section generally prohibits distinctions based 
upon age in dependent coverage of children, it does not prohibit 
distinctions based upon age that apply to all coverage under the plan, 
including coverage for employees and spouses as well as dependent 
children. In this Example 4, the copayments charged to dependent 
children are the same as those charged to employees and spouses. 
Accordingly, the arrangement described in this Example 4 (including 
waiver, for individuals under age 19, of the generally applicable 
copayment) does not violate the requirement of paragraph (d) of this 
section.

    (f) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72263, Nov. 18, 2015]



Sec. 2590.715-2715  Summary of benefits and coverage and uniform glossary.

    (a) Summary of benefits and coverage--(1) In general. A group health 
plan (and its administrator as defined in section 3(16)(A) of ERISA)), 
and a health insurance issuer offering group health insurance coverage, 
is required to provide a written summary of benefits and coverage (SBC) 
for each benefit package without charge to entities and individuals 
described in this paragraph (a)(1)

[[Page 821]]

in accordance with the rules of this section.
    (i) SBC provided by a group health insurance issuer to a group 
health plan--(A) Upon application. A health insurance issuer offering 
group health insurance coverage must provide the SBC to a group health 
plan (or its sponsor) upon application for health coverage, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If an SBC 
was provided before application pursuant to paragraph (a)(1)(i)(D) of 
this section (relating to SBCs upon request), this paragraph 
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been a 
change in the information required, a new SBC that includes the changed 
information must be provided upon application pursuant to this paragraph 
(a)(1)(i)(A).
    (B) By first day of coverage (if there are changes). If there is any 
change in the information required to be in the SBC that was provided 
upon application and before the first day of coverage, the issuer must 
update and provide a current SBC to the plan (or its sponsor) no later 
than the first day of coverage.
    (C) Upon renewal, reissuance, or reenrollment. If the issuer renews 
or reissues a policy, certificate, or contract of insurance for a 
succeeding policy year, or automatically re-enrolls the policyholder or 
its participants and beneficiaries in coverage, the issuer must provide 
a new SBC as follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal or reissuance, the SBC must be provided no 
later than the date the written application materials are distributed.
    (2) If renewal, reissuance, or reenrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the new 
plan or policy year; however, with respect to an insured plan, if the 
policy, certificate, or contract of insurance has not been issued or 
renewed before such 30-day period, the SBC must be provided as soon as 
practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (D) Upon request. If a group health plan (or its sponsor) requests 
an SBC or summary information about a health insurance product from a 
health insurance issuer offering group health insurance coverage, an SBC 
must be provided as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (ii) SBC provided by a group health insurance issuer and a group 
health plan to participants and beneficiaries--(A) In general. A group 
health plan (including its administrator, as defined under section 3(16) 
of ERISA), and a health insurance issuer offering group health insurance 
coverage, must provide an SBC to a participant or beneficiary (as 
defined under sections 3(7) and 3(8) of ERISA), and consistent with the 
rules of paragraph (a)(1)(iii) of this section, with respect to each 
benefit package offered by the plan or issuer for which the participant 
or beneficiary is eligible.
    (B) Upon application. The SBC must be provided as part of any 
written application materials that are distributed by the plan or issuer 
for enrollment. If the plan or issuer does not distribute written 
application materials for enrollment, the SBC must be provided no later 
than the first date on which the participant is eligible to enroll in 
coverage for the participant or any beneficiaries. If an SBC was 
provided before application pursuant to paragraph (a)(1)(ii)(F) of this 
section (relating to SBCs upon request), this paragraph (a)(1)(ii)(B) is 
deemed satisfied, provided there is no change to the information 
required to be in the SBC. However, if there has been a change in the 
information that is required to be in the SBC, a new SBC that includes 
the changed information must be provided upon application pursuant to 
this paragraph (a)(1)(ii)(B).
    (C) By first day of coverage (if there are changes). (1) If there is 
any change to the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the plan 
or issuer must update and provide a current SBC to a participant or 
beneficiary no later than the first day of coverage.

[[Page 822]]

    (2) If the plan sponsor is negotiating coverage terms after an 
application has been filed and the information required to be in the SBC 
changes, the plan or issuer is not required to provide an updated SBC 
(unless an updated SBC is requested) until the first day of coverage.
    (D) Special enrollees. The plan or issuer must provide the SBC to 
special enrollees (as described in Sec. 2590.701-6) no later than the 
date by which a summary plan description is required to be provided 
under the timeframe set forth in ERISA section 104(b)(1)(A) and its 
implementing regulations, which is 90 days from enrollment.
    (E) Upon renewal, reissuance, or reenrollment. If the plan or issuer 
requires participants or beneficiaries to renew in order to maintain 
coverage (for example, for a succeeding plan year), or automatically re-
enrolls participants and beneficiaries in coverage, the plan or issuer 
must provide a new SBC, as follows:
    (1) If written application is required for renewal, reissuance, or 
reenrollment (in either paper or electronic form), the SBC must be 
provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or reenrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the new 
plan or policy year; however, with respect to an insured plan, if the 
policy, certificate, or contract of insurance has not been issued or 
renewed before such 30-day period, the SBC must be provided as soon as 
practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (F) Upon request. A plan or issuer must provide the SBC to 
participants or beneficiaries upon request for an SBC or summary 
information about the health coverage, as soon as practicable, but in no 
event later than seven business days following receipt of the request.
    (iii) Special rules to prevent unnecessary duplication with respect 
to group health coverage--(A) An entity required to provide an SBC under 
this paragraph (a)(1) with respect to an individual satisfies that 
requirement if another party provides the SBC, but only to the extent 
that the SBC is timely and complete in accordance with the other rules 
of this section. Therefore, for example, in the case of a group health 
plan funded through an insurance policy, the plan satisfies the 
requirement to provide an SBC with respect to an individual if the 
issuer provides a timely and complete SBC to the individual. An entity 
required to provide an SBC under this paragraph (a)(1) with respect to 
an individual that contracts with another party to provide such SBC is 
considered to satisfy the requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the noncompliance, and begins 
taking significant steps as soon as practicable to avoid future 
violations.
    (B) If a single SBC is provided to a participant and any 
beneficiaries at the participant's last known address, then the 
requirement to provide the SBC to the participant and any beneficiaries 
is generally satisfied. However, if a beneficiary's last known address 
is different than the participant's last known address, a separate SBC 
is required to be provided to the beneficiary at the beneficiary's last 
known address.
    (C) With respect to a group health plan that offers multiple benefit 
packages, the plan or issuer is required to provide a new SBC 
automatically to

[[Page 823]]

participants and beneficiaries upon renewal or reenrollment only with 
respect to the benefit package in which a participant or beneficiary is 
enrolled (or will be automatically re-enrolled under the plan); SBCs are 
not required to be provided automatically upon renewal or reenrollment 
with respect to benefit packages in which the participant or beneficiary 
is not enrolled (or will not automatically be enrolled). However, if a 
participant or beneficiary requests an SBC with respect to another 
benefit package (or more than one other benefit package) for which the 
participant or beneficiary is eligible, the SBC (or SBCs, in the case of 
a request for SBCs relating to more than one benefit package) must be 
provided upon request as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (D) Subject to paragraph (a)(2)(ii) of this section, a plan 
administrator of a group health plan that uses two or more insurance 
products provided by separate health insurance issuers with respect to a 
single group health plan may synthesize the information into a single 
SBC or provide multiple partial SBCs provided that all the SBC include 
the content in paragraph (a)(2)(iii) of this section.
    (2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of 
this section, the SBC must include the following:
    (A) Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage, in accordance with guidance 
as specified by the Secretary;
    (B) A description of the coverage, including cost sharing, for each 
category of benefits identified by the Secretary in guidance;
    (C) The exceptions, reductions, and limitations of the coverage;
    (D) The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    (E) The renewability and continuation of coverage provisions;
    (F) Coverage examples, in accordance with the rules of paragraph 
(a)(2)(ii) of this section;
    (G) With respect to coverage beginning on or after January 1, 2014, 
a statement about whether the plan or coverage provides minimum 
essential coverage as defined under section 5000A(f) and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable requirements;
    (H) A statement that the SBC is only a summary and that the plan 
document, policy, certificate, or contract of insurance should be 
consulted to determine the governing contractual provisions of the 
coverage;
    (I) Contact information for questions;
    (J) For issuers, an Internet web address where a copy of the actual 
individual coverage policy or group certificate of coverage can be 
reviewed and obtained;
    (K) For plans and issuers that maintain one or more networks of 
providers, an Internet address (or similar contact information) for 
obtaining a list of network providers;
    (L) For plans and issuers that use a formulary in providing 
prescription drug coverage, an Internet address (or similar contact 
information) for obtaining information on prescription drug coverage; 
and
    (M) An Internet address for obtaining the uniform glossary, as 
described in paragraph (c) of this section, as well as a contact phone 
number to obtain a paper copy of the uniform glossary, and a disclosure 
that paper copies are available.
    (ii) Coverage examples. The SBC must include coverage examples 
specified by the Secretary in guidance that illustrate benefits provided 
under the plan or coverage for common benefits scenarios (including 
pregnancy and serious or chronic medical conditions) in accordance with 
this paragraph (a)(2)(ii).
    (A) Number of examples. The Secretary may identify up to six 
coverage examples that may be required in an SBC.
    (B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), a 
benefits scenario is a hypothetical situation, consisting of a sample 
treatment plan for a specified medical condition during a

[[Page 824]]

specific period of time, based on recognized clinical practice 
guidelines as defined by the National Guideline Clearinghouse, Agency 
for Healthcare Research and Quality. The Secretary will specify, in 
guidance, the assumptions, including the relevant items and services and 
reimbursement information, for each claim in the benefits scenario.
    (C) Illustration of benefit provided. For purposes of this paragraph 
(a)(2)(ii), to illustrate benefits provided under the plan or coverage 
for a particular benefits scenario, a plan or issuer simulates claims 
processing in accordance with guidance issued by the Secretary to 
generate an estimate of what an individual might expect to pay under the 
plan, policy, or benefit package. The illustration of benefits provided 
will take into account any cost sharing, excluded benefits, and other 
limitations on coverage, as specified by the Secretary in guidance.
    (iii) Coverage provided outside the United States. In lieu of 
summarizing coverage for items and services provided outside the United 
States, a plan or issuer may provide an Internet address (or similar 
contact information) for obtaining information about benefits and 
coverage provided outside the United States. In any case, the plan or 
issuer must provide an SBC in accordance with this section that 
accurately summarizes benefits and coverage available under the plan or 
coverage within the United States.
    (3) Appearance. (i) A group health plan and a health insurance 
issuer must provide an SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the Secretary 
in guidance. The SBC must be presented in a uniform format, use 
terminology understandable by the average plan enrollee, not exceed four 
double-sided pages in length, and not include print smaller than 12-
point font.
    (ii) A group health plan that utilizes two or more benefit packages 
(such as major medical coverage and a health flexible spending 
arrangement) may synthesize the information into a single SBC, or 
provide multiple SBCs.
    (4) Form. (i) An SBC provided by an issuer offering group health 
insurance coverage to a plan (or its sponsor), may be provided in paper 
form. Alternatively, the SBC may be provided electronically (such as by 
email or an Internet posting) if the following three conditions are 
satisfied--
    (A) The format is readily accessible by the plan (or its sponsor);
    (B) The SBC is provided in paper form free of charge upon request; 
and
    (C) If the electronic form is an Internet posting, the issuer timely 
advises the plan (or its sponsor) in paper form or email that the 
documents are available on the Internet and provides the Internet 
address.
    (ii) An SBC provided by a group health plan or health insurance 
issuer to a participant or beneficiary may be provided in paper form. 
Alternatively, the SBC may be provided electronically (such as by email 
or an Internet posting) if the requirements of this paragraph (a)(4)(ii) 
are met.
    (A) With respect to participants and beneficiaries covered under the 
plan or coverage, the SBC may be provided electronically as described in 
this paragraph (a)(4)(ii)(A). However, in all cases, the plan or issuer 
must provide the SBC in paper form if paper form is requested.
    (1) In accordance with the Department of Labor's disclosure 
regulations at 29 CFR 2520.104b-1;
    (2) In connection with online enrollment or online renewal of 
coverage under the plan; or
    (3) In response to an online request made by a participant or 
beneficiary for the SBC.
    (B) With respect to participants and beneficiaries who are eligible 
but not enrolled for coverage, the SBC may be provided electronically 
if:
    (1) The format is readily accessible;
    (2) The SBC is provided in paper form free of charge upon request; 
and
    (3) In a case in which the electronic form is an Internet posting, 
the plan or issuer timely notifies the individual in paper form (such as 
a postcard) or email that the documents are available on the Internet, 
provides the Internet address, and notifies the individual that the 
documents are available in paper form upon request.
    (5) Language. A group health plan or health insurance issuer must 
provide

[[Page 825]]

the SBC in a culturally and linguistically appropriate manner. For 
purposes of this paragraph (a)(5), a plan or issuer is considered to 
provide the SBC in a culturally and linguistically appropriate manner if 
the thresholds and standards of Sec. 2590.715-2719(e) are met as applied 
to the SBC.
    (b) Notice of modification. If a group health plan, or health 
insurance issuer offering group health insurance coverage, makes any 
material modification (as defined under section 102 of ERISA) in any of 
the terms of the plan or coverage that would affect the content of the 
SBC, that is not reflected in the most recently provided SBC, and that 
occurs other than in connection with a renewal or reissuance of 
coverage, the plan or issuer must provide notice of the modification to 
enrollees not later than 60 days prior to the date on which the 
modification will become effective. The notice of modification must be 
provided in a form that is consistent with the rules of paragraph (a)(4) 
of this section.
    (c) Uniform glossary--(1) In general. A group health plan, and a 
health insurance issuer offering group health insurance coverage, must 
make available to participants and beneficiaries the uniform glossary 
described in paragraph (c)(2) of this section in accordance with the 
appearance and form and manner requirements of paragraphs (c)(3) and (4) 
of this section.
    (2) Health-coverage-related terms and medical terms. The uniform 
glossary must provide uniform definitions, specified by the Secretary in 
guidance, of the following health-coverage-related terms and medical 
terms:
    (i) Allowed amount, appeal, balance billing, co-insurance, 
complications of pregnancy, co-payment, deductible, durable medical 
equipment, emergency medical condition, emergency medical 
transportation, emergency room care, emergency services, excluded 
services, grievance, habilitation services, health insurance, home 
health care, hospice services, hospitalization, hospital outpatient 
care, in-network co-insurance, in-network co-payment, medically 
necessary, network, non-preferred provider, out-of-network co-insurance, 
out-of-network co-payment, out-of-pocket limit, physician services, 
plan, preauthorization, preferred provider, premium, prescription drug 
coverage, prescription drugs, primary care physician, primary care 
provider, provider, reconstructive surgery, rehabilitation services, 
skilled nursing care, specialist, usual customary and reasonable (UCR), 
and urgent care; and
    (ii) Such other terms as the Secretary determines are important to 
define so that individuals and employers may compare and understand the 
terms of coverage and medical benefits (including any exceptions to 
those benefits), as specified in guidance.
    (3) Appearance. A group health plan, and a health insurance issuer, 
must provide the uniform glossary with the appearance specified by the 
Secretary in guidance to ensure the uniform glossary is presented in a 
uniform format and uses terminology understandable by the average plan 
enrollee.
    (4) Form and manner. A plan or issuer must make the uniform glossary 
described in this paragraph (c) available upon request, in either paper 
or electronic form (as requested), within seven business days after 
receipt of the request.
    (d) Preemption. See Sec. 2590.731. State laws that conflict with 
this section (including a state law that requires a health insurance 
issuer to provide an SBC that supplies less information than required 
under paragraph (a) of this section) are preempted.
    (e) Failure to provide. A group health plan that willfully fails to 
provide information under this section to a participant or beneficiary 
is subject to a fine of not more than $1,000 (adjusted for inflation 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended) for each such failure. A failure with respect to each 
participant or beneficiary constitutes a separate offense for purposes 
of this paragraph (e). The Department will enforce this section using a 
process and procedure consistent with Sec. 2560.502c-2 of this chapter 
and 29 CFR part 2570, subpart C.
    (f) Applicability to Medicare Advantage benefits. The requirements 
of this section do not apply to a group health plan benefit package that 
provides Medicare Advantage benefits pursuant

[[Page 826]]

to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.
    (g) Applicability date. (1) This section is applicable to group 
health plans and group health insurance issuers in accordance with this 
paragraph (g). (See Sec. 2590.715-1251(d), providing that this section 
applies to grandfathered health plans.)
    (i) For disclosures with respect to participants and beneficiaries 
who enroll or re-enroll through an open enrollment period (including re-
enrollees and late enrollees), this section applies beginning on the 
first day of the first open enrollment period that begins on or after 
September 1, 2015; and
    (ii) For disclosures with respect to participants and beneficiaries 
who enroll in coverage other than through an open enrollment period 
(including individuals who are newly eligible for coverage and special 
enrollees), this section applies beginning on the first day of the first 
plan year that begins on or after September 1, 2015.
    (2) For disclosures with respect to plans, this section is 
applicable to health insurance issuers beginning September 1, 2015.

[80 FR 34307, June 16, 2015, as amended at 81 FR 43455, July 1, 2016]



Sec. 2590.715-2719  Internal claims and appeals and external review
processes.

    (a) Scope and definitions-(1) Scope. This section sets forth 
requirements with respect to internal claims and appeals and external 
review processes for group health plans and health insurance issuers 
that are not grandfathered health plans under Sec. 2590.715-1251. 
Paragraph (b) of this section provides requirements for internal claims 
and appeals processes. Paragraph (c) of this section sets forth rules 
governing the applicability of State external review processes. 
Paragraph (d) of this section sets forth a Federal external review 
process for plans and issuers not subject to an applicable State 
external review process. Paragraph (e) of this section prescribes 
requirements for ensuring that notices required to be provided under 
this section are provided in a culturally and linguistically appropriate 
manner. Paragraph (f) of this section describes the authority of the 
Secretary to deem certain external review processes in existence on 
March 23, 2010 as in compliance with paragraph (c) or (d) of this 
section.
    (2) Definitions. For purposes of this section, the following 
definitions apply--
    (i) Adverse benefit determination. An adverse benefit determination 
means an adverse benefit determination as defined in 29 CFR 2560.503-1, 
as well as any rescission of coverage, as described in Sec. 2590.715-
2712(a)(2) (whether or not, in connection with the rescission, there is 
an adverse effect on any particular benefit at that time).
    (ii) Appeal (or internal appeal). An appeal or internal appeal means 
review by a plan or issuer of an adverse benefit determination, as 
required in paragraph (b) of this section.
    (iii) Claimant. Claimant means an individual who makes a claim under 
this section. For purposes of this section, references to claimant 
include a claimant's authorized representative.
    (iv) External review. External review means a review of an adverse 
benefit determination (including a final internal adverse benefit 
determination) conducted pursuant to an applicable State external review 
process described in paragraph (c) of this section or the Federal 
external review process of paragraph (d) of this section.
    (v) Final internal adverse benefit determination. A final internal 
adverse benefit determination means an adverse benefit determination 
that has been upheld by a plan or issuer at the completion of the 
internal appeals process applicable under paragraph (b) of this section 
(or an adverse benefit determination with respect to which the internal 
appeals process has been exhausted under the deemed exhaustion rules of 
paragraph (b)(2)(ii)(F) of this section).
    (vi) Final external review decision. A final external review 
decision means a determination by an independent review organization at 
the conclusion of an external review.
    (vii) Independent review organization (or IRO). An independent 
review organization (or IRO) means an entity that conducts independent 
external reviews of adverse benefit determinations and

[[Page 827]]

final internal adverse benefit determinations pursuant to paragraph (c) 
or (d) of this section.
    (viii) NAIC Uniform Model Act. The NAIC Uniform Model Act means the 
Uniform Health Carrier External Review Model Act promulgated by the 
National Association of Insurance Commissioners in place on July 23, 
2010.
    (b) Internal claims and appeals process--(1) In general. A group 
health plan and a health insurance issuer offering group health 
insurance coverage must implement an effective internal claims and 
appeals process, as described in this paragraph (b).
    (2) Requirements for group health plans and group health insurance 
issuers. A group health plan and a health insurance issuer offering 
group health insurance coverage must comply with all the requirements of 
this paragraph (b)(2). In the case of health insurance coverage offered 
in connection with a group health plan, if either the plan or the issuer 
complies with the internal claims and appeals process of this paragraph 
(b)(2), then the obligation to comply with this paragraph (b)(2) is 
satisfied for both the plan and the issuer with respect to the health 
insurance coverage.
    (i) Minimum internal claims and appeals standards. A group health 
plan and a health insurance issuer offering group health insurance 
coverage must comply with all the requirements applicable to group 
health plans under 29 CFR 2560.503-1, except to the extent those 
requirements are modified by paragraph (b)(2)(ii) of this section. 
Accordingly, under this paragraph (b), with respect to health insurance 
coverage offered in connection with a group health plan, the group 
health insurance issuer is subject to the requirements in 29 CFR 
2560.503-1 to the same extent as the group health plan.
    (ii) Additional standards. In addition to the requirements in 
paragraph (b)(2)(i) of this section, the internal claims and appeals 
processes of a group health plan and a health insurance issuer offering 
group health insurance coverage must meet the requirements of this 
paragraph (b)(2)(ii).
    (A) Clarification of meaning of adverse benefit determination. For 
purposes of this paragraph (b)(2), an ``adverse benefit determination'' 
includes an adverse benefit determination as defined in paragraph 
(a)(2)(i) of this section. Accordingly, in complying with 29 CFR 
2560.503-1, as well as the other provisions of this paragraph (b)(2), a 
plan or issuer must treat a rescission of coverage (whether or not the 
rescission has an adverse effect on any particular benefit at that time) 
as an adverse benefit determination. (Rescissions of coverage are 
subject to the requirements of Sec. 2590.715-2712.)
    (B) Expedited notification of benefit determinations involving 
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which 
generally provide, among other things, in the case of urgent care claims 
for notification 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 the receipt of the claim) continue to 
apply to the plan and issuer. For purposes of this paragraph 
(b)(2)(ii)(B), a claim involving urgent care has the meaning given in 29 
CFR 2560.503-1(m)(1), as determined by the attending provider, and the 
plan or issuer shall defer to such determination of the attending 
provider.
    (C) Full and fair review. A plan and issuer must allow a claimant to 
review the claim file and to present evidence and testimony as part of 
the internal claims and appeals process. Specifically, in addition to 
complying with the requirements of 29 CFR 2560.503-1(h)(2)--
    (1) The plan or issuer must provide the claimant, free of charge, 
with any new or additional evidence considered, relied upon, or 
generated by the plan or issuer (or at the direction of the plan or 
issuer) in connection with the claim; such evidence must be provided as 
soon as possible and sufficiently in advance of the date on which the 
notice of final internal adverse benefit determination is required to be 
provided under 29 CFR 2560.503-1(i) to give the claimant a reasonable 
opportunity to respond prior to that date; and
    (2) Before the plan or issuer can issue a final internal adverse 
benefit determination based on a new or additional

[[Page 828]]

rationale, the claimant must be provided, free of charge, with the 
rationale; the rationale must be provided as soon as possible and 
sufficiently in advance of the date on which the notice of final 
internal adverse benefit determination is required to be provided under 
29 CFR 2560.503-1(i) to give the claimant a reasonable opportunity to 
respond prior to that date. Notwithstanding the rules of 29 CFR 
2560.503-1(i), if the new or additional evidence is received so late 
that it would be impossible to provide it to the claimant in time for 
the claimant to have a reasonable opportunity to respond, the period for 
providing a notice of final internal adverse benefit determination is 
tolled until such time as the claimant has a reasonable opportunity to 
respond. After the claimant responds, or has a reasonable opportunity to 
respond but fails to do so, the plan administrator shall notify the 
claimant of the plan's benefit determination as soon as a plan acting in 
a reasonable and prompt fashion can provide the notice, taking into 
account the medical exigencies.
    (D) Avoiding conflicts of interest. In addition to the requirements 
of 29 CFR 2560.503-1(b) and (h) regarding full and fair review, the plan 
and issuer must ensure that all claims and appeals are adjudicated in a 
manner designed to ensure the independence and impartiality of the 
persons involved in making the decision. Accordingly, decisions 
regarding hiring, compensation, termination, promotion, or other similar 
matters with respect to any individual (such as a claims adjudicator or 
medical expert) must not be made based upon the likelihood that the 
individual will support the denial of benefits.
    (E) Notice. A plan and issuer must provide notice to individuals, in 
a culturally and linguistically appropriate manner (as described in 
paragraph (e) of this section) that complies with the requirements of 29 
CFR 2560.503-1(g) and (j). The plan and issuer must also comply with the 
additional requirements of this paragraph (b)(2)(ii)(E).
    (1) The plan and issuer must ensure that any notice of adverse 
benefit determination or final internal adverse benefit determination 
includes information sufficient to identify the claim involved 
(including the date of service, the health care provider, the claim 
amount (if applicable), and a statement describing the availability, 
upon request, of the diagnosis code and its corresponding meaning, and 
the treatment code and its corresponding meaning).
    (2) The plan and issuer must provide to participants and 
beneficiaries, as soon as practicable, upon request, the diagnosis code 
and its corresponding meaning, and the treatment code and its 
corresponding meaning, associated with any adverse benefit determination 
or final internal adverse benefit determination. The plan or issuer must 
not consider a request for such diagnosis and treatment information, in 
itself, to be a request for an internal appeal under this paragraph (b) 
or an external review under paragraphs (c) and (d) of this section.
    (3) The plan and issuer must ensure that the reason or reasons for 
the adverse benefit determination or final internal adverse benefit 
determination includes the denial code and its corresponding meaning, as 
well as a description of the plan's or issuer's standard, if any, that 
was used in denying the claim. In the case of a notice of final internal 
adverse benefit determination, this description must include a 
discussion of the decision.
    (4) The plan and issuer must provide a description of available 
internal appeals and external review processes, including information 
regarding how to initiate an appeal.
    (5) The plan and issuer must disclose the availability of, and 
contact information for, any applicable office of health insurance 
consumer assistance or ombudsman established under PHS Act section 2793 
to assist individuals with the internal claims and appeals and external 
review processes.
    (F) Deemed exhaustion of internal claims and appeals processes--(1) 
In the case of a plan or issuer that fails to strictly adhere to all the 
requirements of this paragraph (b)(2) with respect to a claim, the 
claimant is deemed to have exhausted the internal claims and appeals 
process of this paragraph (b), except as provided in paragraph 
(b)(2)(ii)(F)(2) of this section. Accordingly the claimant may initiate 
an external review under paragraph (c) or (d) of this section, as 
applicable. The

[[Page 829]]

claimant is also entitled to pursue any available remedies under section 
502(a) of ERISA or under State law, as applicable, on the basis that the 
plan or issuer has failed to provide a reasonable internal claims and 
appeals process that would yield a decision on the merits of the claim. 
If a claimant chooses to pursue remedies under section 502(a) of ERISA 
under such circumstances, the claim or appeal is deemed denied on review 
without the exercise of discretion by an appropriate fiduciary.
    (2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the 
internal claims and appeals process of this paragraph (b) will not be 
deemed exhausted based on de minimis violations that do not cause, and 
are not likely to cause, prejudice or harm to the claimant so long as 
the plan or issuer demonstrates that the violation was for good cause or 
due to matters beyond the control of the plan or issuer and that the 
violation occurred in the context of an ongoing, good faith exchange of 
information between the plan and the claimant. This exception is not 
available if the violation is part of a pattern or practice of 
violations by the plan or issuer. The claimant may request a written 
explanation of the violation from the plan or issuer, and the plan or 
issuer must provide such explanation within 10 days, including a 
specific description of its bases, if any, for asserting that the 
violation should not cause the internal claims and appeals process of 
this paragraph (b) to be deemed exhausted. If an external reviewer or a 
court rejects the claimant's request for immediate review under 
paragraph (b)(2)(ii)(F)(1) of this section on the basis that the plan 
met the standards for the exception under this paragraph 
(b)(2)(ii)(F)(2), the claimant has the right to resubmit and pursue the 
internal appeal of the claim. In such a case, within a reasonable time 
after the external reviewer or court rejects the claim for immediate 
review (not to exceed 10 days), the plan shall provide the claimant with 
notice of the opportunity to resubmit and pursue the internal appeal of 
the claim. Time periods for re-filing the claim shall begin to run upon 
claimant's receipt of such notice.
    (iii) Requirement to provide continued coverage pending the outcome 
of an appeal. A plan and issuer subject to the requirements of this 
paragraph (b)(2) are required to provide continued coverage pending the 
outcome of an appeal. For this purpose, the plan and issuer must comply 
with the requirements of 29 CFR 2560.503-1(f)(2)(ii), which generally 
provides that benefits for an ongoing course of treatment cannot be 
reduced or terminated without providing advance notice and an 
opportunity for advance review.
    (c) State standards for external review--(1) In general. (i) If a 
State external review process that applies to and is binding on a health 
insurance issuer offering group health insurance coverage includes at a 
minimum the consumer protections in the NAIC Uniform Model Act, then the 
issuer must comply with the applicable State external review process and 
is not required to comply with the Federal external review process of 
paragraph (d) of this section. In such a case, to the extent that 
benefits under a group health plan are provided through health insurance 
coverage, the group health plan is not required to comply with either 
this paragraph (c) or the Federal external review process of paragraph 
(d) of this section.
    (ii) To the extent that a group health plan provides benefits other 
than through health insurance coverage (that is, the plan is self-
insured) and is subject to a State external review process that applies 
to and is binding on the plan (for example, is not preempted by ERISA) 
and the State external review process includes at a minimum the consumer 
protections in the NAIC Uniform Model Act, then the plan must comply 
with the applicable State external review process and is not required to 
comply with the Federal external review process of paragraph (d) of this 
section. Where a self-insured plan is not subject to an applicable State 
external review process, but the State has chosen to expand access to 
its process for plans that are not subject to the applicable State laws, 
the plan may choose to comply with either the applicable State external 
review process or the Federal external review process of paragraph (d) 
of this section.

[[Page 830]]

    (iii) If a plan or issuer is not required under paragraph (c)(1)(i) 
or (c)(1)(ii) of this section to comply with the requirements of this 
paragraph (c), then the plan or issuer must comply with the Federal 
external review process of paragraph (d) of this section, except to the 
extent, in the case of a plan, the plan is not required under paragraph 
(c)(1)(i) of this section to comply with paragraph (d) of this section.
    (2) Minimum standards for State external review processes. An 
applicable State external review process must meet all the minimum 
consumer protections in this paragraph (c)(2). The Department of Health 
and Human Services will determine whether State external review 
processes meet these requirements.
    (i) The State process must provide for the external review of 
adverse benefit determinations (including final internal adverse benefit 
determinations) by issuers (or, if applicable, plans) that are based on 
the issuer's (or plan's) requirements for medical necessity, 
appropriateness, health care setting, level of care, or effectiveness of 
a covered benefit.
    (ii) The State process must require issuers (or, if applicable, 
plans) to provide effective written notice to claimants of their rights 
in connection with an external review for an adverse benefit 
determination.
    (iii) To the extent the State process requires exhaustion of an 
internal claims and appeals process, exhaustion must be unnecessary 
where the issuer (or, if applicable, the plan) has waived the 
requirement; the issuer (or the plan) is considered to have exhausted 
the internal claims and appeals process under applicable law (including 
by failing to comply with any of the requirements for the internal 
appeal process, as outlined in paragraph (b)(2) of this section), or the 
claimant has applied for expedited external review at the same time as 
applying for an expedited internal appeal.
    (iv) The State process provides that the issuer (or, if applicable, 
the plan) against which a request for external review is filed must pay 
the cost of the IRO for conducting the external review. Notwithstanding 
this requirement, a State external review process that expressly 
authorizes, as of November 18, 2015, a nominal filing fee may continue 
to permit such fees. For this purpose, to be considered nominal, a 
filing fee must not exceed $25; it must be refunded to the claimant if 
the adverse benefit determination (or final internal adverse benefit 
determination) is reversed through external review; it must be waived if 
payment of the fee would impose an undue financial hardship; and the 
annual limit on filing fees for any claimant within a single plan year 
must not exceed $75.
    (v) The State process may not impose a restriction on the minimum 
dollar amount of a claim for it to be eligible for external review. 
Thus, the process may not impose, for example, a $500 minimum claims 
threshold.
    (vi) The State process must allow at least four months after the 
receipt of a notice of an adverse benefit determination or final 
internal adverse benefit determination for a request for an external 
review to be filed.
    (vii) The State process must provide that IROs will be assigned on a 
random basis or another method of assignment that assures the 
independence and impartiality of the assignment process (such as 
rotational assignment) by a State or independent entity, and in no event 
selected by the issuer, plan, or the individual.
    (viii) The State process must provide for maintenance of a list of 
approved IROs qualified to conduct the external review based on the 
nature of the health care service that is the subject of the review. The 
State process must provide for approval only of IROs that are accredited 
by a nationally recognized private accrediting organization.
    (ix) The State process must provide that any approved IRO has no 
conflicts of interest that will influence its independence. Thus, the 
IRO may not own or control, or be owned or controlled by a health 
insurance issuer, a group health plan, the sponsor of a group health 
plan, a trade association of plans or issuers, or a trade association of 
health care providers. The State process must further provide that the 
IRO and the clinical reviewer assigned to conduct an external review may 
not have a material professional, familial, or financial conflict of 
interest with

[[Page 831]]

the issuer or plan that is the subject of the external review; the 
claimant (and any related parties to the claimant) whose treatment is 
the subject of the external review; any officer, director, or management 
employee of the issuer; the plan administrator, plan fiduciaries, or 
plan employees; the health care provider, the health care provider's 
group, or practice association recommending the treatment that is 
subject to the external review; the facility at which the recommended 
treatment would be provided; or the developer or manufacturer of the 
principal drug, device, procedure, or other therapy being recommended.
    (x) The State process allows the claimant at least five business 
days to submit to the IRO in writing additional information that the IRO 
must consider when conducting the external review, and it requires that 
the claimant is notified of the right to do so. The process must also 
require that any additional information submitted by the claimant to the 
IRO must be forwarded to the issuer (or, if applicable, the plan) within 
one business day of receipt by the IRO.
    (xi) The State process must provide that the decision is binding on 
the plan or issuer, as well as the claimant except to the extent the 
other remedies are available under State or Federal law, and except that 
the requirement that the decision be binding shall not preclude the plan 
or issuer from making payment on the claim or otherwise providing 
benefits at any time, including after a final external review decision 
that denies the claim or otherwise fails to require such payment or 
benefits. For this purpose, the plan or issuer must provide benefits 
(including by making payment on the claim) pursuant to the final 
external review decision without delay, regardless of whether the plan 
or issuer intends to seek judicial review of the external review 
decision and unless or until there is a judicial decision otherwise.
    (xii) The State process must require, for standard external review, 
that the IRO provide written notice to the issuer (or, if applicable, 
the plan) and the claimant of its decision to uphold or reverse the 
adverse benefit determination (or final internal adverse benefit 
determination) within no more than 45 days after the receipt of the 
request for external review by the IRO.
    (xiii) The State process must provide for an expedited external 
review if the adverse benefit determination (or final internal adverse 
benefit determination) concerns an admission, availability of care, 
continued stay, or health care service for which the claimant received 
emergency services, but has not been discharged from a facility; or 
involves a medical condition for which the standard external review time 
frame would seriously jeopardize the life or health of the claimant or 
jeopardize the claimant's ability to regain maximum function. As 
expeditiously as possible but within no more than 72 hours after the 
receipt of the request for expedited external review by the IRO, the IRO 
must make its decision to uphold or reverse the adverse benefit 
determination (or final internal adverse benefit determination) and 
notify the claimant and the issuer (or, if applicable, the plan) of the 
determination. If the notice is not in writing, the IRO must provide 
written confirmation of the decision within 48 hours after the date of 
the notice of the decision.
    (xiv) The State process must require that issuers (or, if 
applicable, plans) include a description of the external review process 
in or attached to the summary plan description, policy, certificate, 
membership booklet, outline of coverage, or other evidence of coverage 
it provides to participants, beneficiaries, or enrollees, substantially 
similar to what is set forth in section 17 of the NAIC Uniform Model 
Act.
    (xv) The State process must require that IROs maintain written 
records and make them available upon request to the State, substantially 
similar to what is set forth in section 15 of the NAIC Uniform Model 
Act.
    (xvi) The State process follows procedures for external review of 
adverse benefit determinations (or final internal adverse benefit 
determinations) involving experimental or investigational treatment, 
substantially similar to what is set forth in section 10 of the NAIC 
Uniform Model Act.
    (3) Transition period for external review processes--(i) Through 
December 31,

[[Page 832]]

2017, an applicable State external review process applicable to a health 
insurance issuer or group health plan is considered to meet the 
requirements of PHS Act section 2719(b). Accordingly, through December 
31, 2017, an applicable State external review process will be considered 
binding on the issuer or plan (in lieu of the requirements of the 
Federal external review process). If there is no applicable State 
external review process, the issuer or plan is required to comply with 
the requirements of the Federal external review process in paragraph (d) 
of this section.
    (ii) An applicable State external review process must apply for 
final internal adverse benefit determinations (or, in the case of 
simultaneous internal appeal and external review, adverse benefit 
determinations) provided on or after January 1, 2018. The Federal 
external review process will apply to such internal adverse benefit 
determinations unless the Department of Health and Human Services 
determines that a State law meets all the minimum standards of paragraph 
(c)(2) of this section. Through December 31, 2017, a State external 
review process applicable to a health insurance issuer or group health 
plan may be considered to meet the minimum standards of paragraph (c)(2) 
of this section, if it meets the temporary standards established by the 
Secretary in guidance for a process similar to the NAIC Uniform Model 
Act.
    (d) Federal external review process. A plan or issuer not subject to 
an applicable State external review process under paragraph (c) of this 
section must provide an effective Federal external review process in 
accordance with this paragraph (d) (except to the extent, in the case of 
a plan, the plan is described in paragraph (c)(1)(i) of this section as 
not having to comply with this paragraph (d)). In the case of health 
insurance coverage offered in connection with a group health plan, if 
either the plan or the issuer complies with the Federal external review 
process of this paragraph (d), then the obligation to comply with this 
paragraph (d) is satisfied for both the plan and the issuer with respect 
to the health insurance coverage. A Multi State Plan or MSP, as defined 
by 45 CFR 800.20, must provide an effective Federal external review 
process in accordance with this paragraph (d). In such circumstances, 
the requirement to provide external review under this paragraph (d) is 
satisfied when a Multi State Plan or MSP complies with standards 
established by the Office of Personnel Management.
    (1) Scope--(i) In general. The Federal external review process 
established pursuant to this paragraph (d) applies to the following:
    (A) An adverse benefit determination (including a final internal 
adverse benefit determination) by a plan or issuer that involves medical 
judgment (including, but not limited to, those based on the plan's or 
issuer's requirements for medical necessity, appropriateness, health 
care setting, level of care, or effectiveness of a covered benefit; its 
determination that a treatment is experimental or investigational; its 
determination whether a participant or beneficiary is entitled to a 
reasonable alternative standard for a reward under a wellness program; 
or its determination whether a plan or issuer is complying with the 
nonquantitative treatment limitation provisions of Code section 9812 and 
Sec. 54.9812, which generally require, among other things, parity in the 
application of medical management techniques), as determined by the 
external reviewer. (A denial, reduction, termination, or a failure to 
provide payment for a benefit based on a determination that a 
participant or beneficiary fails to meet the requirements for 
eligibility under the terms of a group health plan or health insurance 
coverage is not eligible for the Federal external review process under 
this paragraph (d)); and
    (B) A rescission of coverage (whether or not the rescission has any 
effect on any particular benefit at that time).
    (ii) Examples. The rules of paragraph (d)(1)(i) of this section are 
illustrated by the following examples:

    Example 1. (i) Facts. A group health plan provides coverage for 30 
physical therapy visits generally. After the 30th visit, coverage is 
provided only if the service is preauthorized pursuant to an approved 
treatment plan that takes into account medical necessity using the 
plan's definition of the term. Individual A seeks coverage for a 31st 
physical therapy visit. A's health care provider submits a

[[Page 833]]

treatment plan for approval, but it is not approved by the plan, so 
coverage for the 31st visit is not preauthorized. With respect to the 
31st visit, A receives a notice of final internal adverse benefit 
determination stating that the maximum visit limit is exceeded.
    (ii) Conclusion. In this Example 1, the plan's denial of benefits is 
based on medical necessity and involves medical judgment. Accordingly, 
the claim is eligible for external review under paragraph (d)(1)(i) of 
this section. Moreover, the plan's notification of final internal 
adverse benefit determination is inadequate under paragraphs (b)(2)(i) 
and (b)(2)(ii)(E)(3) of this section because it fails to make clear that 
the plan will pay for more than 30 visits if the service is 
preauthorized pursuant to an approved treatment plan that takes into 
account medical necessity using the plan's definition of the term. 
Accordingly, the notice of final internal adverse benefit determination 
should refer to the plan provision governing the 31st visit and should 
describe the plan's standard for medical necessity, as well as how the 
treatment fails to meet the plan's standard.
    Example 2. (i) Facts. A group health plan does not provide coverage 
for services provided out of network, unless the service cannot 
effectively be provided in network. Individual B seeks coverage for a 
specialized medical procedure from an out-of-network provider because B 
believes that the procedure cannot be effectively provided in network. B 
receives a notice of final internal adverse benefit determination 
stating that the claim is denied because the provider is out-of-network.
    (ii) Conclusion. In this Example 2, the plan's denial of benefits is 
based on whether a service can effectively be provided in network and, 
therefore, involves medical judgment. Accordingly, the claim is eligible 
for external review under paragraph (d)(1)(i) of this section. Moreover, 
the plan's notice of final internal adverse benefit determination is 
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this 
section because the plan does provide benefits for services on an out-
of-network basis if the services cannot effectively be provided in 
network. Accordingly, the notice of final internal adverse benefit 
determination is required to refer to the exception to the out-of-
network exclusion and should describe the plan's standards for 
determining effectiveness of services, as well as how services available 
to the claimant within the plan's network meet the plan's standard for 
effectiveness of services.

    (2) External review process standards. The Federal external review 
process established pursuant to this paragraph (d) is considered similar 
to the process set forth in the NAIC Uniform Model Act and, therefore 
satisfies the requirements of paragraph (d)(2)) if such process provides 
the following.
    (i) Request for external review. A group health plan or health 
insurance issuer must allow a claimant to file a request for an external 
review with the plan or issuer if the request is filed within four 
months after the date of receipt of a notice of an adverse benefit 
determination or final internal adverse benefit determination. If there 
is no corresponding date four months after the date of receipt of such a 
notice, then the request must be filed by the first day of the fifth 
month following the receipt of the notice. For example, if the date of 
receipt of the notice is October 30, because there is no February 30, 
the request must be filed by March 1. If the last filing date would fall 
on a Saturday, Sunday, or Federal holiday, the last filing date is 
extended to the next day that is not a Saturday, Sunday, or Federal 
holiday.
    (ii) Preliminary review--(A) In general. Within five business days 
following the date of receipt of the external review request, the group 
health plan or health insurance issuer must complete a preliminary 
review of the request to determine whether:
    (1) The claimant is or was covered under the plan or coverage at the 
time the health care item or service was requested or, in the case of a 
retrospective review, was covered under the plan or coverage at the time 
the health care item or service was provided;
    (2) The adverse benefit determination or the final adverse benefit 
determination does not relate to the claimant's failure to meet the 
requirements for eligibility under the terms of the group health plan or 
health insurance coverage (e.g., worker classification or similar 
determination);
    (3) The claimant has exhausted the plan's or issuer's internal 
appeal process unless the claimant is not required to exhaust the 
internal appeals process under paragraph (b)(1) of this section; and
    (4) The claimant has provided all the information and forms required 
to process an external review.
    (B) Within one business day after completion of the preliminary 
review, the plan or issuer must issue a notification in writing to the 
claimant. If

[[Page 834]]

the request is complete but not eligible for external review, such 
notification must include the reasons for its ineligibility and current 
contact information, including the phone number, for the Employee 
Benefits Security Administration. If the request is not complete, such 
notification must describe the information or materials needed to make 
the request complete, and the plan or issuer must allow a claimant to 
perfect the request for external review within the four-month filing 
period or within the 48 hour period following the receipt of the 
notification, whichever is later.
    (iii) Referral to Independent Review Organization--(A) In general. 
The group health plan or health insurance issuer must assign an IRO that 
is accredited by URAC or by similar nationally-recognized accrediting 
organization to conduct the external review. The IRO referral process 
must provide for the following:
    (1) The plan or issuer must ensure that the IRO process is not 
biased and ensures independence;
    (2) The plan or issuer must contract with at least three (3) IROs 
for assignments under the plan or coverage and rotate claims assignments 
among them (or incorporate other independent, unbiased methods for 
selection of IROs, such as random selection); and
    (3) The IRO may not be eligible for any financial incentives based 
on the likelihood that the IRO will support the denial of benefits.
    (4) The IRO process may not impose any costs, including filing fees, 
on the claimant requesting the external review.
    (B) IRO contracts. A group health plan or health insurance issuer 
must include the following standards in the contract between the plan or 
issuer and the IRO:
    (1) The assigned IRO will utilize legal experts where appropriate to 
make coverage determinations under the plan or coverage.
    (2) The assigned IRO will timely notify a claimant in writing 
whether the request is eligible for external review. This notice will 
include a statement that the claimant may submit in writing to the 
assigned IRO, within ten business days following the date of receipt of 
the notice, additional information. This additional information must be 
considered by the IRO when conducting the external review. The IRO is 
not required to, but may, accept and consider additional information 
submitted after ten business days.
    (3) Within five business days after the date of assignment of the 
IRO, the plan or issuer must provide to the assigned IRO the documents 
and any information considered in making the adverse benefit 
determination or final internal adverse benefit determination. Failure 
by the plan or issuer to timely provide the documents and information 
must not delay the conduct of the external review. If the plan or issuer 
fails to timely provide the documents and information, the assigned IRO 
may terminate the external review and make a decision to reverse the 
adverse benefit determination or final internal adverse benefit 
determination. Within one business day after making the decision, the 
IRO must notify the claimant and the plan.
    (4) Upon receipt of any information submitted by the claimant, the 
assigned IRO must within one business day forward the information to the 
plan or issuer. Upon receipt of any such information, the plan or issuer 
may reconsider its adverse benefit determination or final internal 
adverse benefit determination that is the subject of the external 
review. Reconsideration by the plan or issuer must not delay the 
external review. The external review may be terminated as a result of 
the reconsideration only if the plan decides, upon completion of its 
reconsideration, to reverse its adverse benefit determination or final 
internal adverse benefit determination and provide coverage or payment. 
Within one business day after making such a decision, the plan must 
provide written notice of its decision to the claimant and the assigned 
IRO. The assigned IRO must terminate the external review upon receipt of 
the notice from the plan or issuer.
    (5) The IRO will review all of the information and documents timely 
received. In reaching a decision, the assigned IRO will review the claim 
de novo and not be bound by any decisions or conclusions reached during 
the plan's or issuer's internal claims and

[[Page 835]]

appeals process applicable under paragraph (b). In addition to the 
documents and information provided, the assigned IRO, to the extent the 
information or documents are available and the IRO considers them 
appropriate, will consider the following in reaching a decision:
    (i) The claimant's medical records;
    (ii) The attending health care professional's recommendation;
    (iii) Reports from appropriate health care professionals and other 
documents submitted by the plan or issuer, claimant, or the claimant's 
treating provider;
    (iv) The terms of the claimant's plan or coverage to ensure that the 
IRO's decision is not contrary to the terms of the plan or coverage, 
unless the terms are inconsistent with applicable law;
    (v) Appropriate practice guidelines, which must include applicable 
evidence-based standards and may include any other practice guidelines 
developed by the Federal government, national or professional medical 
societies, boards, and associations;
    (vi) Any applicable clinical review criteria developed and used by 
the plan or issuer, unless the criteria are inconsistent with the terms 
of the plan or coverage or with applicable law; and
    (vii) To the extent the final IRO decision maker is different from 
the IRO's clinical reviewer, the opinion of such clinical reviewer, 
after considering information described in this notice, to the extent 
the information or documents are available and the clinical reviewer or 
reviewers consider such information or documents appropriate.
    (6) The assigned IRO must provide written notice of the final 
external review decision within 45 days after the IRO receives the 
request for the external review. The IRO must deliver the notice of the 
final external review decision to the claimant and the plan or issuer.
    (7) The assigned IRO's written notice of the final external review 
decision must contain the following:
    (i) A general description of the reason for the request for external 
review, including information sufficient to identify the claim 
(including the date or dates of service, the health care provider, the 
claim amount (if applicable), and a statement describing the 
availability, upon request, of the diagnosis code and its corresponding 
meaning, the treatment code and its corresponding meaning, and the 
reason for the plan's or issuer's denial);
    (ii) The date the IRO received the assignment to conduct the 
external review and the date of the IRO decision;
    (iii) References to the evidence or documentation, including the 
specific coverage provisions and evidence-based standards, considered in 
reaching its decision;
    (iv) A discussion of the principal reason or reasons for its 
decision, including the rationale for its decision and any evidence-
based standards that were relied on in making its decision;
    (v) A statement that the IRO's determination is binding except to 
the extent that other remedies may be available under State or Federal 
law to either the group health plan or health insurance issuer or to the 
claimant, or to the extent the health plan or health insurance issuer 
voluntarily makes payment on the claim or otherwise provides benefits at 
any time, including after a final external review decision that denies 
the claim or otherwise fails to require such payment or benefits;
    (vi) A statement that judicial review may be available to the 
claimant; and
    (vii) Current contact information, including phone number, for any 
applicable office of health insurance consumer assistance or ombudsman 
established under PHS Act section 2793.
    (viii) After a final external review decision, the IRO must maintain 
records of all claims and notices associated with the external review 
process for six years. An IRO must make such records available for 
examination by the claimant, plan, issuer, or State or Federal oversight 
agency upon request, except where such disclosure would violate State or 
Federal privacy laws.
    (iv) Reversal of plan's or issuer's decision. Upon receipt of a 
notice of a final external review decision reversing the adverse benefit 
determination or final adverse benefit determination, the plan or issuer 
immediately must provide coverage or payment (including immediately 
authorizing care or immediately paying benefits) for the claim.

[[Page 836]]

    (3) Expedited external review. A group health plan or health 
insurance issuer must comply with the following standards with respect 
to an expedited external review:
    (i) Request for external review. A group health plan or health 
insurance issuer must allow a claimant to make a request for an 
expedited external review with the plan or issuer at the time the 
claimant receives:
    (A) An adverse benefit determination if the adverse benefit 
determination involves a medical condition of the claimant for which the 
timeframe for completion of an expedited internal appeal under paragraph 
(b) of this section would seriously jeopardize the life or health of the 
claimant or would jeopardize the claimant's ability to regain maximum 
function and the claimant has filed a request for an expedited internal 
appeal; or
    (B) A final internal adverse benefit determination, if the claimant 
has a medical condition where the timeframe for completion of a standard 
external review would seriously jeopardize the life or health of the 
claimant or would jeopardize the claimant's ability to regain maximum 
function, or if the final internal adverse benefit determination 
concerns an admission, availability of care, continued stay, or health 
care item or service for which the claimant received emergency services, 
but has not been discharged from the facility.
    (ii) Preliminary review. Immediately upon receipt of the request for 
expedited external review, the plan or issuer must determine whether the 
request meets the reviewability requirements set forth in paragraph 
(d)(2)(ii) of this section for standard external review. The plan or 
issuer must immediately send a notice that meets the requirements set 
forth in paragraph (d)(2)(ii)(B) for standard review to the claimant of 
its eligibility determination.
    (iii) Referral to independent review organization. (A) Upon a 
determination that a request is eligible for expedited external review 
following the preliminary review, the plan or issuer will assign an IRO 
pursuant to the requirements set forth in paragraph (d)(2)(iii) of this 
section for standard review. The plan or issuer must provide or transmit 
all necessary documents and information considered in making the adverse 
benefit determination or final internal adverse benefit determination to 
the assigned IRO electronically or by telephone or facsimile or any 
other available expeditious method.
    (B) The assigned IRO, to the extent the information or documents are 
available and the IRO considers them appropriate, must consider the 
information or documents described above under the procedures for 
standard review. In reaching a decision, the assigned IRO must review 
the claim de novo and is not bound by any decisions or conclusions 
reached during the plan's or issuer's internal claims and appeals 
process.
    (iv) Notice of final external review decision. The plan's or 
issuer's contract with the assigned IRO must require the IRO to provide 
notice of the final external review decision, in accordance with the 
requirements set forth in paragraph (d)(2)(iii)(B) of this section, as 
expeditiously as the claimant's medical condition or circumstances 
require, but in no event more than 72 hours after the IRO receives the 
request for an expedited external review. If the notice is not in 
writing, within 48 hours after the date of providing that notice, the 
assigned IRO must provide written confirmation of the decision to the 
claimant and the plan or issuer.
    (4) Alternative, Federally-administered external review process. 
Insured coverage not subject to an applicable State external review 
process under paragraph (c) of this section may elect to use either the 
Federal external review process, as set forth under paragraph (d) of 
this section or the Federally-administered external review process, as 
set forth by HHS in guidance. In such circumstances, the requirement to 
provide external review under this paragraph (d) is satisfied.
    (e) Form and manner of notice--(1) In general. For purposes of this 
section, a group health plan and a health insurance issuer offering 
group health insurance coverage are considered to provide relevant 
notices in a culturally and linguistically appropriate manner if the 
plan or issuer meets all the requirements of paragraph (e)(2) of this 
section with respect to the applicable

[[Page 837]]

non-English languages described in paragraph (e)(3) of this section.
    (2) Requirements--(i) The plan or issuer must provide oral language 
services (such as a telephone customer assistance hotline) that includes 
answering questions in any applicable non-English language and providing 
assistance with filing claims and appeals (including external review) in 
any applicable non-English language;
    (ii) The plan or issuer must provide, upon request, a notice in any 
applicable non-English language; and
    (iii) The plan or issuer must include in the English versions of all 
notices, a statement prominently displayed in any applicable non-English 
language clearly indicating how to access the language services provided 
by the plan or issuer.
    (3) Applicable non-English language. With respect to an address in 
any United States county to which a notice is sent, a non-English 
language is an applicable non-English language if ten percent or more of 
the population residing in the county is literate only in the same non-
English language, as determined in guidance published by the Secretary.
    (f) Secretarial authority. The Secretary may determine that the 
external review process of a group health plan or health insurance 
issuer, in operation as of March 23, 2010, is considered in compliance 
with the applicable process established under paragraph (c) or (d) of 
this section if it substantially meets the requirements of paragraph (c) 
or (d) of this section, as applicable.
    (g) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72264, Nov. 18, 2015]



Sec. 2590.715-2719A  Patient protections.

    (a) Choice of health care professional--(1) Designation of primary 
care provider--(i) In general. If a group health plan, or a health 
insurance issuer offering group health insurance coverage, requires or 
provides for designation by a participant or beneficiary of a 
participating primary care provider, then the plan or issuer must permit 
each participant or beneficiary to designate any participating primary 
care provider who is available to accept the participant or beneficiary. 
In such a case, the plan or issuer must comply with the rules of 
paragraph (a)(4) of this section by informing each participant of the 
terms of the plan or health insurance coverage regarding designation of 
a primary care provider.
    (ii) Construction. Nothing in paragraph (a)(1)(i) of this section is 
to be construed to prohibit the application of reasonable and 
appropriate geographic limitations with respect to the selection of 
primary care providers, in accordance with the terms of the plan or 
coverage, the underlying provider contracts, and applicable State law.
    (iii) Example. The rules of this paragraph (a)(1) are illustrated by 
the following example:

    Example. (i) Facts. A group health plan requires individuals covered 
under the plan to designate a primary care provider. The plan permits 
each individual to designate any primary care provider participating in 
the plan's network who is available to accept the individual as the 
individual's primary care provider. If an individual has not designated 
a primary care provider, the plan designates one until one has been 
designated by the individual. The plan provides a notice that satisfies 
the requirements of paragraph (a)(4) of this section regarding the 
ability to designate a primary care provider.
    (ii) Conclusion. In this Example, the plan has satisfied the 
requirements of paragraph (a) of this section.

    (2) Designation of pediatrician as primary care provider--(i) In 
general. If a group health plan, or a health insurance issuer offering 
group health insurance coverage, requires or provides for the 
designation of a participating primary care provider for a child by a 
participant or beneficiary, the plan or issuer must permit the 
participant or beneficiary to designate a physician (allopathic or 
osteopathic) who specializes in pediatrics (including pediatric 
subspecialties, based on the scope of that provider's license under 
applicable State law) as the child's primary care provider if the 
provider participates in

[[Page 838]]

the network of the plan or issuer and is available to accept the child. 
In such a case, the plan or issuer must comply with the rules of 
paragraph (a)(4) of this section by informing each participant of the 
terms of the plan or health insurance coverage regarding designation of 
a pediatrician as the child's primary care provider.
    (ii) Construction. Nothing in paragraph (a)(2)(i) of this section is 
to be construed to waive any exclusions of coverage under the terms and 
conditions of the plan or health insurance coverage with respect to 
coverage of pediatric care.
    (iii) Examples. The rules of this paragraph (a)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. A group health plan's HMO designates for each 
participant a physician who specializes in internal medicine to serve as 
the primary care provider for the participant and any beneficiaries. 
Participant A requests that Pediatrician B be designated as the primary 
care provider for A's child. B is a participating provider in the HMO's 
network and is available to accept the child.
    (ii) Conclusion. In this Example 1, the HMO must permit A's 
designation of B as the primary care provider for A's child in order to 
comply with the requirements of this paragraph (a)(2).
    Example 2. (i) Facts. Same facts as Example 1, except that A takes 
A's child to B for treatment of the child's severe shellfish allergies. 
B wishes to refer A's child to an allergist for treatment. The HMO, 
however, does not provide coverage for treatment of food allergies, nor 
does it have an allergist participating in its network, and it therefore 
refuses to authorize the referral.
    (ii) Conclusion. In this Example 2, the HMO has not violated the 
requirements of this paragraph (a)(2) because the exclusion of treatment 
for food allergies is in accordance with the terms of A's coverage.

    (3) Patient access to obstetrical and gynecological care--(i) 
General rights--(A) Direct access. A group health plan, or a health 
insurance issuer offering group health insurance coverage, described in 
paragraph (a)(3)(ii) of this section may not require authorization or 
referral by the plan, issuer, or any person (including a primary care 
provider) in the case of a female participant or beneficiary who seeks 
coverage for obstetrical or gynecological care provided by a 
participating health care professional who specializes in obstetrics or 
gynecology. In such a case, the plan or issuer must comply with the 
rules of paragraph (a)(4) of this section by informing each participant 
that the plan may not require authorization or referral for obstetrical 
or gynecological care by a participating health care professional who 
specializes in obstetrics or gynecology. The plan or issuer may require 
such a professional to agree to otherwise adhere to the plan's or 
issuer's policies and procedures, including procedures regarding 
referrals and obtaining prior authorization and providing services 
pursuant to a treatment plan (if any) approved by the plan or issuer. 
For purposes of this paragraph (a)(3), a health care professional who 
specializes in obstetrics or gynecology is any individual (including a 
person other than a physician) who is authorized under applicable State 
law to provide obstetrical or gynecological care.
    (B) Obstetrical and gynecological care. A group health plan or 
health insurance issuer described in paragraph (a)(3)(ii) of this 
section must treat the provision of obstetrical and gynecological care, 
and the ordering of related obstetrical and gynecological items and 
services, pursuant to the direct access described under paragraph 
(a)(3)(i)(A) of this section, by a participating health care 
professional who specializes in obstetrics or gynecology as the 
authorization of the primary care provider.
    (ii) Application of paragraph. A group health plan, or a health 
insurance issuer offering group health insurance coverage, is described 
in this paragraph (a)(3) if the plan or issuer--
    (A) Provides coverage for obstetrical or gynecological care; and
    (B) Requires the designation by a participant or beneficiary of a 
participating primary care provider.
    (iii) Construction. Nothing in paragraph (a)(3)(i) of this section 
is to be construed to--
    (A) Waive any exclusions of coverage under the terms and conditions 
of the plan or health insurance coverage with respect to coverage of 
obstetrical or gynecological care; or
    (B) Preclude the group health plan or health insurance issuer 
involved from

[[Page 839]]

requiring that the obstetrical or gynecological provider notify the 
primary care health care professional or the plan or issuer of treatment 
decisions.
    (iv) Examples. The rules of this paragraph (a)(3) are illustrated by 
the following examples:

    Example 1. (i) Facts. A group health plan requires each participant 
to designate a physician to serve as the primary care provider for the 
participant and the participant's family. Participant A, a female, 
requests a gynecological exam with Physician B, an in-network physician 
specializing in gynecological care. The group health plan requires prior 
authorization from A's designated primary care provider for the 
gynecological exam.
    (ii) Conclusion. In this Example 1, the group health plan has 
violated the requirements of this paragraph (a)(3) because the plan 
requires prior authorization from A's primary care provider prior to 
obtaining gynecological services.
    Example 2. (i) Facts. Same facts as Example 1 except that A seeks 
gynecological services from C, an out-of-network provider.
    (ii) Conclusion. In this Example 2, the group health plan has not 
violated the requirements of this paragraph (a)(3) by requiring prior 
authorization because C is not a participating health care provider.
    Example 3. (i) Facts. Same facts as Example 1 except that the group 
health plan only requires B to inform A's designated primary care 
physician of treatment decisions.
    (ii) Conclusion. In this Example 3, the group health plan has not 
violated the requirements of this paragraph (a)(3) because A has direct 
access to B without prior authorization. The fact that the group health 
plan requires notification of treatment decisions to the designated 
primary care physician does not violate this paragraph (a)(3).
    Example 4. (i) Facts. A group health plan requires each participant 
to designate a physician to serve as the primary care provider for the 
participant and the participant's family. The group health plan requires 
prior authorization before providing benefits for uterine fibroid 
embolization.
    (ii) Conclusion. In this Example 4, the plan requirement for prior 
authorization before providing benefits for uterine fibroid embolization 
does not violate the requirements of this paragraph (a)(3) because, 
though the prior authorization requirement applies to obstetrical 
services, it does not restrict access to any providers specializing in 
obstetrics or gynecology.

    (4) Notice of right to designate a primary care provider--(i) In 
general. If a group health plan or health insurance issuer requires the 
designation by a participant or beneficiary of a primary care provider, 
the plan or issuer must provide a notice informing each participant of 
the terms of the plan or health insurance coverage regarding designation 
of a primary care provider and of the rights--
    (A) Under paragraph (a)(1)(i) of this section, that any 
participating primary care provider who is available to accept the 
participant or beneficiary can be designated;
    (B) Under paragraph (a)(2)(i) of this section, with respect to a 
child, that any participating physician who specializes in pediatrics 
can be designated as the primary care provider; and
    (C) Under paragraph (a)(3)(i) of this section, that the plan may not 
require authorization or referral for obstetrical or gynecological care 
by a participating health care professional who specializes in 
obstetrics or gynecology.
    (ii) Timing. The notice described in paragraph (a)(4)(i) of this 
section must be included whenever the plan or issuer provides a 
participant with a summary plan description or other similar description 
of benefits under the plan or health insurance coverage.
    (iii) Model language. The following model language can be used to 
satisfy the notice requirement described in paragraph (a)(4)(i) of this 
section:
    (A) For plans and issuers that require or allow for the designation 
of primary care providers by participants or beneficiaries, insert:

    [Name of group health plan or health insurance issuer] generally 
[requires/allows] the designation of a primary care provider. You have 
the right to designate any primary care provider who participates in our 
network and who is available to accept you or your family members. [If 
the plan or health insurance coverage designates a primary care provider 
automatically, insert: Until you make this designation, [name of group 
health plan or health insurance issuer] designates one for you.] For 
information on how to select a primary care provider, and for a list of 
the participating primary care providers, contact the [plan 
administrator or issuer] at [insert contact information].

    (B) For plans and issuers that require or allow for the designation 
of a primary care provider for a child, add:
    For children, you may designate a pediatrician as the primary care 
provider.

[[Page 840]]

    (C) For plans and issuers that provide coverage for obstetric or 
gynecological care and require the designation by a participant or 
beneficiary of a primary care provider, add:

    You do not need prior authorization from [name of group health plan 
or issuer] or from any other person (including a primary care provider) 
in order to obtain access to obstetrical or gynecological care from a 
health care professional in our network who specializes in obstetrics or 
gynecology. The health care professional, however, may be required to 
comply with certain procedures, including obtaining prior authorization 
for certain services, following a pre-approved treatment plan, or 
procedures for making referrals. For a list of participating health care 
professionals who specialize in obstetrics or gynecology, contact the 
[plan administrator or issuer] at [insert contact information].

    (b) Coverage of emergency services--(1) Scope. If a group health 
plan, or a health insurance issuer offering group health insurance 
coverage, provides any benefits with respect to services in an emergency 
department of a hospital, the plan or issuer must cover emergency 
services (as defined in paragraph (b)(4)(ii) of this section) consistent 
with the rules of this paragraph (b).
    (2) General rules. A plan or issuer subject to the requirements of 
this paragraph (b) must provide coverage for emergency services in the 
following manner--
    (i) Without the need for any prior authorization determination, even 
if the emergency services are provided on an out-of-network basis;
    (ii) Without regard to whether the health care provider furnishing 
the emergency services is a participating network provider with respect 
to the services;
    (iii) If the emergency services are provided out of network, without 
imposing any administrative requirement or limitation on coverage that 
is more restrictive than the requirements or limitations that apply to 
emergency services received from in-network providers;
    (iv) If the emergency services are provided out of network, by 
complying with the cost-sharing requirements of paragraph (b)(3) of this 
section; and
    (v) Without regard to any other term or condition of the coverage, 
other than--
    (A) The exclusion of or coordination of benefits;
    (B) An affiliation or waiting period permitted under part 7 of 
ERISA, part A of title XXVII of the PHS Act, or chapter 100 of the 
Internal Revenue Code; or
    (C) Applicable cost sharing.
    (3) Cost-sharing requirements--(i) Copayments and coinsurance. Any 
cost-sharing requirement expressed as a copayment amount or coinsurance 
rate imposed with respect to a participant or beneficiary for out-of-
network emergency services cannot exceed the cost-sharing requirement 
imposed with respect to a participant or beneficiary if the services 
were provided in-network. However, a participant or beneficiary may be 
required to pay, in addition to the in-network cost sharing, the excess 
of the amount the out-of-network provider charges over the amount the 
plan or issuer is required to pay under this paragraph (b)(3)(i). A 
group health plan or health insurance issuer complies with the 
requirements of this paragraph (b)(3) if it provides benefits with 
respect to an emergency service in an amount at least equal to the 
greatest of the three amounts specified in paragraphs (b)(3)(i)(A), (B), 
and (C) of this section (which are adjusted for in-network cost-sharing 
requirements).
    (A) The amount negotiated with in-network providers for the 
emergency service furnished, excluding any in-network copayment or 
coinsurance imposed with respect to the participant or beneficiary. If 
there is more than one amount negotiated with in-network providers for 
the emergency service, the amount described under this paragraph 
(b)(3)(i)(A) is the median of these amounts, excluding any in-network 
copayment or coinsurance imposed with respect to the participant or 
beneficiary. In determining the median described in the preceding 
sentence, the amount negotiated with each in-network provider is treated 
as a separate amount (even if the same amount is paid to more than one 
provider). If there is no per-service amount negotiated with in-network 
providers (such as under a capitation

[[Page 841]]

or other similar payment arrangement), the amount under this paragraph 
(b)(3)(i)(A) is disregarded.
    (B) The amount for the emergency service calculated using the same 
method the plan generally uses to determine payments for out-of-network 
services (such as the usual, customary, and reasonable amount), 
excluding any in-network copayment or coinsurance imposed with respect 
to the participant or beneficiary. The amount in this paragraph 
(b)(3)(i)(B) is determined without reduction for out-of-network cost 
sharing that generally applies under the plan or health insurance 
coverage with respect to out-of-network services. Thus, for example, if 
a plan generally pays 70 percent of the usual, customary, and reasonable 
amount for out-of-network services, the amount in this paragraph 
(b)(3)(i)(B) for an emergency service is the total (that is, 100 
percent) of the usual, customary, and reasonable amount for the service, 
not reduced by the 30 percent coinsurance that would generally apply to 
out-of-network services (but reduced by the in-network copayment or 
coinsurance that the individual would be responsible for if the 
emergency service had been provided in-network).
    (C) The amount that would be paid under Medicare (part A or part B 
of title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.) for 
the emergency service, excluding any in-network copayment or coinsurance 
imposed with respect to the participant or beneficiary.
    (ii) Other cost sharing. Any cost-sharing requirement other than a 
copayment or coinsurance requirement (such as a deductible or out-of-
pocket maximum) may be imposed with respect to emergency services 
provided out of network if the cost-sharing requirement generally 
applies to out-of-network benefits. A deductible may be imposed with 
respect to out-of-network emergency services only as part of a 
deductible that generally applies to out-of-network benefits. If an out-
of-pocket maximum generally applies to out-of-network benefits, that 
out-of-pocket maximum must apply to out-of-network emergency services.
    (iii) Special rules regarding out-of-network minimum payment 
standards--(A) The minimum payment standards set forth under paragraph 
(b)(3) of this section do not apply in cases where State law prohibits a 
participant or beneficiary from being required to pay, in addition to 
the in-network cost sharing, the excess of the amount the out-of-network 
provider charges over the amount the plan or issuer provides in 
benefits, or where a group health plan or health insurance issuer is 
contractually responsible for such amounts. Nonetheless, in such cases, 
a plan or issuer may not impose any copayment or coinsurance requirement 
for out-of-network emergency services that is higher than the copayment 
or coinsurance requirement that would apply if the services were 
provided in network.
    (B) A group health plan and health insurance issuer must provide a 
participant or beneficiary adequate and prominent notice of their lack 
of financial responsibility with respect to the amounts described under 
this paragraph (b)(3)(iii), to prevent inadvertent payment by the 
participant or beneficiary.
    (iv) Examples. The rules of this paragraph (b)(3) are illustrated by 
the following examples. In all of these examples, the group health plan 
covers benefits with respect to emergency services.

    Example 1. (i) Facts. A group health plan imposes a 25% coinsurance 
responsibility on individuals who are furnished emergency services, 
whether provided in network or out of network. If a covered individual 
notifies the plan within two business days after the day an individual 
receives treatment in an emergency department, the plan reduces the 
coinsurance rate to 15%.
    (ii) Conclusion. In this Example 1, the requirement to notify the 
plan in order to receive a reduction in the coinsurance rate does not 
violate the requirement that the plan cover emergency services without 
the need for any prior authorization determination. This is the result 
even if the plan required that it be notified before or at the time of 
receiving services at the emergency department in order to receive a 
reduction in the coinsurance rate.
    Example 2. (i) Facts. A group health plan imposes a $60 copayment on 
emergency services without preauthorization, whether provided in network 
or out of network. If emergency services are preauthorized, the plan 
waives the copayment, even if it later determines the medical condition 
was not an emergency medical condition.

[[Page 842]]

    (ii) Conclusion. In this Example 2, by requiring an individual to 
pay more for emergency services if the individual does not obtain prior 
authorization, the plan violates the requirement that the plan cover 
emergency services without the need for any prior authorization 
determination. (By contrast, if, to have the copayment waived, the plan 
merely required that it be notified rather than a prior authorization, 
then the plan would not violate the requirement that the plan cover 
emergency services without the need for any prior authorization 
determination.)
    Example 3. (i) Facts. A group health plan covers individuals who 
receive emergency services with respect to an emergency medical 
condition from an out-of-network provider. The plan has agreements with 
in-network providers with respect to a certain emergency service. Each 
provider has agreed to provide the service for a certain amount. Among 
all the providers for the service: One has agreed to accept $85, two 
have agreed to accept $100, two have agreed to accept $110, three have 
agreed to accept $120, and one has agreed to accept $150. Under the 
agreement, the plan agrees to pay the providers 80% of the agreed 
amount, with the individual receiving the service responsible for the 
remaining 20%.
    (ii) Conclusion. In this Example 3, the values taken into account in 
determining the median are $85, $100, $100, $110, $110, $120, $120, 
$120, and $150. Therefore, the median amount among those agreed to for 
the emergency service is $110, and the amount under paragraph 
(b)(3)(i)(A) of this section is 80% of $110 ($88).
    Example 4. (i) Facts. Same facts as Example 3. Subsequently, the 
plan adds another provider to its network, who has agreed to accept $150 
for the emergency service.
    (ii) Conclusion. In this Example 4, the median amount among those 
agreed to for the emergency service is $115. (Because there is no one 
middle amount, the median is the average of the two middle amounts, $110 
and $120.) Accordingly, the amount under paragraph (b)(3)(i)(A) of this 
section is 80% of $115 ($92).
    Example 5. (i) Facts. Same facts as Example 4. An individual covered 
by the plan receives the emergency service from an out-of-network 
provider, who charges $125 for the service. With respect to services 
provided by out-of-network providers generally, the plan reimburses 
covered individuals 50% of the reasonable amount charged by the provider 
for medical services. For this purpose, the reasonable amount for any 
service is based on information on charges by all providers collected by 
a third party, on a zip code by zip code basis, with the plan treating 
charges at a specified percentile as reasonable. For the emergency 
service received by the individual, the reasonable amount calculated 
using this method is $116. The amount that would be paid under Medicare 
for the emergency service, excluding any copayment or coinsurance for 
the service, is $80.
    (ii) Conclusion. In this Example 5, the plan is responsible for 
paying $92.80, 80% of $116. The median amount among those agreed to for 
the emergency service is $115 and the amount the plan would pay is $92 
(80% of $115); the amount calculated using the same method the plan uses 
to determine payments for out-of-network services--$116--excluding the 
in-network 20% coinsurance, is $92.80; and the Medicare payment is $80. 
Thus, the greatest amount is $92.80. The individual is responsible for 
the remaining $32.20 charged by the out-of-network provider.
    Example 6. (i) Facts. Same facts as Example 5. The group health plan 
generally imposes a $250 deductible for in-network health care. With 
respect to all health care provided by out-of-network providers, the 
plan imposes a $500 deductible. (Covered in-network claims are credited 
against the deductible.) The individual has incurred and submitted $260 
of covered claims prior to receiving the emergency service out of 
network.
    (ii) Conclusion. In this Example 6, the plan is not responsible for 
paying anything with respect to the emergency service furnished by the 
out-of-network provider because the covered individual has not satisfied 
the higher deductible that applies generally to all health care provided 
out of network. However, the amount the individual is required to pay is 
credited against the deductible.

    (4) Definitions. The definitions in this paragraph (b)(4) govern in 
applying the provisions of this paragraph (b).
    (i) Emergency medical condition. The term emergency medical 
condition means a medical condition manifesting itself by acute symptoms 
of sufficient severity (including severe pain) so that a prudent 
layperson, who possesses an average knowledge of health and medicine, 
could reasonably expect the absence of immediate medical attention to 
result in a condition described in clause (i), (ii), or (iii) of section 
1867(e)(1)(A) of the Social Security Act (42 U.S.C. 1395dd(e)(1)(A)). 
(In that provision of the Social Security Act, clause (i) refers to 
placing the health of the individual (or, with respect to a pregnant 
woman, the health of the woman or her unborn child) in serious jeopardy; 
clause (ii) refers to serious impairment to bodily functions; and clause 
(iii) refers to serious dysfunction of any bodily organ or part.)

[[Page 843]]

    (ii) Emergency services. The term emergency services means, with 
respect to an emergency medical condition--
    (A) A medical screening examination (as required under section 1867 
of the Social Security Act, 42 U.S.C. 1395dd) that is within the 
capability of the emergency department of a hospital, including 
ancillary services routinely available to the emergency department to 
evaluate such emergency medical condition, and
    (B) Such further medical examination and treatment, to the extent 
they are within the capabilities of the staff and facilities available 
at the hospital, as are required under section 1867 of the Social 
Security Act (42 U.S.C. 1395dd) to stabilize the patient.
    (iii) Stabilize. The term to stabilize, with respect to an emergency 
medical condition (as defined in paragraph (b)(4)(i) of this section) 
has the meaning given in section 1867(e)(3) of the Social Security Act 
(42 U.S.C. 1395dd(e)(3)).
    (c) Applicability date. The provisions of this section are 
applicable to group health plans and health insurance issuers for plan 
years beginning on or after January 1, 2017. Until the applicability 
date for this regulation, plans and issuers are required to continue to 
comply with the corresponding sections of 29 CFR part 2590, contained in 
the 29 CFR, parts 1927 to end, edition revised as of July 1, 2015.

[80 FR 72270, Nov. 18, 2015]



        Subpart D_General Provisions Related to Subparts B and C

    Source: 62 FR 16941, Apr. 8, 1997, unless otherwise noted. 
Redesignated at 65 FR 82142, Dec. 27, 2000.



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 
requirement 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 
requires special enrollment periods in addition to those required under 
section 701(f) 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 State law rather than a law of the United States.
    (2) State. For purposes of this section the term State includes a 
State (as defined in Sec. 2590.701-2), any political subdivisions of a 
State, or any agency or instrumentality of either.

[69 FR 78778, Dec. 30, 2004; 70 FR 21147, Apr. 25, 2005; 79 FR 10312, 
Feb. 24, 2014]



Sec. 2590.732  Special rules relating to group health plans.

    (a) Group health plan--(1) Defined. A 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 (including both current and former employees) or their

[[Page 844]]

dependents (as defined under the terms of the plan) directly or through 
insurance, reimbursement, or otherwise.
    (2) Determination of number of plans. [Reserved]
    (b) General exception for certain small group health plans--(1) 
Subject to paragraph (b)(2) of this section, the requirements of this 
part do not apply to any group health plan (and group health insurance 
coverage) 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) The following requirements apply without regard to paragraph 
(b)(1) of this section:
    (i) Section 2590.702(b) of this Part, as such section applies with 
respect to genetic information as a health factor.
    (ii) Section 2590.702(c) of this Part, as such section applies with 
respect to genetic information as a health factor.
    (iii) Section 2590.702(e) of this Part, as such section applies with 
respect to genetic information as a health factor.
    (iv) Section 2590.702-1(b) of this Part.
    (v) Section 2590.702-1(c) of this Part.
    (vi) Section 2590.702-1(d) of this Part.
    (vii) Section 2590.702-1(e) of this Part.
    (viii) Section 2590.711 of this Part.
    (c) Excepted benefits--(1) In general. The requirements of this Part 
do not apply to any group health plan (or any group health insurance 
coverage) in relation to its provision of the benefits described in 
paragraph (c)(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 coverage;
    (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 coverage;
    (vi) Automobile medical payment insurance;
    (vii) Credit-only insurance (for example, mortgage insurance); and
    (viii) Coverage for on-site medical clinics.
    (ix) Travel insurance, within the meaning of Sec. 2590.701-2.
    (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 a group 
health plan as described in paragraph (c)(3)(ii) of this section. In 
addition, benefits provided under a health flexible spending arrangement 
are excepted benefits if they satisfy the requirements of paragraph 
(c)(3)(v) of this section. Furthermore, benefits provided under an 
employee assistance program are excepted benefits if they satisfy the 
requirements of paragraph (c)(3)(vi) of this section.
    (ii) Not an integral part of a group health plan. For purposes of 
this paragraph (c)(3), benefits are not an integral part of a group 
health plan (whether the benefits are provided through the same plan, a 
separate plan, or as the only plan offered to participants) if either 
paragraph (c)(3)(ii)(A) or (B) are satisfied.
    (A) Participants may decline coverage. For example, a participant 
may decline coverage if the participant can opt out of the coverage upon 
request, whether or not there is a participant contribution required for 
the coverage.
    (B) Claims for the benefits are administered under a contract 
separate from claims administration for any other benefits under the 
plan.
    (iii) Limited scope--(A) Dental benefits. Limited scope dental 
benefits are benefits substantially all of which are for treatment of 
the mouth (including any organ or structure within the mouth).
    (B) Vision benefits. Limited scope vision benefits are benefits 
substantially all of which are for treatment of the eye.
    (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 services, as defined in section 
7702B(c)(1) of the Internal Revenue Code, or provided under a qualified 
long-term care insurance contract, as defined in section 7702B(b) of the 
Internal Revenue Code; or

[[Page 845]]

    (C) Based on cognitive impairment or a loss of functional capacity 
that is expected to be chronic.
    (v) Health flexible spending arrangements. Benefits provided under a 
health flexible spending arrangement (as defined in section 106(c)(2) of 
the Internal Revenue Code) are excepted for a class of participants only 
if they satisfy the following two requirements--
    (A) Other group health plan coverage, not limited to excepted 
benefits, is made available for the year to the class of participants by 
reason of their employment; and
    (B) The arrangement is structured so that the maximum benefit 
payable to any participant in the class for a year cannot exceed two 
times the participant's salary reduction election under the arrangement 
for the year (or, if greater, cannot exceed $500 plus the amount of the 
participant's salary reduction election). For this purpose, any amount 
that an employee can elect to receive as taxable income but elects to 
apply to the health flexible spending arrangement is considered a salary 
reduction election (regardless of whether the amount is characterized as 
salary or as a credit under the arrangement).
    (vi) Employee assistance programs. Benefits provided under employee 
assistance programs are excepted if they satisfy all of the requirements 
of this paragraph (c)(3)(vi).
    (A) The program does not provide significant benefits in the nature 
of medical care. For this purpose, the amount, scope and duration of 
covered services are taken into account.
    (B) The benefits under the employee assistance program are not 
coordinated with benefits under another group health plan, as follows:
    (1) Participants in the other group health plan must not be required 
to use and exhaust benefits under the employee assistance program 
(making the employee assistance program a gatekeeper) before an 
individual is eligible for benefits under the other group health plan; 
and
    (2) Participant eligibility for benefits under the employee 
assistance program must not be dependent on participation in another 
group health plan.
    (C) No employee premiums or contributions are required as a 
condition of participation in the employee assistance program.
    (D) There is no cost sharing under the employee assistance program.
    (vii) Limited wraparound coverage. Limited benefits provided through 
a group health plan that wrap around eligible individual health 
insurance (or Basic Health Plan coverage described in section 1331 of 
the Patient Protection and Affordable Care Act); or that wrap around 
coverage under a Multi-State Plan described in section 1334 of the 
Patient Protection and Affordable Care Act, collectively referred to as 
``limited wraparound coverage,'' are excepted benefits if all of the 
following conditions are satisfied. For this purpose, eligible 
individual health insurance is individual health insurance coverage that 
is not a grandfathered health plan (as described in section 1251 of the 
Patient Protection and Affordable Care Act and Sec. 2590.715-1251), not 
a transitional individual health insurance plan (as described in the 
March 5, 2014 Insurance Standards Bulletin Series--Extension of 
Transitional Policy through October 1, 2016), and does not consist 
solely of excepted benefits (as defined in paragraph (c) of this 
section).
    (A) Covers additional benefits. The limited wraparound coverage 
provides meaningful benefits beyond coverage of cost sharing under 
either the eligible individual health insurance, Basic Health Program 
coverage, or Multi-State Plan coverage. The limited wraparound coverage 
must not provide benefits only under a coordination-of-benefits 
provision and must not consist of an account-based reimbursement 
arrangement.
    (B) Limited in amount. The annual cost of coverage per employee (and 
any covered dependents, as defined in Sec. 2590.701-2) under the limited 
wraparound coverage does not exceed the greater of the amount determined 
under either paragraph (c)(3)(vii)(B)(1) or (2) of this section. Making 
a determination regarding the annual cost of coverage per employee must 
occur on an aggregate basis relying on sound actuarial principles.
    (1) The maximum permitted annual salary reduction contribution 
toward health flexible spending arrangements,

[[Page 846]]

indexed in the manner prescribed under section 125(i)(2) of the Code. 
For this purpose, the cost of coverage under the limited wraparound 
includes both employer and employee contributions towards coverage and 
is determined in the same manner as the applicable premium is calculated 
under a COBRA continuation provision.
    (2) Fifteen percent of the cost of coverage under the primary plan. 
For this purpose, the cost of coverage under the primary plan and under 
the limited wraparound coverage includes both employer and employee 
contributions towards the coverage and each is determined in the same 
manner as the applicable premium is calculated under a COBRA 
continuation provision.
    (C) Nondiscrimination. All of the conditions of this paragraph 
(c)(3)(vii)(C) are satisfied.
    (1) No preexisting condition exclusion. The limited wraparound 
coverage does not impose any preexisting condition exclusion, consistent 
with the requirements of section 2704 of the PHS Act (incorporated by 
reference into section 715 of ERISA) and Sec. 2590.715-2704.
    (2) No discrimination based on health status. The limited wraparound 
coverage does not discriminate against individuals in eligibility, 
benefits, or premiums based on any health factor of an individual (or 
any dependent of the individual, as defined in Sec. 2590.701-2), 
consistent with the requirements of section 702 of ERISA and section 
2705 of the PHS Act (incorporated by reference into section 715 of 
ERISA).
    (3) No discrimination in favor of highly compensated individuals. 
Neither the limited wraparound coverage, nor any other group health plan 
coverage offered by the plan sponsor, fails to comply with section 2716 
of the PHS Act (incorporated by reference into section 715 of ERISA) or 
fails to be excludible from income for any individual due to the 
application of section 105(h) of the Code (as applicable).
    (D) Plan eligibility requirements. Individuals eligible for the 
wraparound coverage are not enrolled in excepted benefit coverage under 
paragraph (c)(3)(v) of this section (relating to health FSAs). In 
addition, the conditions set forth in either paragraph (c)(3)(vii)(D)(1) 
or (2) of this section are met.
    (1) Limited wraparound coverage that wraps around eligible 
individual insurance for persons who are not full-time employees. 
Coverage that wraps around eligible individual health insurance (or that 
wraps around Basic Health Plan coverage) must satisfy all of the 
conditions of this paragraph (c)(3)(vii)(D)(1).
    (i) For each year for which limited wraparound coverage is offered, 
the employer that is the sponsor of the plan offering limited wraparound 
coverage, or the employer participating in a plan offering limited 
wraparound coverage, offers to its full-time employees coverage that is 
substantially similar to coverage that the employer would need to offer 
to its full-time employees in order not to be subject to a potential 
assessable payment under the employer shared responsibility provisions 
of section 4980H(a) of the Code, if such provisions were applicable; 
provides minimum value (as defined in section 36B(c)(2)(C)(ii) of the 
Code); and is reasonably expected to be affordable (applying the safe 
harbor rules for determining affordability set forth in 26 CFR 54.4980H-
5(e)(2)). If a plan or issuer providing limited wraparound coverage 
takes reasonable steps to ensure that employers disclose to the plan or 
issuer necessary information regarding their coverage offered and 
affordability information, the plan or issuer is permitted to rely on 
reasonable representations by employers regarding this information, 
unless the plan or issuer has specific knowledge to the contrary. In the 
event that the employer that is the sponsor of the plan offering 
wraparound coverage, or the employer participating in a plan offering 
wraparound coverage, has no full-time employees for any plan year 
limited wraparound coverage is offered, the requirement of this 
paragraph (c)(3)(vii)(D)(1)(i) is considered satisfied.
    (ii) Eligibility for the limited wraparound coverage is limited to 
employees who are reasonably determined at the time of enrollment to not 
be full-time employees (and their dependents, as defined in 
Sec. 2590.701-2), or who are retirees (and their dependents, as defined 
in Sec. 2590.701-2). For this purpose, full-

[[Page 847]]

time employees are employees who are reasonably expected to work at 
least an average of 30 hours per week.
    (iii) Other group health plan coverage, not limited to excepted 
benefits, is offered to the individuals eligible for the limited 
wraparound coverage. Only individuals eligible for the other group 
health plan coverage are eligible for the limited wraparound coverage.
    (2) Limited coverage that wraps around Multi-State Plan coverage. 
Coverage that wraps around Multi-State Plan coverage must satisfy all of 
the conditions of this paragraph (c)(3)(vii)(D)(2). For this purpose, 
the term ``full-time employee'' means a ``full-time employee'' as 
defined in 26 CFR 54.4980H-1(a)(21) who is not in a limited non-
assessment period for certain employees (as defined in 26 CFR 54.4980H-
1(a)(26)). Moreover, if a plan or issuer providing limited wraparound 
coverage takes reasonable steps to ensure that employers disclose to the 
plan or issuer necessary information regarding their coverage offered 
and contribution levels for 2013 or 2014 (as applicable), and for any 
year in which limited wraparound coverage is offered, the plan or issuer 
is permitted to rely on reasonable representations by employers 
regarding this information, unless the plan or issuer has specific 
knowledge to the contrary. Consistent with the reporting and evaluation 
criteria of paragraph (c)(3)(vii)(E) of this section, the Office of 
Personnel Management may verify that plans and issuers have reasonable 
mechanisms in place to ensure that contributing employers meet these 
standards.
    (i) The limited wraparound coverage is reviewed and approved by the 
Office of Personnel Management, consistent with the reporting and 
evaluation criteria of paragraph (c)(3)(vii)(E) of this section, to 
provide benefits in conjunction with coverage under a Multi-State Plan 
authorized under section 1334 of the Patient Protection and Affordable 
Care Act. The Office of Personnel Management may revoke approval if it 
determines that continued approval is inconsistent with the reporting 
and evaluation criteria of paragraph (c)(3)(vii)(E) of this section.
    (ii) The employer offered coverage in the plan year that began in 
either 2013 or 2014 that is substantially similar to coverage that the 
employer would need to have offered to its full-time employees in order 
to not be subject to an assessable payment under the employer shared 
responsibility provisions of section 4980H(a) of the Code, if such 
provisions had been applicable. In the event that a plan that offered 
coverage in 2013 or 2014 has no full-time employees for any plan year 
limited wraparound coverage is offered, the requirement of this 
paragraph (c)(3)(vii)(D)(2)(ii) is considered satisfied.
    (iii) In the plan year that began in either 2013 or 2014, the 
employer offered coverage to a substantial portion of full-time 
employees that provided minimum value (as defined in section 
36B(c)(2)(C)(ii) of the Code) and was affordable (applying the safe 
harbor rules for determining affordability set forth in 26 CFR 54.4980H-
5(e)(2)). In the event that the plan that offered coverage in 2013 or 
2014 has no full-time employees for any plan year limited wraparound 
coverage is offered, the requirement of this paragraph 
(c)(3)(vii)(D)(2)(iii) is considered satisfied.
    (iv) For the duration of the pilot program, as described in 
paragraph (c)(3)(vii)(F) of this section, the employer's annual 
aggregate contributions for both primary and limited wraparound coverage 
are substantially the same as the employer's total contributions for 
coverage offered to full-time employees in 2013 or 2014.
    (E) Reporting--(1) Reporting by group health plans and group health 
insurance issuers. A self-insured group health plan, or a health 
insurance issuer, offering or proposing to offer limited wraparound 
coverage in connection with Multi-State Plan coverage pursuant to 
paragraph (c)(3)(vii)(D)(2) of this section reports to the Office of 
Personnel Management (OPM), in a form and manner specified in guidance, 
information OPM reasonably requires to determine whether the plan or 
issuer qualifies to offer such coverage or complies with the applicable 
requirements of this section.
    (2) Reporting by group health plan sponsors. The plan sponsor of a 
group health plan offering limited wraparound coverage under paragraph 
(c)(3)(vii) of this section, must report

[[Page 848]]

to the Department of Health and Human Services (HHS), in a form and 
manner specified in guidance, information HHS reasonably requires.
    (F) Pilot program with sunset--The provisions of paragraph 
(c)(3)(vii) of this section apply to limited wraparound coverage that is 
first offered no earlier than January 1, 2016 and no later than December 
31, 2018 and that ends no later than on the later of:
    (1) The date that is three years after the date limited wraparound 
coverage is first offered; or
    (2) The date on which the last collective bargaining agreement 
relating to the plan terminates after the date limited wraparound 
coverage is first offered (determined without regard to any extension 
agreed to after the date limited wraparound coverage is first offered).
    (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 
indemnity insurance is excepted only if it meets each of the conditions 
specified in paragraph (c)(4)(ii) of this section. To be hospital 
indemnity or other fixed indemnity insurance, the insurance must pay a 
fixed dollar amount per day (or per other period) of hospitalization or 
illness (for example, $100/day) regardless of the amount of expenses 
incurred.
    (ii) Conditions. Benefits are described in paragraph (c)(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 the event under any group 
health plan maintained by the same plan sponsor.
    (iii) Example. The rules of this paragraph (c)(4) are illustrated by 
the following example:

    Example. (i) Facts. An employer sponsors a group health plan that 
provides coverage through an insurance policy. The policy provides 
benefits only for hospital stays at a fixed percentage of hospital 
expenses up to a maximum of $100 a day.
    (ii) Conclusion. In this Example, even though the benefits under the 
policy satisfy the conditions in paragraph (c)(4)(ii) of this section, 
because the policy pays a percentage of expenses incurred rather than a 
fixed dollar amount, the benefits under the policy are not excepted 
benefits under this paragraph (c)(4). This is the result even if, in 
practice, the policy pays the maximum of $100 for every day of 
hospitalization.

    (5) Supplemental benefits. (i) The following benefits are excepted 
only if they are provided under a separate policy, certificate, or 
contract of insurance--
    (A) Medicare supplemental health insurance (as defined under section 
1882(g)(1) of the Social Security Act; also known as Medigap or MedSupp 
insurance);
    (B) Coverage supplemental to the coverage provided under Chapter 55, 
Title 10 of the United States Code (also known as TRICARE supplemental 
programs); and
    (C) Similar supplemental coverage provided to coverage under a group 
health plan. To be similar supplemental coverage, the coverage must be 
specifically designed to fill gaps in the primary coverage. The 
preceding sentence is satisfied if the coverage is designed to fill gaps 
in cost sharing in the primary coverage, such as coinsurance or 
deductibles, or the coverage is designed to provide benefits for items 
and services not covered by the primary coverage and that are not 
essential health benefits (as defined under section 1302(b) of the 
Patient Protection and Affordable Care Act) in the State where the 
coverage is issued, or the coverage is designed to both fill such gaps 
in cost sharing under, and cover such benefits not covered by, the 
primary coverage. Similar supplemental coverage does not include 
coverage that becomes secondary or supplemental only under a 
coordination-of-benefits provision.
    (ii) The rules of this paragraph (c)(5) are illustrated by the 
following example:

    Example. (i) Facts. An employer sponsors a group health plan that 
provides coverage for

[[Page 849]]

both active employees and retirees. The coverage for retirees 
supplements benefits provided by Medicare, but does not meet the 
requirements for a supplemental policy under section 1882(g)(1) of the 
Social Security Act.
    (ii) Conclusion. In this Example, the coverage provided to retirees 
does not meet the definition of supplemental excepted benefits under 
this paragraph (c)(5) because the coverage is not Medicare supplemental 
insurance as defined under section 1882(g)(1) of the Social Security 
Act, is not a TRICARE supplemental program, and is not supplemental to 
coverage provided under a group health plan.

    (d) Treatment of partnerships. For purposes of this part:
    (1) Treatment as a group health plan. Any plan, fund, or program 
that would not be (but for this paragraph (d)) an employee welfare 
benefit plan and that is established or maintained by a partnership, to 
the extent that the plan, fund, or program provides medical care 
(including items and services paid for as medical care) to present or 
former partners in the partnership or to their dependents (as defined 
under the terms of the plan, fund, or program), directly or through 
insurance, reimbursement, or otherwise, is treated (subject to paragraph 
(d)(2)) as an employee welfare benefit plan that is a group health plan.
    (2) Employment relationship. In the case of a group health plan, the 
term employer also includes the partnership in relation to any bona fide 
partner. In addition, the term employee also includes any bona fide 
partner. Whether or not an individual is a bona fide partner is 
determined based on all the relevant facts and circumstances, including 
whether the individual performs services on behalf of the partnership.
    (3) Participants of group health plans. In the case of a group 
health plan, the term participant also includes any individual described 
in paragraph (d)(3)(i) or (ii) of this section if the individual is, or 
may become, eligible to receive a benefit under the plan or the 
individual's beneficiaries may be eligible to receive any such benefit.
    (i) In connection with a group health plan maintained by a 
partnership, the individual is a partner in relation to the partnership.
    (ii) In connection with a group health plan maintained by a self-
employed individual (under which one or more employees are 
participants), the individual is the self-employed individual.
    (e) Determining the average number of employees. [Reserved]

[69 FR 78778, Dec. 30, 2004, as amended at 74 FR 51687, Oct. 7, 2009; 79 
FR 10312, Feb. 24, 2014; 79 FR 59136, Oct. 1, 2014; 80 FR 14005, Mar. 
18, 2015; 81 FR 75325, Oct. 31, 2016]



Sec. 2590.734  Enforcement. [Reserved]



Sec. 2590.736  Applicability dates.

    Sections 2590.701-1 through 2590.701-8 and 2590.731 through 2590.736 
are applicable for plan years beginning on or after July 1, 2005. Until 
the applicability date for this regulation, plans and issuers are 
required to continue to comply with the corresponding sections of 29 CFR 
part 2590, contained in the 29 CFR, parts 1927 to end, edition revised 
as of July 1, 2004. Notwithstanding the previous sentence, the 
definition of ``short-term, limited-duration insurance'' in 
Sec. 2590.701-2 and paragraph (c)(5)(i)(C) of Sec. 2590.732 apply for 
plan years beginning on or after January 1, 2017.

[69 FR 78778, Dec. 30, 2004, as amended at 81 FR 75326, Oct. 31, 2016]

                       PARTS 2591	2599 [RESERVED]

[[Page 851]]



     CHAPTER XXVII--FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
2700            Procedural rules............................         853
2701            Government in the Sunshine Act regulations..         880
2702            Regulations implementing the Freedom of 
                    Information Act.........................         882
2703            Employee responsibilities and conduct.......         887
2704            Implementation of the Equal Access to 
                    Justice Act in Commission proceedings...         887
2705            Privacy Act implementation..................         895
2706            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Federal Mine 
                    Safety and Health Review Commission.....         897
2707-2799       [Reserved]

[[Page 853]]



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 filing notice of contest of citation or order.
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.
2700.24  Emergency response plan dispute proceedings.

                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 dates and 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  [Reserved]
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.

                    Subpart J_Simplified Proceedings

2700.100  Purpose.
2700.101  Eligibility for simplified proceedings.
2700.102  Commission commencement of simplified proceedings.
2700.103  Party request for simplified proceedings.
2700.104  Discontinuance of simplified proceedings.

[[Page 854]]

2700.105  Disclosure of information by the Parties.
2700.106  Pre-Hearing conference.
2700.107  Discovery.
2700.108  Hearing.
2700.109  Review of Judge's Decision.
2700.110  Application.

    Authority: 30 U.S.C. 815, 820, 823, and 876.

    Source: 58 FR 12164, Mar. 3, 1993, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 2700.1  Scope; applicability of other rules; construction.

    (a) Scope. (1) This part sets forth rules applicable to proceedings 
before the Federal Mine Safety and Health Review Commission (``the 
Commission'') and its Administrative Law Judges. The Commission is an 
adjudicative agency that provides administrative trial and appellate 
review of legal disputes arising under the Federal Mine Safety and 
Health Act of 1977, 30 U.S.C. 801 et seq. (``the Act''). The Commission 
is an independent agency, not a part of nor affiliated in any way with 
the U.S. Department of Labor or its Mine Safety and Health 
Administration (``MSHA''). The location of the Commission's headquarters 
is at 1331 Pennsylvania Avenue NW., Suite 520N, Washington, DC 20004-
1710; its primary phone number is 202-434-9900; and the fax number of 
its Docket Office is 202-434-9954. The Commission maintains a Web site 
at http://www.fmshrc.gov where these rules, recent and many past 
decisions of the Commission and its Judges, and other information 
regarding the Commission, can be accessed.
    (2) Unless the Commission provides otherwise, amendments to these 
rules are effective 60 days following publication in the Federal 
Register, and apply to cases initiated after they take effect. They also 
apply to further proceedings in cases pending on the effective date, 
except to the extent that application of the amended rules would not be 
feasible, or would work injustice, in which event the former rules of 
procedure would continue to apply.
    (b) Applicability of other rules. On any procedural question not 
regulated by 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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44206, Aug. 4, 2006; 77 
FR 48430, Aug. 14, 2012]



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 in accordance with Sec. 2700.6; 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

[[Page 855]]

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; 78 
FR 77356, Dec. 23, 2013]



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, 1331 Pennsylvania 
Avenue NW., Suite 520N, Washington, DC 20004-1710. 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. 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; 
77 FR 48430, Aug. 14, 2012]



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(c); 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

[[Page 856]]

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) How to file. Unless otherwise provided for in the Act, these 
rules, or by order, filing may be accomplished in person, by U.S. Postal 
Service, by third-party commercial carrier, by facsimile transmission, 
or by electronic transmission. Instructions for electronic filing may be 
accessed on the Commission's Web site (http://www.fmshrc.gov).
    (c) Where to file. Unless otherwise provided for in the Act, these 
rules, or by order:
    (1) Filing by electronic transmission. A document may be filed by 
electronic transmission with the Commission and its Judges. Instructions 
for electronic filing may be accessed on the Commission's Web site 
(http://www.fmshrc.gov).
    (2) Filing in person, by U.S. Postal Service, by third-party 
commercial carrier, or by facsimile transmission--(i) Before a Judge has 
been assigned. Before 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, 
1331 Pennsylvania Avenue NW., Suite 520N, Washington, DC 20004-1710; 
facsimile delivery shall be transmitted to (202) 434-9954.
    (ii) After a Judge has been assigned. After a Judge has been 
assigned, and before a decision has been issued, documents shall be 
filed with the Judge at the address set forth on the notice of the 
assignment.
    (iii) Interlocutory review. Documents filed in connection with 
interlocutory review shall be filed with the Commission in accordance 
with Sec. 2700.76.
    (iv) After a Judge has issued a final decision. After the Judge has 
issued a final decision, documents shall be filed with the Commission as 
described in paragraph (c)(2)(i) of this section.
    (d) 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, business telephone 
number, cell telephone number if available, fax number if available, and 
email address if available. Written notice of any change in contact 
information shall be given promptly to the Commission or the Judge and 
all other parties.
    (e) Privacy considerations. Persons submitting information to the 
Commission shall protect information that tends to identify certain 
individuals or tends to constitute an unwarranted intrusion of personal 
privacy in the following manner:
    (1) All but the last four digits of social security numbers, 
financial account numbers, driver's license numbers, or other personal 
identifying numbers, shall be redacted or excluded;
    (2) Minor children shall be identified only by initials;
    (3) If dates of birth must be included, only the year shall be used;
    (4) Parties shall exercise caution when filing medical records, 
medical treatment records, medical diagnosis records, employment 
history, and individual financial information, and shall redact or 
exclude certain materials unnecessary to a disposition of the case.
    (f) Effective date of filing. Unless otherwise provided for in the 
Act, these rules, or by order:
    (1) Filing by electronic transmission. When filing is by electronic 
transmission, filing is effective upon successful receipt by the 
Commission. The electronic transmission shall be in the manner specified 
by the Commission's Web site (http://www.fmshrc.gov).
    (2) Filing in person, by U.S. Postal Service, by third-party 
commercial carrier, or by facsimile transmission. When filing is by U.S. 
Postal Service, filing is effective upon mailing, except that the filing 
of a motion for extension of time, any document in an emergency response 
plan dispute proceeding, a petition for review of a temporary 
reinstatement order, a motion for summary decision, a petition for 
discretionary review, and a motion to exceed page limit is effective 
only upon receipt. See Secs. 2700.9(a), 2700.24(d), 2700.45(f), 
2700.67(a), 2700.70(a), (f), and 2700.75(f). When filing is in person, 
by

[[Page 857]]

third-party commercial carrier, or by facsimile, filing is effective 
upon successful receipt by the Commission.
    (g) Number of copies. Unless otherwise ordered or stated in this 
part, only the original of a document shall be filed.
    (h) Form of pleadings. All documents, including those filed 
electronically, shall appear in at least 12-point type on paper 8\1/2\ 
by 11 inches in size, with margins of at least 1 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 may be grounds for rejection of a pleading.
    (i) Citation to a decision of a Judge. Each citation to a decision 
of a Judge should include ``(ALJ)'' at the end of the citation.
    (j) Status or informational requests. Information concerning filing 
requirements, the status of cases, or docket information may be accessed 
through the Commission's Web site (http://www.fmshrc.gov). In the event 
such information is unavailable through the Commission's Web site or the 
requesting party does not have access to the Web site, such status or 
informational requests must be directed to the Docket Office of the 
Federal Mine Safety and Health Review Commission, 1331 Pennsylvania 
Avenue NW., Suite 520N, Washington, DC 20004-1710.

[78 FR 77356, Dec. 23, 2013]



Sec. 2700.6  Signing of documents.

    (a) Signature--(1) Documents not filed by electronic transmission. A 
party or representative of the party shall sign a document by 
handwriting his signature.
    (2) Documents filed by electronic transmission.
    (i) A party or representative of the party may sign a document by 
including the notation ``/s/'' followed by the typewritten name of the 
party or representative of the party filing the document.
    (ii) A party or representative of the party may sign a document by 
including a graphical duplicate of his handwritten signature.
    (b) Meaning of Signature. A document or signature may not be denied 
legal effect or enforceability solely because it is in electronic form. 
When a party or representative of the party signs a document in the 
manner described in paragraph (a) of this section, that person's 
signature shall constitute his certificate:
    (1) 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
    (2) 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.

[78 FR 77357, Dec. 23, 2013]



Sec. 2700.7  Service.

    (a) Generally. A copy of each document filed with the Commission 
shall be served on all parties. 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, service 
thereafter shall be made upon the attorney or other authorized 
representative. 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) Manner of service. Unless otherwise provided for in the Act, 
these rules, or by order:

[[Page 858]]

    (1) Methods of service. Documents may be served in person, by U.S. 
Postal Service, by third-party commercial carrier, by facsimile 
transmission, or by electronic transmission (email). For documents filed 
pursuant to Secs. 2700.9(a), 2700.24, 2700.45, 2700.70(f), 2700.75(f), 
and subpart F (applications for temporary relief), the method of service 
used must be no less expeditious than that used for filing, except that 
if service by electronic transmission (email) is impossible, the filing 
party must serve in person, by third party commercial carrier, or 
facsimile transmission, resulting in same-day delivery.
    (2) Effective date of service. When service is by U.S. Postal 
service, service is effective upon mailing. When service is in person, 
by third-party commercial carrier, by facsimile transmission, or by 
electronic transmission (email), service is effective upon successful 
receipt by the party intended to be served.
    (d) Proof of service. All pleadings and other filed documents shall 
be accompanied by a certification setting forth the date, method of 
service, and all contact information used.

[78 FR 77357, Dec. 23, 2013]



Sec. 2700.8  Computation of time.

    Unless otherwise provided for in the Act, these rules, or by order, 
the due date for a pleading or other deadline for party or Commission 
action (hereinafter ``due date'') is determined sequentially as follows:
    (a) Except to the extent otherwise provided herein (see, e.g., 
Secs. 2700.24 and 2700.45), when the period of time prescribed for 
action is less than 11 days, Saturdays, Sundays, and federal holidays 
shall be excluded in determining the due date.
    (b) When a party serves a pleading by a method of delivery resulting 
in other than same-day service, the due date for party action in 
response is extended 5 additional calendar days beyond the date 
otherwise prescribed, after consideration of paragraph (a) of this 
section where applicable.
    (c) The day from which the designated period begins to run shall not 
be included in determining the due date. The last day of the prescribed 
period for action, after consideration of paragraphs (a) and (b) of this 
section where applicable, shall be included and be the due date, unless 
it is a Saturday, Sunday, federal holiday, or other day on which the 
Commission's offices are not open or the Commission is open but unable 
to accept filings, in which event the due date shall be the next day 
which is not one of the aforementioned days.
    (d) The time of filing with the Commission shall be determined using 
Washington, DC, local time. For filing by electronic means and by 
facsimile transmission, the due date ends at midnight Washington, DC, 
local time. For filing by other means, the due date ends at 5:00 p.m. 
Washington, DC, local time.
    Example 1: A motion is filed with the Commission on Monday, July 1, 
2013. Under Sec. 2700.10(d), other parties in the proceeding have 8 days 
in which to respond to the motion. Because the response period is less 
than 11 days, intervening weekends and holidays, such as Thursday, July 
4, 2013, are excluded in determining the due date. A response is thus 
due by Friday, July 12, 2013. In addition, those parties not served with 
the motion on the day it was filed have 5 additional calendar days in 
which to respond, or until Wednesday, July 17, 2013.
    Example 2: A Commission Judge issues his final decision in a case on 
Friday, July 5, 2013. Under Sec. 2700.70(a), parties have until August 
4, 2013, to file with the Commission a petition for discretionary review 
of the Judge's decision. Even though the decision was mailed, 5 
additional calendar days are not added, because paragraph (b) of this 
section only applies to actions in response to parties' pleadings. 
However, because August 4, 2013, is a Sunday, the actual due date for 
the petition is Monday, August 5, 2013.
    Example 3: Pursuant to Sec. 2700.24(a), the Secretary of Labor files 
a referral of a citation arising out of a dispute over the content of an 
operator's emergency response plan. Certain subsequent deadlines in such 
cases are specifically established by reference to calendar days, and 
thus paragraph (a) of this section would not necessarily apply in 
determining due dates. For instance, if the referral was filed on

[[Page 859]]

Thursday, July 11, 2013, the short and plain statement the operator must 
file in response within 5 calendar days would be due Tuesday, July 16, 
2013, because the intervening weekend days would not be excluded in 
determining the due date. If the fifth calendar day were to fall on a 
weekend, holiday, or other day on which the Commission is not open 
however, the terms of paragraph (c) would apply and the due date would 
be the next day the Commission is open.

[78 FR 77358, Dec. 23, 2013]



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 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. 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 electronic transmission (email) is impossible, the filing party must 
serve in person, by third party commercial carrier, or by facsimile 
transmission, resulting in same-day 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.
    (c) This rule does not apply to petitions for discretionary review 
filed pursuant to section 113(d)(2)(A)(i) of the Act, 30 U.S.C. 
823(d)(2)(A)(i), and Sec. 2700.70(a).

[64 FR 48713, Sept. 8, 1999, as amended at 71 FR 44207, Aug. 4, 2006; 78 
FR 77358, Dec. 23, 2013]



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 any motion other than a dispositive 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 8 days after service upon the party. Unless otherwise 
ordered, oral argument on motions will not be heard. Where circumstances 
warrant, a 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; 71 
FR 44207, Aug. 4, 2006]



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:

[[Page 860]]

    (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 filing notice of contest of citation or order.

    (a) The filing of a notice of contest of a citation or order issued 
under section 104 of the Act, 30 U.S.C. 814, does not constitute a 
challenge to a proposed penalty assessment that may subsequently be 
issued by the Secretary under section 105(a) of the Act, 30 U.S.C. 
815(a), which is based on that citation or order. A challenge to such a 
proposed penalty assessment must be filed as a separate notice of 
contest of the proposed penalty assessment. See Sec. 2700.26.
    (b) 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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44207, Aug. 4, 2006]



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 
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

[[Page 861]]

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.



Sec. 2700.24  Emergency response plan dispute proceedings.

    (a) Referral by the Secretary. The Secretary shall immediately refer 
to the Commission any citation arising from a dispute between the 
Secretary and an operator with respect to the content of the operator's 
emergency response plan, or any refusal by the Secretary to approve such 
a plan. Any referral made pursuant to this paragraph shall be made 
within two business days of the issuance of any such citation.
    (b) Contents of referral. A referral shall consist of a notice of 
plan dispute describing the nature of the dispute; a copy of the 
citation issued by the Secretary; a short and plain statement of the 
Secretary's position with respect to any disputed plan provision; and a 
copy of the disputed provision of the emergency response plan.
    (c) Short and plain statement by the operator. Within five calendar 
days following the filing of the referral, the operator shall file with 
the Commission a short and plain statement of its position with respect 
to the disputed plan provision.
    (d) Filing and service of pleadings. The filing with the Commission 
of any document in an emergency response plan dispute proceeding, 
including the referral, is effective upon receipt. A copy of each 
document filed with the Commission in such a proceeding shall be served 
on all parties and on any miner or miners' representative who has 
participated in the emergency response plan review process by a method 
of service no less expeditious than that used for filing, except that if 
service by electronic transmission (email) is impossible, the filing 
party must serve in person, by third party commercial carrier, or by 
facsimile transmission, resulting in same-day delivery.
    (e) Proceedings before the Judge--(1) Submission of materials. 
Within 15 calendar days of the referral, the parties shall submit to the 
Judge assigned to the matter all relevant materials regarding the 
dispute. Such submissions shall include a request for any relief sought 
and may include proposed findings of fact and conclusions of law. Such 
materials may be supported by affidavits or other verified documents, 
and shall specify the grounds upon which the party seeks relief. 
Supporting affidavits shall be made on personal knowledge and shall show 
affirmatively that the affiant is competent to testify to the matters 
stated.
    (2) Hearing. (i) Within 5 calendar days following the filing of the 
Secretary's referral, any party may request a hearing and shall so 
advise the Commission's Chief Administrative Law Judge or his designee, 
and simultaneously notify the other parties.
    (ii) Within 10 calendar days following the filing of the Secretary's 
referral, the Commission's Chief Administrative Law Judge or his 
designee may issue an order scheduling a hearing on the Judge's own 
motion, and must immediately so notify the parties.
    (iii) If a hearing is ordered under paragraphs (e)(2)(i) or (ii) of 
this section, the hearing shall be held within 15 calendar days of the 
filing of the referral. The scope of such a hearing is limited to the 
disputed plan provision or provisions. If no hearing is held, the Judge 
assigned to the matter shall review the materials submitted by the 
parties pursuant to paragraph (e)(1) of this subsection, and shall issue 
a decision pursuant to paragraph (f) of this section.
    (f) Disposition--(1) Decision of the Judge. Within 15 calendar days 
following receipt by the Judge of all submissions and testimony made 
pursuant to paragraph (e) of this subsection, the Judge shall issue a 
decision that constitutes the Judge's final disposition of the 
proceedings. The decision shall be

[[Page 862]]

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. The 
parties shall be notified of the Judge's decision by the most 
expeditious means reasonably available. Service of the decision shall be 
by certified or registered mail, return receipt requested.
    (2) Stay of plan provision. Notwithstanding Sec. 2700.69(b), a Judge 
shall retain jurisdiction over a request for a stay in an emergency 
response plan dispute proceeding. Within two business days following 
service of the decision, the operator may file with the judge a request 
to stay the inclusion of the disputed provision in the plan during the 
pendency of an appeal to the Commission pursuant to paragraph (g) of 
this section. The Secretary shall respond to the operator's motion 
within two business days following service of the motion. The judge 
shall issue an order granting or denying the relief sought within two 
business days after the filing of the Secretary's response.
    (g) Review of decision. Any party may seek review of a Judge's 
decision, including the Judge's order granting or denying a stay, by 
filing with the Commission a petition for discretionary review pursuant 
to Sec. 2700.70. Neither an operator's request for a stay nor the 
issuance of an order addressing the stay request affects the time limits 
for filing a petition for discretionary review of a Judge's decision 
with the Commission under this subparagraph. The Commission shall act 
upon a petition on an expedited basis. If review is granted, the 
Commission shall issue a briefing order. Except as otherwise ordered or 
provided for herein, the provisions of Sec. 2700.75 apply. The 
Commission will not grant motions for extension of time for filing 
briefs, except under extraordinary circumstances.

[72 FR 2191, Jan. 18, 2007, as amended at 78 FR 77358, Dec. 23, 2013]



                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 assessment. A person who wishes to contest a proposed 
penalty assessment must provide such notification regardless of whether 
the person has previously contested the underlying citation or order 
pursuant to Sec. 2700.20. The Secretary shall immediately transmit to 
the Commission any notice of contest of a proposed penalty assessment.

[71 FR 44207, Aug. 4, 2006]



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:
    (1) 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

[[Page 863]]

section of the Act or regulations alleged to be violated.
    (2) 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), unless a single penalty assessment has been 
proposed under 30 CFR 100.4.
    (3) State whether the citation or order has been contested pursuant 
to Sec. 2700.20 and the docket number of any contest proceeding.
    (4) Advise the party against whom the petition is filed that an 
answer to the petition must be filed within 30 days pursuant to 
Sec. 2700.29 and that the answer must be filed regardless of whether the 
party has already filed a notice of contest of the citation, order, or 
proposed penalty assessment involved.
    (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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44207, Aug. 4, 2006]



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 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. In all penalty proceedings, except for discrimination 
proceedings arising under section 105(c) of the Mine Act, 30 U.S.C. 
815(c), a settlement motion must be accompanied by a proposed order 
approving settlement. In discrimination proceedings, a party shall file 
a motion to approve settlement that includes the factual support 
described in paragraph (b)(1) of this section, and that shall be filed 
and served in accordance with the provisions of 29 CFR 2700.5 and 
2700.7, respectively. In discrimination proceedings, a party need not 
file a proposed order.
    (b) Content of motion--(1) Factual support. A motion to approve a 
penalty settlement shall include for each violation the amount of the 
penalty proposed by the Secretary, the amount of the penalty agreed to 
in settlement, and facts in support of the penalty agreed to by the 
parties. Rather than setting forth such information in detail, the 
motion may incorporate by reference the information which has been 
included in the accompanying proposed order as required by paragraph 
(c)(1) of this section.
    (2) Certification. The party filing a motion must certify that the 
opposing party has authorized the filing party to represent that the 
opposing party consents to the granting of the motion and the entry of 
the proposed order approving settlement.
    (c) Content of proposed order--(1) Factual support. A proposed order 
approving a penalty settlement shall include for each violation the 
amount of the penalty proposed by the Secretary, the amount of the 
penalty agreed to in settlement, and facts in support of the penalty 
agreed to by the parties. Forms for proposed orders approving settlement 
are available on the Commission's Web site (http://www.fmshrc.gov). 
Although parties are not required to use the forms on the Commission's 
Web site, if proposed orders fail to include pertinent information, the 
motion and proposed order may be rejected for filing by the Commission 
in accordance with paragraph

[[Page 864]]

(f) of this section. Proposed orders shall not be submitted in PDF 
format.
    (2) Appearance by CLR. If a motion has been filed by a Conference 
and Litigation Representative (``CLR'') on behalf of the Secretary, the 
proposed order approving settlement accompanying the motion shall 
include a provision in which the Judge accepts the CLR to represent the 
Secretary in accordance with the notice of either limited or unlimited 
appearance previously filed with the Commission. A CLR does not need to 
obtain authorization from the Commission to represent the Secretary 
before the CLR files a motion to approve settlement and proposed order.
    (d) Filing and service of motion accompanied by proposed order--(1) 
Electronic filing. A motion and proposed order shall be filed 
electronically according to the requirements set forth in this rule and 
instructions on the Commission's Web site (http://www.fmshrc.gov). 
Filing is effective upon successful receipt by the Commission.
    (i) Signatures. Any signature line set forth within a motion to 
approve settlement submitted electronically shall include the notation 
``/s/'' followed by the typewritten name of the party or representative 
of the party filing the document, or by the graphical duplicate of the 
handwritten signature of the party or representative of the party filing 
the document. Such representation of the signature shall be deemed to be 
the original signature of the representative for all purposes unless the 
party representative shows that such representation of the signature was 
unauthorized. See 29 CFR 2700.6.
    (ii) Status of documents. A motion and proposed order filed 
electronically constitute written documents for the purpose of applying 
the Commission's procedural rules (29 CFR part 2700), and such rules 
apply unless an exception to those rules is specifically set forth in 
this rule.
    (2) Filing by non-electronic means. A party may file a motion to 
approve settlement and an accompanying proposed order by non-electronic 
means only with the permission of the Judge.
    (3) Service. A settlement motion and proposed order shall be served 
on all parties or, if parties are represented, upon their 
representatives, by the most expeditious method possible and at least 
five business days before the motion and proposed order are filed with 
the Commission. If a party cannot be served by email, facsimile 
transmission, or commercial delivery, a copy of the motion and proposed 
order may be served by mail. A certificate of service shall accompany 
the motion and proposed order setting forth the date, method of service, 
and all contact information used.
    (e) Filing of motion and proposed order prior to filing of petition. 
If a motion to approve settlement and proposed order is filed with the 
Commission before the Secretary has filed a petition for assessment of 
penalty, the filing party must also submit as attachments, electronic 
copies of the proposed penalty assessment and citations and orders at 
issue. If such attachments are filed, the Secretary need not file a 
petition for assessment of penalty.
    (f) Non-acceptance of motion and proposed order. If a party filing a 
motion to approve settlement and a proposed order fails to include in 
the motion and proposed order pertinent information required by this 
rule and the Commission's instructions posted on the Commission's Web 
site, the Commission will not accept for filing the motion and proposed 
order. Rather, the Commission will inform the filing party of the need 
for correction and resubmission.
    (g) Final order. 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 order of the Commission 40 days after 
issuance unless the Commission has directed that the order be reviewed. 
A Judge may correct clerical errors in an order approving settlement in 
accordance with the provisions of 29 CFR 2700.69(c).

[75 FR 73957, Nov. 30, 2010, as amended at 78 FR 77358, Dec. 23, 2013]

[[Page 865]]



                  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.



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.

[[Page 866]]



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 a method of service as expeditious as that used for 
filing, except that if service by electronic transmission (email) is 
impossible, the filing party must serve in person, by third party 
commercial carrier, or by facsimile transmission, resulting in same-day 
delivery.
    (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 
method of notice and delivery reasonably available.
    (c) Request for hearing. Within 10 calendar 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 calendar 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. (1) Within 7 calendar 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.
    (2) The Judge's order shall include findings and conclusions 
supporting the determination as to whether the miner's complaint has 
been frivolously brought.
    (3) The parties shall be notified of the Judge's 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.
    (4) A Judge's order temporarily reinstating a miner is not a final 
decision within the meaning of Sec. 2700.69, and except during appellate 
review of such order by the Commission or courts, the Judge shall retain 
jurisdiction over the temporary reinstatement proceeding.
    (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 business days following receipt of the 
Judge's written order. The filing of any such petition is effective upon 
receipt. 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

[[Page 867]]

filed within 5 business 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 electronic transmission (email) is impossible, the filing 
party must serve in person, by third party commercial carrier, or by 
facsimile transmission, resulting in same-day 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 calendar 
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. 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; 71 
FR 44208, Aug. 4, 2006; 78 FR 77359, Dec. 23, 2013]



               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.
    (d) Service of pleadings. A copy of each document filed with the 
Commission under subpart F of this part must be served on all parties by 
a means of delivery no less expeditious than that used for filing, 
except that if service by electronic transmission (email) is impossible, 
the filing party must serve in person, by third party commercial 
carrier, or by facsimile transmission, resulting in same-day delivery.

[58 FR 12164, Mar. 3, 1993, as amended at 78 FR 77359, Dec. 23, 2013]



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 dates and sites.

    All cases will be assigned a hearing date and site by order of the 
Judge. In fixing the time and place of the hearing, the Judge shall give 
due regard to the convenience and necessity of the parties or their 
representatives and witnesses, the availability of suitable hearing 
facilities, and other relevant factors.

[71 FR 44208, Aug. 4, 2006]



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. Oral motions

[[Page 868]]

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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44208, Aug. 4, 2006]



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 may be initiated after an 
answer to a notice of contest, an answer to a petition for assessment of 
penalty, or an answer to a complaint under section 105(c) or 111 of the 
Act has been filed. 30 U.S.C. 815(c) and 821.
    (e) Completion of discovery. Discovery shall not unduly delay or 
otherwise impede disposition of the case, and must be completed at least 
20 days prior to the scheduled hearing date. For good

[[Page 869]]

cause shown, the Judge may extend or shorten the time for discovery.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44208, Aug. 4, 2006]



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 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

[[Page 870]]

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 also enter an order 
assessing appropriate penalties and directing that such penalties be 
paid.

[[Page 871]]



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 25 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. 
Filing of a summary decision motion and an opposition thereto shall be 
effective upon receipt.
    (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. A motion shall be accompanied by a memorandum of 
points and authorities specifying the grounds upon which the party seeks 
summary decision and a statement of material facts specifying each 
material fact as to which the party contends there is no genuine issue. 
Each material fact set forth in the statement shall be supported by a 
reference to accompanying affidavits or other verified documents.
    (d) Form of opposition. An opposition to a motion for summary 
decision shall include a memorandum of points and authorities specifying 
why the moving party is not entitled to summary decision and may be 
supported by affidavits or other verified documents. The opposition 
shall also include a separate concise statement of each genuine issue of 
material fact necessary to be litigated, supported by a reference to any 
accompanying affidavits or other verified documents. Material facts 
identified as not in issue by the moving party shall be deemed admitted 
for purposes of the motion unless controverted by the statement in 
opposition. If a party does not respond in opposition, summary decision, 
if appropriate, shall be entered in favor of the moving party.
    (e) Affidavits. 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.
    (f) 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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44208, Aug. 4, 2006]



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

[[Page 872]]

settlement proposal is a decision of the Judge.
    (b) Termination of the Judge's jurisdiction. Except to the extent 
otherwise provided herein, 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 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. Neither the filing of a motion 
to correct a clerical error, nor the issuance of an order or amended 
decision correcting a clerical error, shall toll the time for filing a 
petition for discretionary review of the Judge's decision on the merits.
    (d) Effect of decision of Judge. A decision of a Judge is not a 
precedent binding upon the Commission.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44209, Aug. 4, 2006; 72 
FR 2192, Jan. 18, 2007]



                   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 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. Filing of a motion requesting an extension of page limit 
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 electronic transmission (email) is impossible, the filing 
party must serve in person, by third party commercial carrier, or by 
facsimile transmission, resulting in same-day delivery.

[[Page 873]]

    (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; 71 
FR 44209, Aug. 4, 2006; 78 FR 77359, Dec. 23, 2013]



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 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  [Reserved]



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; indicate which party's position, if 
any, the movant supports; the reason why an amicus brief is desirable 
and why the matters asserted are relevant to the disposition of the 
case; 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

[[Page 874]]

response or reply may be made to the amicus curiae brief.
    (d) Any person who does not support a party in the proceeding must 
file its motion for participation as amicus curiae and brief no later 
than 20 days after initial briefs are filed (see Sec. 2700.75(a)(1)). A 
motion for participation as amicus curiae must comply with the 
requirements set forth in paragraph (a) of this section. A brief of 
amicus curiae must comply with Sec. 2700.75(c).

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48714, Sept. 8, 1999; 71 
FR 44209, Aug. 4, 2006; 71 FR 52211, Sept. 1, 2006]



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.
    (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. 
Filing of a motion requesting an extension of page limit 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 electronic transmission (email) is impossible, the filing party must 
serve in person, by third party commercial carrier, or by facsimile 
transmission, resulting in same-day delivery.
    (g) Number of copies. Unless otherwise ordered or stated in this 
part, only the original of a document shall be filed.
    (h) Table of contents. Each opening and response brief filed with 
the Commission shall contain a table of contents. Unless otherwise 
ordered by the Commission, a party is not required to submit a table of 
contents for a previously filed petition for discretionary review that 
has been designated as the party's opening brief pursuant to paragraph 
(a) of this section.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48714, Sept. 8, 1999; 71 
FR 44209, Aug. 4, 2006; 78 FR 77359, Dec. 23, 2013; 79 FR 3105, Jan. 17, 
2014]



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:

[[Page 875]]

    (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, it 
shall also issue an order which addresses page limits on briefs and the 
sequence and schedule for filing of initial briefs, and, if permitted by 
the order, reply briefs.
    (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; 71 FR 44209, Aug. 4, 2006]



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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44209, Aug. 4, 2006]



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 or before 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:

[[Page 876]]

    (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 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.

[58 FR 12164, Mar. 3, 1993, as amended at 71 FR 44209, Aug. 4, 2006]



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

[[Page 877]]

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, 1331 Pennsylvania 
Avenue NW., Suite 520N, Washington, DC 20004-1710.

[58 FR 12164, Mar. 3, 1993, as amended at 67 FR 60862, Sept. 27, 2002; 
77 FR 48430, Aug. 14, 2012]



Sec. 2700.83  Authority to sign orders.

    The Chairman or other designated Commissioner is authorized to sign 
on 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.



                    Subpart J_Simplified Proceedings

    Source: 75 FR 81462, Dec. 28, 2010, unless otherwise noted.



Sec. 2700.100  Purpose.

    (a) The purpose of this Simplified Proceedings subpart is to provide 
simplified procedures for resolving civil penalty contests under the 
Federal Mine Safety and Health Act of 1977, 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 that 
would otherwise apply in subparts A, C, G, H, and I of this part are as 
follows.
    (1) Answers to petitions for assessment of penalty are not required.
    (2) Motions are eliminated to the greatest extent practicable.
    (3) Early discussions among the parties and the Administrative Law 
Judge are required to narrow and define the disputes between the 
parties.
    (4) The parties are required to provide certain materials early in 
the proceedings.
    (5) Discovery is not permitted except as ordered by the 
Administrative Law Judge.
    (6) Interlocutory appeals are not permitted.
    (7) The administrative process is streamlined, but hearings will be 
full due process hearings. The parties will argue their case orally 
before the Judge at the conclusion of the hearing

[[Page 878]]

instead of filing briefs. In many instances, the Judge will render a 
decision from the bench.



Sec. 2700.101  Eligibility for simplified proceedings.

    Cases designated for Simplified Proceedings will not involve 
fatalities, injuries or illnesses, and will generally include one or 
more of the following characteristics:
    (a) The case involves only citations issued under section 104(a) of 
the Mine Act.
    (b) The proposed penalties were not specially assessed under 30 CFR 
100.5.
    (c) The case does not involve complex issues of law or fact.
    (d) The case involves a limited number of citations to be determined 
by the Chief Judge or designee.
    (e) The case involves a limited penalty amount to be determined by 
the Chief Judge or designee.
    (f) The case will involve a hearing of limited duration to be 
determined by the Chief Judge or designee.
    (g) The case does not involve only legal issues.
    (h) The case does not involve expert witnesses.



Sec. 2700.102  Commission commencement of simplified proceedings.

    (a) Designation. Upon receipt of a petition for assessment of 
penalty, the Chief Administrative Law Judge, or designee, has the 
authority to designate an appropriate case for Simplified Proceedings.
    (b) Notice of designation. After a case has been designated for 
Simplified Proceedings, the Commission will issue a Notice of 
Designation for Simplified Proceedings. The Notice will inform parties 
that the case has been designated for Simplified Proceedings, state the 
name and contact information for the Commission Administrative Law Judge 
assigned to the case, provide instructions for filing a notice of 
appearance in the Simplified Proceedings, and state that the operator 
need not file an answer to the petition for assessment of penalty. The 
Commission will send the notice of designation to the parties' addresses 
listed on the petition for assessment of penalty.
    (c) Notice of appearance. Unless the contact information described 
in this paragraph has already been provided to the Judge, within 15 
calendar days after receiving a notice of designation, the parties shall 
file notices of appearance with the assigned Judge. Each notice of 
appearance shall provide the following information for the counsel or 
representative acting on behalf of the party: Name, address, business 
telephone number, cell telephone number if available, fax number if 
available, and e-mail address if available. Notices of appearance shall 
be served on all parties in accordance with the provisions of 
Sec. 2700.7.
    (d) No filing of an answer under Subpart C of this part. If a case 
has been designated for Simplified Proceedings, an answer pursuant to 
Sec. 2700.29 is not required to be filed.



Sec. 2700.103  Party request for simplified proceedings.

    (a) Party request. Any party may request that a case be designated 
for Simplified Proceedings. The request must be in writing and should 
address the characteristics specified in Sec. 2700.101. The request must 
be filed with the Commission in accordance with the provisions of 
Sec. 2700.5 and served on all parties in accordance with the provisions 
of Sec. 2700.7. The requesting party shall confer or make reasonable 
efforts to confer with the other parties and shall state in the request 
if any other party opposes or does not oppose the request. Parties 
opposing the request shall have eight business days after service of the 
motion to file an opposition.
    (b) Judge's ruling on request. The Chief Administrative Law Judge or 
the Judge assigned to the case may grant a party's request and designate 
a case for Simplified Proceedings at the Judge's discretion.
    (c) Notice of appearance. Unless the contact information described 
in this paragraph has already been provided to the Judge, within 15 
calendar days after receiving an order granting a request for Simplified 
Proceedings, the parties shall file with the Judge notices of appearance 
described in Sec. 2700.102(c). Notices of appearance shall

[[Page 879]]

be served on all parties in accordance with the provisions of 
Sec. 2700.7.
    (d) No filing of an answer under subpart C of this part. If a case 
has been designated for Simplified Proceedings, an answer pursuant to 
Sec. 2700.29 is not required to be filed. If a request for Simplified 
Proceedings is denied, the period for filing an answer will begin to run 
upon issuance of the Judge's order denying Simplified Proceedings.



Sec. 2700.104  Discontinuance of simplified proceedings.

    (a) Procedure. If it becomes apparent at any time that a case is not 
appropriate for Simplified Proceedings, the Judge assigned to the case 
may, upon motion by any party or upon the Judge's own motion, 
discontinue Simplified Proceedings and order the case to continue under 
conventional rules.
    (b) Party motion. At any time during the proceedings but no later 
than 30 days before the scheduled hearing, any party may move that 
Simplified Proceedings be discontinued and that the matter continue 
under conventional procedures. A motion to discontinue must explain why 
the case is inappropriate for Simplified Proceedings. 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. Parties opposing the motion shall have eight business 
days after service of the motion to file an opposition.
    (c) Ruling. If Simplified Proceedings are discontinued, the Judge 
may issue such orders as are necessary for an orderly continuation under 
conventional rules.



Sec. 2700.105  Disclosure of information by the Parties.

    (a) Within 45 calendar days after a case has been designated for 
Simplified Proceedings, the parties shall provide any information in a 
party's possession, custody, or control that the disclosing party or 
opposing party may use to support its claims or defenses. Any material 
or object that cannot be copied, or the copying of which would be unduly 
burdensome, shall be described and its location specified. Materials 
required to be disclosed include, but are not limited to, inspection 
notes from the entire subject inspection, rebuttal forms, citation 
documentation, narratives, photos, diagrams, preshift and onshift 
reports, training documents, mine maps, witness statements (subject to 
the provisions of Sec. 2700.61), witness lists, and written opinions of 
expert witnesses, if any.
    (b) If any items are withheld from disclosure on grounds of 
privilege, the disclosing party shall provide a log describing each item 
and stating the reason(s) why it was not produced. The privilege log 
shall provide an index, identifying the allegedly privileged documents 
and shall provide sufficient detail to permit an informed decision as to 
whether the document is at least potentially privileged. Specifically, 
the index must include: A description of the document, including its 
subject matter and the purpose for which it was created; the date the 
document was created; the name and job title of the author of the 
document; and if applicable, the name and job title of the recipient(s) 
of the document. The judge may order an in camera inspection of the 
privileged documents, if necessary, to determine the proper application 
of the privilege.



Sec. 2700.106  Pre-Hearing Conference.

    (a) When held. As early as practicable after the parties have 
received the materials set forth in Sec. 2700.105, 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, by 
telephone, or electronic means. After receipt of the materials set forth 
in Sec. 2700.105 and prior to the pre-hearing conference, parties are 
required to engage in a discussion to explore the possibility of 
settlement.
    (b) Content. At the pre-hearing conference, the parties will discuss 
the following: Settlement efforts in the case; the narrowing of issues; 
an agreed statement of issues and facts; defenses; witnesses and 
exhibits; motions; and any other pertinent matter. Within a time 
determined by the Judge during the pre-hearing conference, the parties 
must provide each other with documents or materials intended for 
submission as exhibits at the hearing that

[[Page 880]]

have not already been provided in accordance with the provisions of 
Sec. 2700.105. 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 
hearing.



Sec. 2700.107  Discovery.

    Discovery is not permitted except as ordered by the Administrative 
Law Judge.



Sec. 2700.108  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 G of 
this part, except for Secs. 2700.56, 2700.57, 2700.58, 2700.59, 2700.65, 
and 2700.67, 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 relevant, and not unduly repetitious or cumulative. 
Testimony will be given under oath or affirmation. The parties are 
reminded that the Federal Rules of Evidence do not apply in Commission 
proceedings. Any evidence not disclosed as required by Secs. 2700.105 
and 2700.106(b), including the testimony of witnesses not identified 
pursuant to Sec. 2700.106(b), shall be inadmissible at the hearing, 
except where extraordinary circumstances are established by the party 
seeking to offer such evidence.
    (d) Court reporter. A court reporter will be present at the hearing. 
An official verbatim transcript of the hearing will be prepared and 
filed with the Judge.
    (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. The Judge shall make a decision that 
constitutes the final disposition of the proceedings within 60 calendar 
days after the hearing. The decision shall be in writing and shall 
include all findings of fact and conclusions of law; 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 within 60 calendar days 
after the hearing. An order by a Judge approving a settlement proposal 
is a decision of the Judge.



Sec. 2700.109  Review of Judge's Decision.

    After the issuance of the Judge's written decision, any party may 
petition the Commission for review of the Judge's written decision as 
provided for in subpart H of this part.



Sec. 2700.110  Application.

    The rules in this subpart will govern proceedings before a Judge in 
a case designated for Simplified Proceedings under Secs. 2700.102 and 
2700.103. The provisions of subparts A and I apply to Simplified 
Proceedings when consistent with these rules in subpart J. The 
provisions of subpart C of this part apply to Simplified Proceedings 
except for Sec. 2700.29, which does not apply. The provisions of subpart 
G of this part apply to Simplified Proceedings except for Secs. 2700.56, 
2700.57, 2700.58, 2700.59, 2700.65, and 2700.67, which do not apply. The 
provisions of subpart H of this part apply to Simplified Proceedings 
except for Sec. 2700.76, which does not apply. The provisions of 
subparts B, D, E and F of this part do not apply to Simplified 
Proceedings.



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.


[[Page 881]]


    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.
    (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.

[[Page 882]]



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, 1331 Pennsylvania Avenue NW., Suite 520N, Washington, DC 
20004-1710.

[44 FR 2575, Jan. 12, 1979, as amended at 67 FR 60862, Sept. 27, 2002; 
77 FR 48430, Aug. 14, 2012]



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 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 headquarters.
2702.3  Requests for information.
2702.4  Materials available.

[[Page 883]]

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 the rules in this part 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 information subject to disclosure pursuant to this 
subchapter and FOIA, and not otherwise protected by law, readily 
available to the public. Additional guidance on obtaining information 
from the Commission can be found in the document entitled ``FOIA 
Guide,'' which is available upon request from the Commission and on the 
Commission's Web site (http://www.fmshrc.gov). These rules apply 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 2700.

[72 FR 71790, Dec. 19, 2007]



Sec. 2702.2  Location of headquarters.

    The Commission maintains its Headquarters office at 1331 
Pennsylvania Avenue NW., Suite 520N, Washington, DC 20004-1710. The 
locations of other Commission offices may obtained from the Commission's 
Web site (http://www.fmshrc.gov).

[77 FR 48430, Aug. 14, 2012]



Sec. 2702.3  Requests for information.

    (a) Content of request. All requests for information should be in 
writing and should be mailed or delivered to Chief FOIA Officer, Federal 
Mine Safety and Health Review Commission, 1331 Pennsylvania Avenue NW., 
Suite 520N, Washington, DC 20004-1710. See FOIA Guide for more 
information on the submission of requests, including requests submitted 
electronically or by facsimile. 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.
    (b) Response to request. The Chief FOIA Officer will determine 
whether to comply with the request. 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 of the decision. The sitting 
Commissioners, by majority vote, will decide appeals within 20 working 
days after receipt. In the event of a tie vote of those Commissioners, 
the Chief FOIA Officer's initial determination will be deemed approved 
by the Commission. Records to be disclosed shall be provided with the 
initial letter setting forth the determination as to the request or 
shall be sent as soon as possible thereafter.
    (c) Processing of request. (1) In unusual circumstances as described 
in this paragraph, when additional time is

[[Page 884]]

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) Additional time to respond to request. 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.
    (e) Expedited processing of request. (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

[[Page 885]]

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) Denial of request. In denying a request for records, in whole or 
in part, the Commission shall state the reason for the denial; set forth 
the name and title or position of the person responsible for the denial 
of the request; 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. If 
an appeal is denied, the Commission's notice of denial shall inform the 
requester of the right to obtain judicial review of the Commission's 
action under 5 U.S.C. 552(a)(4)(B)-(G).
    (g) Partial response to request. 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; 
72 FR 71790, Dec. 19, 2007; 77 FR 48430, Aug. 14, 2012]



Sec. 2702.4  Materials available.

    (a) FOIA Reading Room. Materials which may be made publicly 
available for inspection and copying at the Commission's on-site FOIA 
Reading Room, 1331 Pennsylvania Avenue NW., Suite 520N, Washington, DC 
20004-1710, include, but are not limited to:
    (1) Final opinions, including concurring and dissenting opinions, as 
well as orders, made in the adjudication of cases;
    (2) Those statements of policy and interpretations which have been 
adopted by the agency and are not published in the Federal Register;
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (4) Copies of all records, regardless of form or format, which have 
been released to any person under this subpart and which, because of the 
nature of their subject matter, the Commission has determined have 
become or are likely to become the subject of subsequent requests for 
substantially the same records; and
    (5) A general index of records referred to under this paragraph (a).
    (b) E-FOIA Reading Room. Materials created on or after November 1, 
1996, under paragraphs (a)(1) through (5) of this section may also be 
accessed electronically through the Commission's Web site at http://
www.fmshrc.gov.

[72 FR 71790, Dec. 19, 2007, as amended at 77 FR 48430, Aug. 14, 2012]



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.
    (e) For purposes of paragraphs (b) through (d) of this section, 
whenever it reasonably appears that a requester, or

[[Page 886]]

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 the salary rate (that is, basic pay plus 16%) of the employee 
making the search. This hourly rate is listed on the Commission's Web 
site at http://www.fmshrc.gov. 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. If search charges are likely to exceed $50, 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. Fees may be charged even if the documents are not 
located or if they are located but withheld on the basis of an 
exemption.
    (b) Review fee. The review fee shall be charged for the Chief FOIA 
Officer's initial examination 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 the salary rate (that is, basic pay 
plus 16%) of the Chief FOIA Officer or the employee designated to 
perform the review. This hourly rate is listed on the Commission's Web 
site at http://www.fmshrc.gov.
    (c) Duplicating fee. The copy fee for each page of paper up to 8\1/
2\"  x  14" shall be $.15 per copy per page. Any private sector services 
required, including the fee for copying photographs and nonstandard 
documents, will be the actual direct cost incurred by the Commission. 
For copies prepared by computer, such as tapes or printouts, the 
Commission shall charge the actual cost, including operator time, of 
production of the tape or printout. For other methods of reproduction or 
duplication, the Commission will charge the actual direct costs of 
producing the document(s). If duplication charges are likely to exceed 
$50, 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.

[72 FR 71791, Dec. 19, 2007]



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 or greater than the fee itself. Accordingly, the 
Commission has determined that fees of less than $20 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

[[Page 887]]

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 in the commerical interest of the requester.''
    (2) The Chief FOIA Officer, 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. In 
accordance with the procedures set forth in Sec. 2702.3, appeals of 
adverse decisions may be made to the Commission within 5 working days. 
Determination of appeals will be made by the Commission within 10 
working days of receipt.

[54 FR 3022, Jan. 23, 1989, as amended at 62 FR 55336, Oct. 24, 1997; 72 
FR 71791, Dec. 19, 2007]



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.

[[Page 888]]

             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.
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 U.S. 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, a non-prevailing 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. In addition to the rules in 
this part, the Commission's general rules of procedure, part 2700 of 
this chapter, apply where appropriate.

[71 FR 44209, Aug. 4, 2006]



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:

[[Page 889]]

    (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 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.

[47 FR 1001, Mar. 9, 1982, as amended at 71 FR 54905, Sept. 20, 2006]



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) 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.
    (3) 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 for non-prevailing parties 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; 71 FR 44210; Aug. 4, 2006; 71 FR 54905, Sept. 
20, 2006]



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 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

[[Page 890]]

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 who does not prevail 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 is 
substantially in excess of the Commission's decision; the Secretary may 
avoid an award by establishing that the demand is 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, as amended at 71 FR 44210, Aug. 4, 2006]



Sec. 2704.106  Allowable fees and expenses.

    (a) Awards will be based on rates customarily charged by persons 
engaged in the business of or 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; 71 
FR 54905, Sept. 20, 2006]



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.
    (b) Any person may file with the Commission a petition for 
rulemaking

[[Page 891]]

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 
1331 Pennsylvania Avenue NW., Suite 520N, Washington, DC 20004-1710. 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; 
77 FR 48430, Aug. 14, 2012]



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).
    (c) Each applicant must provide with its application a detailed 
exhibit showing the net worth of the applicant 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 assets 
and liabilities and is sufficient to determine whether the applicant 
qualifies under the standards in this part. The administrative law judge

[[Page 892]]

may require an applicant to file additional information to determine its 
eligibility for an award.

[63 FR 63176, Nov. 12, 1998, as amended at 71 FR 54905, Sept. 20, 2006]



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 
by a non-prevailing party 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

[[Page 893]]

final and nonappealable in any Commission adjudication that has been 
appealed pursuant to section 106 of the Mine Act, 30 U.S.C. 816.
    (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 or order disposing of the 
merits of the proceeding or any other complete resolution of the 
proceeding, such as a settlement or voluntary dismissal, becomes final 
(pursuant to sections 105(d) and 113(d) of the Mine Act (30 U.S.C. 
815(d) and 823(d)) and unappealable, both within the Commission and to 
the courts (pursuant to section 106(a) of the Mine Act (30 U.S.C. 
816(a)).

[63 FR 63176, Nov. 12, 1998, as amended at 71 FR 44210, Aug. 4, 2006]



            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, 
files a statement of intent to negotiate under paragraph (b), or a 
proceeding is stayed pursuant to Sec. 206(b), 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.

[63 FR 63176, Nov. 12, 1998, as amended at 71 FR 44210, Aug. 4, 2006]



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

[[Page 894]]

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, 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 1331 Pennsylvania 
Avenue NW., Suite 520N, Washington, DC 20004-1710 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

[[Page 895]]

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 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; 77 FR 48430, Aug. 14, 2012]



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. This does not include Commission files 
generated in adversary proceedings under the Federal Mine Safety and 
Health Act; 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.

[49 FR 38542, Oct. 1, 1984, as amended at 71 FR 44210, Aug. 4, 2006]



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 of 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

[[Page 896]]

which is compatible with the purpose for which it was collected.

[49 FR 38542, Oct. 1, 1984, as amended at 71 FR 54905, Sept. 20, 2006]



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 written request at 
the Commission Office, 1331 Pennsylvania Avenue NW., Suite 520N, 
Washington, DC 20004-1710, 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; 
77 FR 48430, Aug. 14, 2012]



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, 1331 Pennsylvania Avenue NW., Suite 520N, 
Washington, DC 20004-1710. 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; 
77 FR 48430, Aug. 14, 2012]

[[Page 897]]



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.



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.

[[Page 898]]

    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.
    (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.

[[Page 899]]



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:
    (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

[[Page 900]]

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. 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

[[Page 901]]

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. 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.

[[Page 902]]



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 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, 1331 
Pennsylvania Avenue NW., Suite 520N, Washington, DC 20004-1710
    (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

[[Page 903]]

(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, 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; 77 FR 48431, Aug. 14, 2012]



Secs. 2706.171-2706.999  [Reserved]

                       PARTS 2707	2799 [RESERVED]

[[Page 905]]



            CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION




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

  Note: PBGC's regulations were substantially reorganized and renumbered 
effective June 29, 1981 (at 46 FR 32574) and July 1, 1996 (at 61 FR 
34002). Distribution and derivation tables showing the changes that 
occurred as a result of these amendments are available on the PBGC's Web 
site at http://www.pbgc.gov.

                          SUBCHAPTER A--GENERAL
Part                                                                Page
4000            Filing, issuance, computation of time, and 
                    record retention........................         909
4001            Terminology.................................         919
4002            Bylaws of the Pension Benefit Guaranty 
                    Corporation.............................         923
4003            Rules for administrative review of agency 
                    decisions...............................         926
                         SUBCHAPTER B--PREMIUMS
4006            Premium rates...............................         934
4007            Payment of premiums.........................         940
       SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS
4010            Annual financial and actuarial information 
                    reporting...............................         951
                   SUBCHAPTER D--COVERAGE AND BENEFITS
4022            Benefits payable in terminated single-
                    employer plans..........................         963
4022B           Aggregate limits on guaranteed benefits.....        1008
                     SUBCHAPTER E--PLAN TERMINATIONS
4041            Termination of single-employer plans........        1009
4041A           Termination of multiemployer plans..........        1030
4042            Single-employer plan termination initiated 
                    by PBGC.................................        1035
4043            Reportable events and certain other 
                    notification requirements...............        1037

[[Page 906]]

4044            Allocation of assets in single-employer 
                    plans...................................        1050
4047            Restoration of terminating and terminated 
                    plans...................................        1074
4050            Missing participants........................        1076
                         SUBCHAPTER F--LIABILITY
4061            Amounts payable by the Pension Benefit 
                    Guaranty Corporation....................        1086
4062            Liability for termination of single-employer 
                    plans...................................        1086
4063            Withdrawal liability; plans under multiple 
                    controlled groups.......................        1091
4064            Liability on termination of single-employer 
                    plans under multiple controlled groups..        1091
               SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS
4065            Annual report...............................        1092
                  SUBCHAPTER H--ENFORCEMENT PROVISIONS
4067            Recovery of liability for plan terminations.        1093
4068            Lien for liability..........................        1093
4071            Penalties for failure to provide certain 
                    notices or other material information...        1094
       SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS
4203            Extension of special withdrawal liability 
                    rules...................................        1095
4204            Variances for sale of assets................        1096
4206            Adjustment of liability for a withdrawal 
                    subsequent to a partial withdrawal......        1100
4207            Reduction or waiver of complete withdrawal 
                    liability...............................        1103
4208            Reduction or waiver of partial withdrawal 
                    liability...............................        1112
4211            Allocating unfunded vested benefits to 
                    withdrawing employers...................        1119
4219            Notice, collection, and redetermination of 
                    withdrawal liability....................        1130
4220            Procedures for PBGC approval of plan 
                    amendments..............................        1140
4221            Arbitration of disputes in multiemployer 
                    plans...................................        1142
 SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES 
                    APPLICABLE TO MULTIEMPLOYER PLANS
4231            Mergers and transfers between multiemployer 
                    plans...................................        1149
4233            Partitions of eligible multiemployer plans..        1155
4245            Notice of insolvency........................        1167
4261            Financial assistance to multiemployer plans.        1171

[[Page 907]]

4281            Duties of plan sponsor following mass 
                    withdrawal..............................        1171
           SUBCHAPTER K--MULTIEMPLOYER ENFORCEMENT PROVISIONS
4302            Penalties for failure to provide certain 
                    multiemployer plan notices..............        1182
     SUBCHAPTER L--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES
4901            Examination and copying of Pension Benefit 
                    Guaranty Corporation records............        1183
4902            Disclosure and amendment of records 
                    pertaining to individuals under the 
                    Privacy Act.............................        1192
4903            Debt collection.............................        1198
4905            Appearances in certain proceedings..........        1212
4906            [Reserved]

4907            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Pension 
                    Benefit Guaranty Corporation............        1214
4908-4999       [Reserved]

[[Page 909]]



                          SUBCHAPTER A_GENERAL





PART 4000_FILING, ISSUANCE, COMPUTATION OF TIME, AND RECORD RETENTION
--Table of Contents



                         Subpart A_Filing Rules

Sec.
4000.1  What are these filing rules about?
4000.2  What definitions do I need to know for these rules?
4000.3  What methods of filing may I use?
4000.4  Where do I file my submission?
4000.5  Does the PBGC have discretion to waive these filing 
          requirements?

                        Subpart B_Issuance Rules

4000.11  What are these issuance rules about?
4000.12  What definitions do I need to know for these rules?
4000.13  What methods of issuance may I use?
4000.14  What is the safe-harbor method for providing an issuance by 
          electronic media?
4000.15  Does the PBGC have discretion to waive these issuance 
          requirements?

             Subpart C_Determining Filing and Issuance Dates

4000.21  What are these rules for determining the filing or issuance 
          date about?
4000.22  What definitions do I need to know for these rules?
4000.23  When is my submission or issuance treated as filed or issued?
4000.24  What if I mail my submission or issuance using the U.S. Postal 
          Service?
4000.25  What if I use the postal service of a foreign country?
4000.26  What if I use a commercial delivery service?
4000.27  What if I hand deliver my submission or issuance?
4000.28  What if I send a computer disk?
4000.29  What if I use electronic delivery?
4000.30  What if I need to resend my filing or issuance for technical 
          reasons?
4000.31  Is my issuance untimely if I miss a few participants or 
          beneficiaries?
4000.32  Does the PBGC have discretion to waive any requirements under 
          this part?

                      Subpart D_Computation of Time

4000.41  What are these computation-of-time rules about?
4000.42  What definitions do I need to know for these rules?
4000.43  How do I compute a time period?

             Subpart E_Electronic Means of Record Retention

4000.51  What are these record retention rules about?
4000.52  What definitions do I need to know for these rules?
4000.53  May I use electronic media to satisfy PBGC's record retention 
          requirements?
4000.54  May I dispose of original paper records if I keep electronic 
          copies?

    Authority: 29 U.S.C. 1083(k), 1302(b)(3).

    Source: 68 FR 61347, Oct. 28, 2003, unless otherwise noted.



                         Subpart A_Filing Rules



Sec. 4000.1  What are these filing rules about?

    Where a particular regulation calls for their application, the rules 
in this subpart A of part 4000 tell you what filing methods you may use 
for any submission (including a payment) to us. They do not cover an 
issuance from you to anyone other than the PBGC, such as a notice to 
participants. Also, they do not cover filings with us that are not made 
under our regulations, such as procurement filings, litigation filings, 
and applications for employment with us. (Subpart B tells you what 
methods you may use to issue a notice or otherwise provide information 
to any person other than us. Subpart C tells you how we determine your 
filing or issuance date. Subpart D tells you how to compute various 
periods of time. Subpart E tells you how to maintain required records in 
electronic form.)



Sec. 4000.2  What definitions do I need to know for these rules?

    You need to know two definitions from Sec. 4001.2 of this chapter: 
PBGC and person. You also need to know the following definitions:
    Filing means any notice, information, or payment that you submit to 
us under our regulations.
    Issuance means any notice or other information you provide to any 
person other than us under our regulations.
    We means the PBGC.
    You means the person filing with us.

[[Page 910]]



Sec. 4000.3  What methods of filing may I use?

    (a) Paper filings. Except for the filings listed in paragraph (b) of 
this section, you may file any submission with us by hand, mail, or 
commercial delivery service.
    (b) Electronic filings. (1) You must file premium declarations under 
part 4007 of this chapter electronically in accordance with the 
instructions on the PBGC's Web site subject to the following provisions:
    (i) This electronic filing requirement does not apply to premium 
information to the extent that the PBGC grants an exemption for good 
cause in appropriate circumstances.
    (ii) This electronic filing requirement does not apply to premium 
payments except to the extent that the PBGC so provides in the 
instructions on the PBGC's Web site.
    (iii) This electronic filing requirement does not apply to 
information you file to comply with a request we make under 
Sec. 4007.10(c) of this chapter (dealing with providing record 
information in connection with a premium compliance review).
    (2) You must submit the information required under part 4010 of this 
chapter electronically in accordance with the instructions on the PBGC's 
Web site, except as otherwise provided by the PBGC.
    (3) You must file notices under part 4043 of this chapter 
electronically in accordance with the instructions on PBGC's Web site, 
http://www.pbgc.gov, except as otherwise provided by PBGC.
    (4) When making filings to PBGC under parts 4041A, 4245, and 4281 of 
this chapter (except for notices of benefit reductions and notices of 
restoration of benefits under part 4281), you must submit the 
information required under these parts electronically in accordance with 
the instructions on the PBGC's Web site, except as otherwise provided by 
the PBGC.
    (c) Information on how to file. Current information on how to file, 
including permitted filing methods, fax numbers, and mail and e-mail 
addresses, is--
    (1) On our Web site, http://www.pbgc.gov;
    (2) In our various printed forms and instructions packages; and
    (3) Available by contacting our Customer Service Center at 1200 K 
Street, NW., Washington, DC, 20005-4026; telephone 1-800-400-7242 (for 
participants), or 1-800-736-2444 (for practitioners). (TTY/TDD users may 
call the Federal relay service toll-free at 1-800-877-8339 and ask to be 
connected to the appropriate number.)

[70 FR 11543, Mar. 9, 2005, as amended at 71 FR 31080, June 1, 2006; 79 
FR 13559, Mar. 11, 2014; 80 FR 55002, Sept. 11, 2015; 80 FR 55745, Sept. 
17, 2015; 80 FR 57717, Sept. 25, 2015]



Sec. 4000.4  Where do I file my submission?

    To find out where to send your submission, visit our Web site at 
http://www.pbgc.gov, see the instructions to our forms, or call our 
Customer Service Center (1-800-400-7242 for participants, or 1-800-736-
2444 for practitioners; TTY/TDD users may call the Federal relay service 
toll-free at 1-800-877-8339 and ask to be connected to the appropriate 
number.) Because we have different addresses for different types of 
filings, you should make sure to use the appropriate address for your 
type of filing. For example, some filings (such as premium payments) 
must be sent to a specified bank, while other filings (such as the 
Standard Termination Notice (Form 500)) must be sent to the appropriate 
department at our offices in Washington, DC. You do not have to address 
electronic submissions made through our Web site. We are responsible for 
ensuring that such submissions go to the proper place.

[68 FR 61347, Oct. 28, 2003, as amended at 70 FR 11543, Mar. 9, 2005]



Sec. 4000.5  Does the PBGC have discretion to waive these filing 
requirements?

    We retain the discretion to waive any requirement under this part, 
at any time, if warranted by the facts and circumstances.



                        Subpart B_Issuance Rules



Sec. 4000.11  What are these issuance rules about?

    Where a particular regulation calls for their application, the rules 
in this subpart B of part 4000 tell you what methods you may use to 
issue a notice

[[Page 911]]

or otherwise provide information to any person other than us (e.g., a 
participant or beneficiary). They do not cover payments to third 
parties. In some cases, the PBGC regulations tell you to comply with 
requirements that are found somewhere other than in the PBGC's own 
regulations (e.g., requirements under the Internal Revenue Code). If so, 
you must comply with any applicable issuance rules under those other 
requirements. (Subpart A tells you what filing methods you may use for 
filings with us. Subpart C tells you how we determine your filing or 
issuance date. Subpart D tells you how to compute various periods of 
time. Subpart E tells you how to maintain required records in electronic 
form.)



Sec. 4000.12  What definitions do I need to know for these rules?

    You need to know two definitions from Sec. 4001.2 of this chapter: 
PBGC and person. You also need to know the following definitions:
    Filing means any notice, information, or payment that you submit to 
us under our regulations.
    Issuance means any notice or other information you provide to any 
person other than us under our regulations.
    We means the PBGC.
    You means the person providing the issuance to a third party.



Sec. 4000.13  What methods of issuance may I use?

    (a) In general. You may use any method of issuance, provided you use 
measures reasonably calculated to ensure actual receipt of the material 
by the intended recipient. Posting is not a permissible method of 
issuance under the rules of this part.
    (b) Electronic safe-harbor method. Section 4000.14 provides a safe-
harbor method for meeting the requirements of paragraph (a) of this 
section when providing an issuance using electronic media.



Sec. 4000.14  What is the safe-harbor method for providing an issuance
by electronic media?

    (a) In general. Except as otherwise provided by applicable law, rule 
or regulation, you satisfy the requirements of Sec. 4000.13 if you 
follow the methods described at paragraph (b) of this section when 
providing an issuance by electronic media to any person described in 
paragraph (c) or (d) of this section.
    (b) Issuance requirements. (1) You must take appropriate and 
necessary measures reasonably calculated to ensure that the system for 
furnishing documents--
    (i) 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
    (ii) Protects confidential information relating to the intended 
recipient (e.g., incorporating into the system measures designed to 
preclude unauthorized receipt of or access to such information by anyone 
other than the intended recipient);
    (2) You prepare and furnish electronically delivered documents in a 
manner that is consistent with the style, format and content 
requirements applicable to the particular document;
    (3) You provide each intended recipient with a notice, in electronic 
or non-electronic form, at the time a document is furnished 
electronically, that apprises the intended recipient of--
    (i) The significance of the document when it is not otherwise 
reasonably evident as transmitted (e.g., ``The attached participant 
notice contains information on the funding level of your defined benefit 
pension plan and the benefits guaranteed by the Pension Benefit Guaranty 
Corporation.''); and
    (ii) The intended recipient's right to request and obtain a paper 
version of such document; and
    (4) You give the intended recipient, upon request, a paper version 
of the electronically furnished documents.
    (c) Employees with electronic access. This section applies to a 
participant who--
    (1) Has the ability to effectively access the document furnished in 
electronic form at any location where the participant is reasonably 
expected to perform duties as an employee; and
    (2) With respect to whom access to the employer's electronic 
information

[[Page 912]]

system is an integral part of those duties.
    (d) Any person. This section applies to any person who--
    (1) Except as provided in paragraph (d)(2) of this section, has 
affirmatively consented, in electronic or non-electronic form, to 
receiving documents through electronic media and has not withdrawn such 
consent;
    (2) 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 person'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;
    (3) Prior to consenting, is provided, in electronic or non-
electronic form, a clear and conspicuous statement indicating:
    (i) The types of documents to which the consent would apply;
    (ii) That consent can be withdrawn at any time without charge;
    (iii) The procedures for withdrawing consent and for updating the 
participant's, beneficiary's or other person's address for receipt of 
electronically furnished documents or other information;
    (iv) 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;
    (v) Any hardware and software requirements for accessing and 
retaining the documents; and
    (4) Following consent, if a change in hardware or software 
requirements needed to access or retain electronic documents creates a 
material risk that the person will be unable to access or retain 
electronically furnished documents,
    (i) Is provided with a statement of the revised hardware or software 
requirements for access to and retention of electronically furnished 
documents;
    (ii) 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
    (iii) Again consents, in accordance with the requirements of 
paragraph (d)(1) or paragraph (d)(2) of this section, as applicable, to 
the receipt of documents through electronic media.



Sec. 4000.15  Does the PBGC have discretion to waive these issuance
requirements?

    We retain the discretion to waive any requirement under this part, 
at any time, if warranted by the facts and circumstances.



             Subpart C_Determining Filing and Issuance Dates



Sec. 4000.21  What are these rules for determining the filing or
issuance date about?

    Where the particular regulation calls for their application, the 
rules in this subpart C of part 4000 tell you how we will determine the 
date you send us a filing and the date you provide an issuance to 
someone other than us (such as a participant). These rules do not cover 
payments to third parties. In addition, they do not cover filings with 
us that are not made under our regulations, such as procurement filings, 
litigation filings, and applications for employment with us. In some 
cases, the PBGC regulations tell you to comply with requirements that 
are found somewhere other than in the PBGC's own regulations (e.g., 
requirements under the Internal Revenue Code (Title 26, USC)). In 
meeting those requirements, you should follow any applicable rules under 
those requirements for determining the filing and issuance date. 
(Subpart A tells you what filing methods you may use for filings with 
us. Subpart B tells you what methods you may use to issue a notice or 
otherwise provide information to any person other than us. Subpart D 
tells you how to compute various periods of time. Subpart E tells you 
how to maintain required records in electronic form.)



Sec. 4000.22  What definitions do I need to know for these rules?

    You need to know two definitions from Sec. 4001.2 of this chapter: 
PBGC and

[[Page 913]]

person. You also need to know the following definitions:
    Business day means a day other than a Saturday, Sunday, or Federal 
holiday. We means the PBGC.
    You means the person filing with us or the person providing the 
issuance to a third party.



Sec. 4000.23  When is my submission or issuance treated as filed 
or issued?

    (a) Filed or issued when sent. Generally, we treat your submission 
as filed, or your issuance as provided, on the date you send it, if you 
meet certain requirements. The requirements depend upon the method you 
use to send your submission or issuance (see Secs. 4000.24 through 
4000.29). (Certain filings are always treated as filed when received, as 
explained in paragraph (b)(2) of this section.) A submission made 
through our Web site is considered to have been sent when you perform 
the last act necessary to indicate that your submission is filed and 
cannot be further edited or withdrawn.
    (b) Filed or issued when received--(1) In general. If you do not 
meet the requirements for your submission or issuance to be treated as 
filed or issued when sent (see Secs. 4000.24 through 4000.32), we treat 
it as filed or issued on the date received in a permitted format at the 
proper address.
    (2) Certain filings always treated as filed when received. We treat 
the following submissions as filed on the date we receive your 
submission, no matter what method you use:
    (i) Applications for benefits. An application for benefits or 
related submission (unless the instructions for the applicable forms 
provide for an earlier date);
    (ii) Advance notice of reportable events. Information required under 
subpart C of part 4043 of this chapter, dealing with advance notice of 
reportable events;
    (iii) Form 200 filings. Information required under subpart D of part 
4043 of this chapter, dealing with notice of certain missed minimum 
funding contributions; and
    (iv) Requests for approval of multiemployer plan amendments. A 
request for approval of an amendment filed with the PBGC pursuant to 
part 4220 of this chapter.
    (3) Determining our receipt date for your filing. If we receive your 
submission at the correct address by 5 p.m. (our time) on a business 
day, we treat it as received on that date. If we receive your submission 
at the correct address after 5 p.m. on a business day, or anytime on a 
weekend or Federal holiday, we treat it as received on the next business 
day. For example, if you send your fax or e-mail of a Form 200 filing to 
us in Washington, DC, on Friday, March 15, from California at 3 p.m. 
(Pacific standard time), and we receive it immediately at 6 p.m. (our 
time), we treat it as received on Monday, March 18. A submission made 
through our Web site is considered to have been received when we receive 
an electronic signal that you have performed the last act necessary to 
indicate that your submission is filed and cannot be further edited or 
withdrawn.

[68 FR 61347, Oct. 28, 2003, as amended at 70 FR 11543, Mar. 9, 2005]



Sec. 4000.24  What if I mail my submission or issuance using the
U.S. Postal Service?

    (a) In general. Your filing or issuance date is the date you mail 
your submission or issuance using the U.S. Postal Service if you meet 
the requirements of paragraph (b) of this section, and you mail it by 
the last scheduled collection of the day. If you mail it later than 
that, or if there is no scheduled collection that day, your filing or 
issuance date is the date of the next scheduled collection. If you do 
not meet the requirements of paragraph (b), your filing or issuance date 
is the date of receipt at the proper address.
    (b) Requirements for ``send date.'' Your submission or issuance must 
meet the applicable postal requirements, be properly addressed, and you 
must use First-Class Mail (or a U.S. Postal Service mail class that is 
at least the equivalent of First-Class Mail, such as Priority Mail or 
Express Mail). However, if you are filing an advance notice of 
reportable event or a Form 200 (notice of certain missed contributions), 
see Sec. 4000.23(b); these filings are always treated as filed when 
received.

[[Page 914]]

    (c) Presumptions. We make the following presumptions--
    (1) U.S. Postal Service postmark. If you meet the requirements of 
paragraph (b) of this section and your submission or issuance has a 
legible U.S. Postal Service postmark, we presume that the postmark date 
is the filing or issuance date. However, you may prove an earlier date 
under paragraph (a) of this section.
    (2) Private meter postmark. If you meet the requirements of 
paragraph (b) of this section and your submission or issuance has a 
legible postmark made by a private postage meter (but no legible U.S. 
Postal Service postmark) and arrives at the proper address by the time 
reasonably expected, we presume that the metered postmark date is your 
filing or issuance date. However, you may prove an earlier date under 
paragraph (a) of this section.
    (d) Examples. (1) You mail your issuance using the U.S. Postal 
Service and meet the requirements of paragraph (b) of this section. You 
deposit your issuance in a mailbox at 4 p.m. on Friday, March 15 and the 
next scheduled collection at that mailbox is 5 p.m. that day. Your 
issuance date is March 15. If on the other hand you deposit it at 6 p.m. 
and the next collection at that mailbox is not until Monday, March 18, 
your issuance date is March 18.
    (2) You mail your submission using the U.S. Postal Service and meet 
the requirements of paragraph (b) of this section. You deposit your 
submission in the mailbox at 4 p.m. on Friday, March 15, and the next 
scheduled collection at that mailbox is 5 p.m. that day. If your 
submission does not show a March 15 postmark, then you may prove to us 
that you mailed your submission by the last scheduled collection on 
March 15.



Sec. 4000.25  What if I use the postal service of a foreign country?

    If you send your submission or issuance using the postal service of 
a foreign country, your filing or issuance date is the date of receipt 
at the proper address.



Sec. 4000.26  What if I use a commercial delivery service?

    (a) In general. Your filing or issuance date is the date you deposit 
your submission or issuance with the commercial delivery service if you 
meet the requirements of paragraph (b) of this section, and you deposit 
it by the last scheduled collection of the day for the type of delivery 
you use (such as two-day delivery or overnight delivery). If you deposit 
it later than that, or if there is no scheduled collection that day, 
your filing or issuance date is the date of the next scheduled 
collection. If you do not meet the requirements of paragraph (b), your 
filing or issuance date is the date of receipt at the proper address. 
However, if you are filing an advance notice of reportable event or a 
Form 200 (notice of certain missed contributions), see Sec. 4000.23(b); 
these filings are always treated as filed when received.
    (b) Requirements for ``send date.'' Your submission or issuance must 
meet the applicable requirements of the commercial delivery service, be 
properly addressed, and--
    (1) Delivery within two days. It must be reasonable to expect your 
submission or issuance will arrive at the proper address by 5 p.m. on 
the second business day after the next scheduled collection; or
    (2) Designated delivery service. You must use a ``designated 
delivery service'' under section 7502(f) of the Internal Revenue Code 
(Title 26, USC). Our Web site, http://www.pbgc.gov, lists those 
designated delivery services. You should make sure that both the 
provider and the particular type of delivery (such as two-day delivery) 
are designated.
    (c) Example. You send your submission by commercial delivery service 
using two-day delivery. In addition, you meet the requirements of 
paragraph (b) of this section. Suppose that the deadline for two-day 
delivery at the place you make your deposit is 8 p.m. on Friday, March 
15. If you deposit your submission by that the deadline, your filing 
date is March 15. If, instead, you deposit it after the 8 p.m. deadline 
and the next collection at that site for two-day delivery is on

[[Page 915]]

Monday, March 18, your filing date is March 18.



Sec. 4000.27  What if I hand deliver my submission or issuance?

    Your filing or issuance date is the date of receipt of your hand-
delivered submission or issuance at the proper address. A hand-delivered 
issuance need not be delivered while the intended recipient is 
physically present. For example, unless you have reason to believe that 
the intended recipient will not receive the notice within a reasonable 
amount of time, a notice is deemed to be received when you place it in 
the intended recipient's office mailbox. Our Web site, http://
www.pbgc.gov, and the instructions to our forms, identify the proper 
addresses for filings with us.



Sec. 4000.28  What if I send a computer disk?

    (a) In general. We determine your filing or issuance date for a 
computer disk as if you had sent a paper version of your submission or 
issuances if you meet the requirements of paragraph (b) of this section.
    (1) Filings. For computer-disk filings, we may treat your submission 
as invalid if you fail to meet the requirements of paragraph (b)(1) or 
(b)(3) of this section.
    (2) Issuances. For computer-disk issuances, we may treat your 
issuance as invalid if--
    (i) You fail to meet the requirements (``using measures reasonably 
calculated to ensure actual receipt'') of Sec. 4000.13(a), or
    (ii) You fail to meet the contact information requirements of 
paragraph (b)(3) of this section.
    (b) Requirements. To get the filing date under paragraph (a) of this 
section, you must meet the requirements of paragraphs (b)(1) and (b)(3). 
To get the issuance date under paragraph (a), you must meet the 
requirements of paragraphs (b)(2) and (b)(3).
    (1) Technical requirements for filings. For filings, your electronic 
disk must comply with any technical requirements for that type of 
submission (our Web site, http://www.pbgc.gov, identifies the technical 
requirements for each type of filing).
    (2) Technical requirements for issuances. For issuances, you must 
comply with the safe-harbor method under Sec. 4000.14.
    (3) Identify contact person. For filings and issuances, you must 
include, in a paper cover letter or on the disk's label, the name and 
telephone number of the person to contact if we or the intended 
recipient is unable to read the disk.



Sec. 4000.29  What if I use electronic delivery?

    (a) In general. Your filing or issuance date is the date you 
electronically transmit your submission or issuance to the proper 
address if you meet the requirements of paragraph (b) of this section. 
Note that we always treat an advance notice of reportable event and a 
Form 200 (notice of certain missed contributions) as filed when 
received. A submission made through our Web site is considered to have 
been transmitted when you perform the last act necessary to indicate 
that your submission is filed and cannot be further edited or withdrawn. 
You do not have to address electronic submissions made through our Web 
site. We are responsible for ensuring that such submissions go to the 
proper place.
    (1) Filings. For electronic filings, if you fail to meet the 
requirements of paragraph (b)(1) or (b)(3) of this section, we may treat 
your submission as invalid.
    (2) Issuances. For electronic issuances, we may treat your issuance 
as invalid if--
    (i) You fail to meet the requirements (``using measures reasonably 
calculated to ensure actual receipt'') of Sec. 4000.13(a), or
    (ii) You fail to meet the contact information requirements of 
paragraph (b)(3) of this section.
    (b) Requirements. To get the filing date under paragraph (a) of this 
section, you must meet the requirements of paragraphs (b)(1) and (b)(3). 
To get the issuance date under paragraph (a), you must meet the 
requirement of paragraphs (b)(2) and (b)(3).
    (1) Technical requirements for filings. For filings, your electronic 
submission must comply with any technical requirements for that type of 
submission

[[Page 916]]

(our Web site, http://www.pbgc.gov, identifies the technical 
requirements for each type of filing).
    (2) Technical requirements for issuances. For issuances, you must 
comply with the safe-harbor method under Sec. 4000.14.
    (3) Identify contact person. For an e-mail submission or issuance 
with an attachment, you must include, in the body of your e-mail, the 
name and telephone number of the person to contact if we or the intended 
recipient needs you to resubmit your filing or issuance.
    (c) Failure to meet address requirement. If you send your electronic 
submission or issuance to the wrong address (but you meet the 
requirements of paragraph (b) of this section), your filing or issuance 
date is the date of receipt at the proper address.

[68 FR 61347, Oct. 28, 2003, as amended at 70 FR 11544, Mar. 9, 2005]



Sec. 4000.30  What if I need to resend my filing or issuance for 
technical reasons?

    (a) Request to resubmit--(1) Filing. We may ask you to resubmit all 
or a portion of your filing for technical reasons (for example, because 
we are unable to open an attachment to your e-mail). In that case, your 
submission (or portion) is invalid. However, if you comply with the 
request or otherwise resolve the problem (e.g., by providing advice that 
allows us to open the attachment to your e-mail) by the date we specify, 
your filing date for the submission (or portion) that we asked you to 
resubmit is the date you filed your original submission. If you comply 
with our request late, your submission (or portion) will be treated as 
filed on the date of your resubmission.
    (2) Issuance. The intended recipient may, for good reason (of a 
technical nature), ask you to resend all or a portion of your issuance 
(for example, because of a technical problem in opening an attachment to 
your e-mail). In that case, your issuance (or portion) is invalid. 
However, if you comply with the request or otherwise resolve the problem 
(e.g., by providing advice that the recipient uses to open the 
attachment to your e-mail), within a reasonable time, your issuance date 
for the issuance (or portion) that the intended recipient asked you to 
resend is the date you provided your original issuance. If you comply 
with the request late, your issuance (or portion) will be treated as 
provided on the date of your reissuance.
    (b) Reason to believe submission or issuance not received or 
defective. If you have reason to believe that we have not received your 
submission (or have received it in a form that is not useable), or that 
the intended recipient has not received your issuance (or has received 
it in a form that is not useable), you must promptly resend your 
submission or issuance to get your original filing or issuance date. 
However, we may require evidence to support your original filing or 
issuance date. If you are not prompt, or you do not provide us with any 
evidence we may require to support your original filing or issuance 
date, your filing or issuance date is the filing or issuance date of 
your resubmission or reissuance.



Sec. 4000.31  Is my issuance untimely if I miss a few participants
or beneficiaries?

    The PBGC will not treat your issuance as untimely based on your 
failure to provide the issuance to a participant or beneficiary in a 
timely manner if--
    (a) The failure resulted from administrative error;
    (b) The failure involved only a de minimis percentage of intended 
recipients; and
    (c) You resend the issuance to the intended recipient promptly after 
discovering the error.



Sec. 4000.32  Does the PBGC have discretion to waive any requirements
under this part?

    We retain the discretion to waive any requirement under this part, 
at any time, if warranted by the facts and circumstances.

[[Page 917]]



                      Subpart D_Computation of Time



Sec. 4000.41  What are these computation-of-time rules about?

    The rules in this subpart D of part 4000 tell you how to compute 
time periods under our regulations (e.g., for filings with us and 
issuances to third parties) where the particular regulation calls for 
their application. (There are specific exceptions or modifications to 
these rules in Sec. 4007.6 of this chapter (premium payments), 
Sec. 4050.6(d)(3) of this chapter (payment of designated benefits for 
missing participants), and Sec. 4062.10 of this chapter (employer 
liability payments). In some cases, the PBGC regulations tell you to 
comply with requirements that are found somewhere other than in the 
PBGC's own regulations (e.g., requirements under the Internal Revenue 
Code (Title 26, USC)). In meeting those requirements, you should follow 
any applicable computation-of-time rules under those other requirements. 
(Subpart A tells you what filing methods you may use for filings with 
us. Subpart B tells you what methods you may use to issue a notice or 
otherwise provide information to any person other than us. Subpart C 
tells you how we determine your filing or issuance date. Subpart E tells 
you how to maintain required records in electronic form.)



Sec. 4000.42  What definitions do I need to know for these rules?

    You need to know two definitions from Sec. 4001.2 of this chapter: 
PBGC and person. You also need to know the following definitions:
    Business day means a day other than a Saturday, Sunday, or Federal 
holiday.
    We means the PBGC.
    You means the person responsible, under our regulations, for the 
filing or issuance to which these rules apply.



Sec. 4000.43  How do I compute a time period?

    (a) In general. If you are computing a time period to which this 
part applies, whether you are counting forwards or backwards, the day 
after (or before) the act, event, or default that begins the period is 
day one, the next day is day two, and so on. Count all days, including 
weekends and Federal holidays. However, if the last day you count is a 
weekend or Federal holiday, extend or shorten the period (whichever 
benefits you in complying with the time requirement) to the next regular 
business day. The examples in paragraph (d) of this section illustrate 
these rules.
    (b) When date is designated. In some cases, our regulations 
designate a specific day as the end of a time period, such as ``the last 
day'' of a plan year or ``the fifteenth day'' of a calendar month. In 
these cases, you simply use the designated day, together with the 
weekend and holiday rule of paragraph (a) of this section.
    (c) When counting months. If a time period is measured in months, 
first identify the date (day, month, and year) of the act, event, or 
default that begins the period. The corresponding day of the following 
(or preceding) month is one month later (or earlier), and so on. For 
example, two months after July 15 is September 15. If the period ends on 
a weekend or Federal holiday, follow the weekend and holiday rule of 
paragraph (a) of this section. There are two special rules for 
determining what the corresponding day is when you start counting on a 
day that is at or near the end of a calendar month:
    (1) Special ``last-day'' rule. If you start counting on the last day 
of a calendar month, the corresponding day of any calendar month is the 
last day of that calendar month. For example, a three-month period 
measured from November 30 ends (if counting forward) on the last day of 
February (the 28th or 29th) or (if counting backward) on the last day of 
August (the 31st).
    (2) Special February rule. If you start counting on the 29th or 30th 
of a calendar month, the corresponding day of February is the last day 
of February. For example, a one-month period measured from January 29 
ends on the last day of February (the 28th or 29th).
    (d) Examples--(1) Counting backwards. Suppose you are required to 
file an advance notice of reportable event for a transaction that is 
effective December 31. Under our regulations, the notice is due at least 
30 days before the effective date of the event. To determine your 
deadline, count December 30 as day 1,

[[Page 918]]

December 29 as day 2, December 28 as day 3, and so on. Therefore, 
December 1 is day 30. Assuming that day is not a weekend or holiday, 
your notice is timely if you file it on or before December 1.
    (2) Weekend or holiday rule. Suppose you are filing a notice of 
intent to terminate. The notice must be issued at least 60 days and no 
more than 90 days before the proposed termination date. Suppose the 60th 
day before the proposed termination date is a Saturday. Your notice is 
timely if you issue it on the following Monday even though that is only 
58 days before the proposed termination date. Similarly, if the 90th day 
before the proposed termination date is Wednesday, July 4 (a Federal 
holiday), your notice is timely if you issue it on Tuesday, July 3, even 
though that is 91 days before the proposed termination date.
    (3) Counting months. Suppose you are required to issue a Participant 
Notice two months after December 31. The deadline for the Participant 
Notice is the last day of February (the 28th or 29th). If the last day 
of February is a weekend or Federal holiday, your deadline is extended 
until the next day that is not a weekend or Federal holiday.



             Subpart E_Electronic Means of Record Retention



Sec. 4000.51  What are these record retention rules about?

    The rules in this subpart E of part 4000 tell you what methods you 
may use to meet any record retention requirement under our regulations 
if you choose to use electronic means. The rules for who must retain the 
records, how long the records must be maintained, and how records must 
be made available to us are contained in the specific part where the 
record retention requirement is found. (Subpart A tells you what filing 
methods you may use for filings with us and how we determine your filing 
date. Subpart B tells you what methods you may use to issue a notice or 
otherwise provide information to any person other than us. Subpart C 
tells you how we determine your filing or issuance date. Subpart D tells 
you how to compute various periods of time.)



Sec. 4000.52  What definitions do I need to know for these rules?

    You need to know two definitions from Sec. 4001.2 of this chapter: 
PBGC and person. You also need to know the following definitions:
    We means the PBGC.
    You means the person subject to the record retention requirement.



Sec. 4000.53  May I use electronic media to satisfy PBGC's record 
retention requirements?

    General requirements. You may use electronic media to satisfy the 
record maintenance and retention requirements of this chapter if:
    (a) The electronic recordkeeping system has reasonable controls to 
ensure the integrity, accuracy, authenticity and reliability of the 
records kept in electronic form;
    (b) 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);
    (c) 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 section 101(f), section 
303(k)(4), or Title IV of ERISA;
    (d) 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 
section 101(f), section 303(k)(4), or Title IV of ERISA;
    (e) 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

[[Page 919]]

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); and
    (f) All electronic records 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.

[68 FR 61347, Oct. 28, 2003, as amended at 80 FR 55002, Sept. 11, 2015]



Sec. 4000.54  May I dispose of original paper records if I keep
electronic copies?

    You may dispose of original paper records any time after they are 
transferred to an electronic recordkeeping system that complies with the 
requirements of this subpart, 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.

(Approved by the Office of Management and Budget under control number 
1212-0059)



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 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.
    Bankruptcy filing date means, with respect to a plan, the date on 
which a petition commencing a case under the United States Bankruptcy 
Code is filed, or the date on which any similar filing is made 
commencing a case under any similar Federal law or law of a State or 
political subdivision, with respect to the contributing sponsor of the 
plan, if such case has not been dismissed as of the termination date of 
the plan. If a bankruptcy petition is filed under one chapter of the 
United States Bankruptcy Code, or under one chapter or provision of any 
such similar law, and the case is converted to a case under a different 
chapter or provision of such Code or similar law (for example, a Chapter 
11 reorganization case is converted to a Chapter 7 liquidation case), 
the date of the original petition is the bankruptcy filing date. If such 
a plan has more than one contributing sponsor:

[[Page 920]]

    (1) If all contributing sponsors entered bankruptcy on the same 
date, that date is the bankruptcy filing date;
    (2) If all contributing sponsors did not enter bankruptcy on the 
same date (or if not all contributing sponsors are in bankruptcy), PBGC 
will determine the date that will be treated as the bankruptcy filing 
date based on the facts and circumstances, which may include such things 
as the relative sizes of the contributing sponsors, the relative amounts 
of their minimum required contributions to the plan, the timing of the 
different bankruptcies, and the expectations of participants.
    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. In a PPA 
2006 bankruptcy termination, it also includes a benefit accrued by a 
participant, or to which a participant otherwise became entitled, on or 
before the plan's termination date but that is not guaranteed solely 
because of the provisions of Secs. 4022.3(b) or 4022.4(c).
    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(b)(2) of the Code or section 302(b)(2) 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.
    Disclosure officer means the official designated as disclosure 
officer in the Office of the General Counsel, PBGC.
    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).
    Earliest retirement age at valuation date means the later of: a 
participant's age on his or her birthday nearest to the valuation date, 
or the participant's attained age as of his or her Earliest PBGC 
Retirement Date (as determined under Sec. 4022.10 of this chapter).
    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.
    Expected retirement age (XRA) means the age, determined in 
accordance with

[[Page 921]]

Sec. Sec. 4044.55 through 4044.57 of this chapter, 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.
    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 304(b) of ERISA or section 431(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 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. 
Multiemployer plan also means a plan that elects to be a multiemployer 
plan under ERISA section 3(37)(G) and Code section 414(f)(6), pursuant 
to procedures prescribed by PBGC.
    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.
    Non-PPA 2006 bankruptcy termination means a plan termination that is 
not a PPA 2006 bankruptcy termination.
    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.

[[Page 922]]

    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.
    PPA 2006 bankruptcy termination means a plan termination to which 
section 404 of the Pension Protection Act of 2006 applies. Section 404 
of the Pension Protection Act of 2006 applies to any plan termination in 
which the termination date occurs while bankruptcy proceedings are 
pending with respect to the contributing sponsor of the plan, if the 
bankruptcy proceedings were initiated on or after September 16, 2006. 
Bankruptcy proceedings are pending, for this purpose, if a contributing 
sponsor has filed or has had filed against it a petition seeking 
liquidation or reorganization in a case under title 11, United States 
Code, or under any similar Federal law or law of a State or political 
subdivision, and the case has not been dismissed as of the termination 
date of the 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.
    Rollover amounts means the dollar amount of all or any part of a 
distribution that is rolled over from a defined contribution plan into a 
defined benefit plan in accordance with section 401(a)(31) or 402(c) or 
similar provisions under the Internal Revenue Code. Rollover amounts 
include salary deferral contributions made by the participant, any 
additional employer contributions provided for under the defined 
contribution plan, and earnings on both.
    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 
4021(d) 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. In a PPA 2006 bankruptcy termination, the determination whether a 
plan is sufficient for guaranteed benefits is made taking into account 
the limitations in sections 4022(g) and 4044(e) of ERISA (and 
corresponding provisions of these regulations). The determinations of 
which benefits are guaranteed and which benefits are in priority 
category 3 under section 4044(a)(3) of ERISA are made by reference to 
the bankruptcy filing date, but the present values of those benefits are 
determined as of the proposed termination date and the date of 
distribution.
    Termination date means the date established pursuant to section 
4048(a) of ERISA.
    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.
    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.
    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; 73 FR 79635, Dec. 30, 2008; 74 FR 11029, Mar. 16, 2009; 74 FR 
27081, June 8, 2009; 74 FR 59095, Nov. 17, 2009; 76 FR 34601, June 14, 
2011; 79 FR 70094, Nov. 25, 2014; 80 FR 55002, Sept. 11, 2015]

[[Page 923]]



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, Chair, and Representatives of Board Members.
4002.4  Quorum.
4002.5  Meetings.
4002.6  Place of meetings; use of conference call communications 
          equipment.
4002.7  Voting without a meeting.
4002.8  Conflicts of interest.
4002.9  Director of the Corporation and Senior Officers.
4002.10  Emergency Procedures.
4002.11  Seal.
4002.12  Amendments.

    Authority: 29 U.S.C. 1302(b)(3), 1302(f).

    Source: 73 FR 29985, May 23, 2008, 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 is 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, Chair, and Representatives of Board
Members.

    (a)(1) The Corporation is governed by a Board of Directors which is 
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 in an acting capacity as 
Secretary of Labor, Secretary of the Treasury, or Secretary of Commerce 
shall serve as a Member of the Board of Directors with the same 
authority and effect as the designated Secretary.
    (2) The Secretary of Labor shall be the Chair of the Board of 
Directors and shall call and preside over all Board meetings, and shall, 
on behalf of the Board, review and approve the Corporation's budget. The 
Inspector General of the Corporation shall report to the Board through 
the Chair.
    (3) The Board of Directors is responsible for establishing and 
overseeing the policies of the Corporation. The Board may delegate 
powers to the Director of the Corporation except that the following 
powers of the Board may not be delegated to the Director of the 
Corporation:
    (i) Voting on an amendment to these bylaws;

[[Page 924]]

    (ii) Approval of the Annual Management Report (AMR), which includes 
the annual financial statements, management's discussion and analysis, 
annual performance report, and reports of the independent auditor;
    (iii) Approval of the Annual Report, which includes the AMR, the 
Chairman's message, and certain statutory reporting requirements;
    (iv) Approval of the Corporation's Investment Policy Statement;
    (v) Approval of the issuance of any notes or debt instruments to the 
Secretary of the Treasury under Section 4005(c) of ERISA;
    (vi) Approval of all final nonprocedural regulations prior to 
publication in the Federal Register, except for amendments that 
establish new interest rates and factors under Parts 4044 (Appendices C 
and D) and 4281 of this chapter, which may be approved by the Director 
of the Corporation;
    (vii) Approval of all reports or recommendations to the Congress 
required by Title IV of ERISA;
    (viii) Approval of any policy matter that would have a significant 
impact on the pension insurance program or its stakeholders; and
    (ix) Review of reports from the Corporation's Inspector General that 
the Inspector General deems appropriate to deliver to the Board.
    (4) The Board shall review the Corporation's Investment Policy 
Statement at least every two years and approve the Investment Policy 
Statement at least every four years.
    (b)(1) Each Board Member shall designate in writing an official, not 
below the level of Assistant Secretary, to serve as the Board Member's 
Representative. Such designation shall be effective until revoked or 
until a date or event specified therein. A Board Representative may act 
for all purposes under these bylaws, except that an action of a Board 
Representative on a Board Member's behalf with respect to the powers 
described in paragraph (a)(3)(i) through (v) of this section, shall be 
valid only upon ratification in writing by the Board Member. Any Board 
Representative may refer for Board action any matter under consideration 
by the Board Representatives.
    (2) A Board Member may designate in writing an official, not below 
the level of Assistant Secretary, to serve as the Board Member's 
Alternate Representative at a meeting. An Alternate Representative may 
act for all purposes at that meeting, except that the Alternate 
Representative's actions shall be valid only upon ratification in 
writing by either the Board Member or the Board Representative. Any 
action of the Alternate Representative involving the powers described in 
paragraph (a)(3)(i) through (v) of this section or any matter that has 
been referred to the Board under paragraph (b)(1) of this section must 
be ratified in writing by the Board Member.
    (3) For purposes of this section, ratification shall include 
approval of the minutes of the meeting of the Board of Directors.
    (c) Final procedural regulations and all proposed regulations shall 
be approved by the Director of the Corporation prior to publication in 
the Federal Register; however, all final procedural regulations and all 
proposed regulations shall first be reviewed for comment by each Board 
Representative, except for amendments that establish new interest rates 
and factors under Parts 4044 (Appendices C and D) and 4281 of this 
chapter. A Board Representative may, within 21 days of receiving a final 
procedural regulation or proposed regulation for review, request that it 
be referred to the Board Representatives for approval.



Sec. 4002.4  Quorum.

    A majority of the Board Members shall constitute a quorum for the 
transaction of business. Any act of a majority of the Members present at 
any meeting at which there is a quorum shall be the act of the Board.



Sec. 4002.5  Meetings.

    Regular meetings of the Board of Directors shall be held as often as 
required to provide appropriate oversight and guidance to the 
Corporation and at such times as the Chair shall select. Special 
meetings of the Board of Directors shall be called by the Chair on the 
request of any other Board Member. Reasonable notice of any meetings 
shall be given to each Board Member.

[[Page 925]]

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 approval.



Sec. 4002.6  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 Chair. Any Member 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 speak to and hear each other. Any Board 
Member 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.



Sec. 4002.7  Voting without a meeting.

    A resolution of the Board of Directors signed by each of the Board 
Members or each of the Board Representatives shall have the same effect 
as if agreed to at a meeting and shall be kept in the Corporate Minutes 
Book. A resolution for an action taken on any matter for which a Board 
Member has been disqualified under Sec. 4002.8 may be signed by the 
Board Representative of the disqualified Board Member.



Sec. 4002.8  Conflict of interest.

    Any Board Member may disqualify himself or herself from 
participation in a Board action on any matter if the Board Member may 
have or may appear to have a conflict of interest. The Board Member 
shall notify the other Board Members of a disqualification. The 
disqualified Member's Board Representative, acting independently of that 
Member, may vote on the matter in the Member's place. The disqualified 
Board Member need not and may not ratify any action taken on the matter 
giving rise to his or her disqualification.



Sec. 4002.9  Director of the Corporation and Senior Officers.

    (a) Director of the Corporation. The Corporation shall be 
administered by a Director appointed by the President with the advice 
and consent of the Senate. Subject to policies established by the Board, 
the Director shall have responsibility for the Corporation's management, 
including its personnel, organization and budget practices, and shall 
carry out the Corporation's functions under Title IV of ERISA. The 
Director shall submit the Corporation's budget to the Chair of the Board 
for review and approval.
    (b) There shall be the following senior officers of the Corporation, 
reporting directly to the Director:
    (1) Deputy Directors for Policy and Operations, who shall be first 
and second assistant, respectively;
    (2) General Counsel, who shall serve as Secretary to the Board;
    (3) Chief Financial Officer;
    (4) Chief Information Officer;
    (5) Chief Management Officer;
    (6) Chief Operating Officer; and
    (7) Chief Insurance Program Officer.
    (c) Subject to prior approval of the Board, the Director may 
establish such additional or other senior officers as necessary. Before 
making an appointment to a senior officer position, the Director shall 
consult with the Board.



Sec. 4002.10  Emergency procedures.

    (a) An emergency exists if a quorum of the Corporation's Board 
cannot readily be assembled or act through written contact because of 
the declaration of a government-wide emergency. These emergency 
procedures shall remain in effect during the emergency and upon the 
termination of the emergency shall cease to be operative unless and 
until another emergency occurs. The emergency procedures shall operate 
in conjunction with the PBGC Continuity of Operations Plan (``COOP 
Plan'') of the current year, and any government-wide COOP protocols in 
effect.
    (b) During an emergency, the business of the PBGC shall continue to 
be managed in accordance with its COOP

[[Page 926]]

Plan. The functions of the Board of Directors will be carried out by 
those Members of the Board of Directors in office at the time the 
emergency arises, or by persons designated by the agencies' COOP plans 
to act in place of the Board Members, who are available to act during 
the emergency. If no such persons are available, then the authority of 
the Board shall be transferred to the Board Representatives who are 
available. If no Board Representatives are available, then the Director 
of the Corporation shall perform essential Board functions.
    (c) During an emergency, meetings of the Board may be called by any 
available Member of the Board. The notice thereof shall specify the time 
and place of the meeting. To the extent possible, notice shall be given 
in accordance with these bylaws. Notice shall be given to those Board 
Members whom it is feasible to reach at the time of the emergency, and 
notice may be given at a time less than 24 hours before the meeting if 
deemed necessary by the person giving notice.



Sec. 4002.11  Seal.

    The seal of the Corporation shall be in such form as may be approved 
from time to time by the Board.



Sec. 4002.12  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  Method and date of filing.
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 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)(5). Subpart D establishes procedures governing 
administrative appeals from initial determinations relating to the 
matters set forth in paragraphs (b)(6) through (b)(11).

[[Page 927]]

    (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 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 with respect to penalties under section 4071 of 
ERISA;
    (6) Determinations that a plan is not covered under section 4021 of 
ERISA;
    (7) Determinations under section 4022 (a) or (c) 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;
    (8) Determinations under section 4022 (b) or (c) or section 4022B of 
ERISA of the amount of benefits payable to participants and 
beneficiaries under covered plans;
    (9) Determinations of the amount of money subject to recapture 
pursuant to section 4045 of ERISA;
    (10) Determinations of the amount of liability under section 
4062(b)(1), section 4063, or section 4064 of ERISA;
    (11) 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.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008; 77 
FR 22489, Apr. 16, 2012]



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 
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

[[Page 928]]

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 Director of the PBGC, Deputy Directors, and the General 
Counsel.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



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 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.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



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

[[Page 929]]

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.



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  Method and date of filing.

    (a) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (b) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.

[68 FR 61352, Oct. 28, 2003]



Sec. 4003.10  Computation of time.

    The PBGC applies the rules in subpart D of part 4000 of this chapter 
to compute any time period under this part.

[68 FR 61352, Oct. 28, 2003]



                    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 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.

[[Page 930]]



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 part 4903 of this chapter, 
by the date that is specified in the PBGC's notice of the right to 
request review.

[61 FR 34012, July 1, 1996, as amended at 75 FR 68205, Nov. 5, 2010]



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 Director. See 
Sec. 4000.4 of this chapter for information on where to file.

[61 FR 34012, July 1, 1996, as amended at 68 FR 61352, Oct. 28, 2003; 73 
FR 38120, July 3, 2008]



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 Director (or an official designated by the 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.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



                    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 part 4903 of this chapter, by the date that is specified in 
the PBGC's notice of the right to request review.

[61 FR 34012, July 1, 1996, as amended at 75 FR 68205, Nov. 5, 2010]



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. See Sec. 4000.4 of this chapter for 
additional information on where to file.

[61 FR 34012, July 1, 1996, as amended at 68 FR 61352, Oct. 28, 2003; 73 
FR 38120, July 3, 2008]



Sec. 4003.54  Contents of appeal.

    (a) An appeal shall--

[[Page 931]]

    (1) Be in writing;
    (2) Be clearly designated as an appeal;
    (3) Specifically explain why PBGC's determination is wrong and the 
result the appellant is seeking;
    (4) Describe the relevant information the appellant believes is 
known by PBGC, and summarize any other information the appellant 
believes is relevant. It is important to include copies of any 
documentation that support the appellant's claim or the appellant's 
assertions about this information;
    (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).

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



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.

[[Page 932]]



Sec. 4003.58  Powers of the Appeals Board.

    (a) In addition to the powers specifically described in this part, 
the Appeals Board may request the submission of any information or the 
appearance of 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.
    (b) The Appeals Board may refer certain appeals to another PBGC 
department or to Appeals Board staff to provide a response to the 
appellant. The response from another PBGC department or Board staff 
shall be in writing and address the matters raised in the appeal. The 
response may be in the form of an explanation or corrected benefit 
determination. In either case, the appellant will have 45 calendar-days 
from the date of the response to file a written request for review by 
the Appeals Board. If a written request for review is not filed with the 
Appeals Board within the 45-calendar-day period the determination shall 
become effective pursuant to Sec. 4003.22(a).
    (1) Appeals that may be referred to another PBGC department or to 
the Board staff include those that--
    (i) Request an explanation of the initial determination being 
appealed;
    (ii) Dispute specific data used in the determination, such as date 
of hire, date of retirement, date of termination of employment, length 
of service, compensation, marital status and form of benefit elected; or
    (iii) Request an explanation of the limits on benefits payable by 
PBGC under part 4022, subpart B, such as the maximum guaranteeable 
benefit and phase-in of the PBGC guarantee.
    (2) An explanation or corrected benefit determination issued under 
this subsection is not considered a decision of the Appeals Board. If an 
appellant aggrieved by PBGC's initial determination is issued an 
explanation or corrected benefit determination under this section, the 
appellant has not exhausted his or her administrative remedies until the 
appellant has filed a timely request with the Appeals Board for review 
and the Appeals Board has issued a decision granting or denying the 
relief requested. See Sec. 4003.7 of this part.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



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 Director.

    The Appeals Board may, in its discretion, refer any appeal to the 
Director of the PBGC for decision. In such a case, the Director shall 
have all the powers vested in the Appeals Board by this subpart and the 
decision of the Director shall meet the requirements of and have the 
effect of a decision issued under Sec. 4003.59 of this part.

[61 FR 34012, July 1, 1996, as amended at 73 FR 38120, July 3, 2008]



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

[[Page 933]]

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 934]]



                          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.''
4006.7  Premium rate for certain terminated single-employer plans.

    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: 
benefit liabilities, Code, contributing sponsor, ERISA, fair market 
value, insurer, irrevocable commitment, mandatory employee 
contributions, multiemployer plan, notice of intent to terminate, PBGC, 
plan administrator, plan, plan year, single-employer plan, and 
termination date.
    In addition, for purposes of this part:
    Continuation plan means a new plan resulting from a consolidation or 
spinoff that is not de minimis pursuant to the regulations under section 
414(l) of the Code.
    New plan means a plan that did not exist before. 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 becomes covered by title IV of 
ERISA during the premium payment year and that existed as an uncovered 
plan immediately before the first date in the premium payment year on 
which it was a covered plan.
    Participant has the meaning described in Sec. 4006.6.
    Participant count of a plan means the number of participants in the 
plan on the participant count date of the plan.
    Participant count date of a plan means the date provided for in 
Sec. 4006.5(c), (d), or (e) as applicable.
    Premium funding target has the meaning described in 
Sec. 4006.4(b)(1).
    Premium payment year means the plan year for which the premium is 
being paid.
    Short plan year means a plan year of coverage that is shorter than a 
normal plan year.
    Small plan means a plan--
    (1) Whose participant count is not more than 100, or
    (2) Whose funding valuation date for the premium payment year, 
determined in accordance with ERISA section 303(g)(2), is not the first 
day of the premium payment year.
    UVB valuation date of a plan means the plan's funding valuation date 
for the UVB valuation year, determined in accordance with ERISA section 
303(g)(2).
    UVB valuation year of a plan means--
    (1) In general,--
    (i) The plan year preceding the premium payment year, if the plan is 
a small plan other than a continuation plan, or
    (ii) The premium payment year, in any other case; or
    (2) For a small plan that so opts subject to PBGC premium 
instructions, the premium payment year.

[61 FR 34016, July 1, 1996, as amended at 65 FR 75163, Dec. 1, 2000; 73 
FR 15074, Mar. 21, 2008; 79 FR 13559, Mar. 11, 2014]



Sec. 4006.3  Premium rate.

    Subject to the provisions of Sec. 4006.5 (dealing with exemptions 
and special rules) and Sec. 4006.7 (dealing with premiums for certain 
terminated single-employer plans), the premium paid for basic benefits 
guaranteed under section 4022(a) or section 4022A(a) of ERISA shall 
equal the flat-rate premium under paragraph (a) of this section

[[Page 935]]

plus, in the case of a single-employer plan, the variable-rate premium 
under paragraph (b) of this section. Premium rates (and the MAP-21 cap 
rate referred to in paragraph (b)(2) of this section) are subject to 
change each year under inflation indexing provisions in section 4006 of 
ERISA.
    (a) Flat-rate premium. The flat-rate premium for a plan is equal to 
the applicable flat premium rate multiplied by the plan's participant 
count. The applicable flat premium rate is the amount prescribed for the 
calendar year in which the premium payment year begins by the applicable 
provisions of--
    (1) ERISA section 4006(a)(3)(A), (F), and (G) for a single-employer 
plan, or
    (2) ERISA section 4006(a)(3)(A), (H), and (J) for a multiemployer 
plan.
    (b) Variable-rate premium--(1) In general. Subject to the cap 
provisions in paragraphs (b)(2) and (b)(3) of this section, the 
variable-rate premium for a single-employer plan is equal to a specified 
dollar amount for each $1,000 (or fraction thereof) of the plan's 
unfunded vested benefits as determined under Sec. 4006.4 for the UVB 
valuation year. The specified dollar amount is the applicable variable 
premium rate prescribed by the applicable provisions of ERISA section 
4006(a)(8) for the calendar year in which the premium payment year 
begins.
    (2) MAP-21 cap. The variable-rate premium for a plan is not more 
than the applicable MAP-21 cap rate multiplied by the plan's participant 
count. The applicable MAP-21 cap rate is the amount prescribed by the 
applicable provisions of ERISA section 4006(a)(3)(E)(i)(II), 
(E)(i)(III), (K), and (L) for the calendar year in which the premium 
payment year begins.
    (3) Small-employer cap. (i) In general. If a plan is described in 
paragraph (b)(3)(ii) of this section for the premium payment year, the 
variable-rate premium is not more than $5 multiplied by the square of 
the participant count. For example, if the participant count is 20, the 
variable-rate premium is not more than $2,000 ($5  x  20\2\ = $5  x  400 
= $2,000).
    (ii) Plans eligible for cap. A plan is described in paragraph 
(b)(3)(ii) of this section for the premium payment year if the aggregate 
number of employees of all employers in the plan's controlled group on 
the first day of the premium payment year is 25 or fewer.
    (iii) Meaning of ``employee.'' For purposes of paragraph (b)(3)(ii) 
of this section, the aggregate number of employees is determined in the 
same manner as under section 410(b)(1) of the Code, taking into account 
the provisions of section 414(m) and (n) of the Code, but without regard 
to section 410(b)(3), (4), and (5) of the Code.

[61 FR 34016, July 1, 1996, as amended at 72 FR 71228, Dec. 17, 2007; 73 
FR 15074, Mar. 21, 2008; 79 FR 13559, Mar. 11, 2014]



Sec. 4006.4  Determination of unfunded vested benefits.

    (a) In general. Except as provided in the exemptions and special 
rules under Sec. 4006.5, the amount of a plan's unfunded vested benefits 
for the UVB valuation year is the excess (if any) of the plan's premium 
funding target for the UVB valuation year (determined under paragraph 
(b) of this section) over the fair market value of the plan's assets for 
the UVB valuation year (determined under paragraph (c) of this section). 
Unfunded vested benefits for the UVB valuation year must be determined 
as of the plan's UVB valuation date , based on the plan provisions and 
the plan's population as of that date. The determination must be made in 
a manner consistent with generally accepted actuarial principles and 
practices.
    (b) Premium funding target--(1) In general. A plan's premium funding 
target is its standard premium funding target under paragraph (b)(2) of 
this section or, if an election to use the alternative premium funding 
target under Sec. 4006.5(g) is in effect, its alternative premium 
funding target under Sec. 4006.5(g).
    (2) Standard premium funding target. A plan's standard premium 
funding target under this section is the plan's funding target as 
determined under ERISA section 303(d) (or 303(i), if applicable) for the 
UVB valuation year using the same assumptions that are used for funding 
purposes, except that--
    (i) Only vested benefits are taken into account, and

[[Page 936]]

    (ii) The interest rates to be used are the segment rates for the 
month preceding the month in which the UVB valuation year begins that 
are determined in accordance with ERISA section 4006(a)(3)(E)(iv). These 
are the rates that would be determined under ERISA section 303(h)(2)(C) 
if ERISA section 303(h)(2)(D) were applied by using the monthly yields 
for the month preceding the month in which the UVB valuation year begins 
on investment grade corporate bonds with varying maturities and in the 
top 3 quality levels rather than the average of such yields for a 24-
month period. For this purpose, the transition rule in ERISA section 
303(h)(2)(G) is inapplicable.
    (3) ``At-risk'' plans; transition rules; loading factor. The 
transition rules in ERISA section 303(i)(5) apply to the determination 
of the premium funding target of a plan in at-risk status for funding 
purposes. If a plan in at-risk status is also described in ERISA section 
303(i)(1)(A)(ii) for the UVB valuation year, its premium funding target 
reflects a loading factor pursuant to ERISA section 303(i)(1)(C) equal 
to the sum of--
    (i) Per-participant portion of loading factor. The amount determined 
for funding purposes under ERISA section 303(i)(1)(C)(i) for the UVB 
valuation year, and
    (ii) Four percent portion of loading factor. Four percent of the 
premium funding target determined as if the plan were not in at-risk 
status.
    (c) Value of assets. The fair market value of a plan's assets under 
this section is determined in the same manner as for funding purposes 
under ERISA section 303(g)(3) and (4), except that averaging as 
described in ERISA section 303(g)(3)(B) must not be used and prior year 
contributions are included only to the extent received by the plan by 
the date the premium is filed. Contribution receipts must be accounted 
for as described in ERISA section 303(g)(4), using effective interest 
rates determined under ERISA section 303(h)(2)(A) (not rates that could 
be determined based on the segment rates described in paragraph (b)(2) 
of this section).
    (d) ``Vested.'' For purposes of ERISA section 4006(a)(3)(E), this 
part, and part 4007 of this chapter:
    (1) A participant's benefit that is otherwise vested does not fail 
to be vested merely because of the circumstance that the participant is 
living, in the case of the following death benefits:
    (i) A qualified pre-retirement survivor annuity (as described in 
ERISA section 205(e)), (ii) A post-retirement survivor annuity that pays 
some or all of the participant's benefit amount for a fixed or 
contingent period (such as a joint and survivor annuity or a certain and 
continuous annuity), and
    (iii) A benefit that returns the participant's accumulated mandatory 
employee contributions (as described in ERISA section 204(c)(2)(C)).
    (2) A benefit otherwise vested does not fail to be vested merely 
because of the circumstance that the benefit may be eliminated or 
reduced by the adoption of a plan amendment or by the occurrence of a 
condition or event (such as a change in marital status).
    (3) A participant's pre-retirement lump-sum death benefit (other 
than a benefit described in paragraph (d)(1)(iii) of this section) is 
not vested if the participant is living.
    (4) A participant's disability benefit is not vested if the 
participant is not disabled.
    (e) Illustration of vesting principles. The vesting principles set 
forth in paragraph (d) of this section are illustrated by the following 
examples:
    (1) Example 1. Under Plan A, if a participant retires at or after 
age 55 but before age 62, the participant receives a temporary 
supplement from retirement until age 62. The supplement is not a QSUPP 
(qualified social security supplement), as defined in Treasury Reg. 
Sec. 1.401(a)(4)-12, and is not protected under Code section 411(d)(6). 
The temporary supplement is considered vested, and its value is included 
in the premium funding target, for each participant who, on the UVB 
valuation date, is at least 55 but less than 62, and thus eligible for 
the supplement. The calculation is unaffected by the fact that the plan 
could be amended to remove the supplement after the UVB valuation date.

[[Page 937]]

    (2) Example 2. Plan B provides a qualified pre-retirement survivor 
annuity (QPSA) upon the death of a participant who has five years of 
service, at no charge to the participant. The QPSA is considered vested, 
and its value is included in the premium funding target, for each 
participant who, on the UVB valuation date, has five years of service 
and is thus eligible for the QPSA. The calculation is unaffected by the 
fact that the participant is alive on that date.
    (f) Plans to which special funding rules apply. Unfunded vested 
benefits must be determined (whether the standard premium funding target 
or the alternative premium funding target is used) without regard to the 
following provisions of the Pension Protection Act of 2006 (Pub. L. 109-
280):
    (1) Section 104, dealing generally with plans of cooperatives.
    (2) Section 105, dealing generally with plans affected by settlement 
agreements with PBGC.
    (3) Section 106, dealing generally with plans of government 
contractors.
    (4) Section 402, dealing generally with plans of commercial 
passenger airlines and airline caterers.

[73 FR 15074, Mar. 21, 2008, as amended at 79 FR 13560, Mar. 11, 2014]



Sec. 4006.5  Exemptions and special rules.

    (a) Variable-rate premium exemptions. A plan described in any of 
paragraphs (a)(1)-(a)(4) of this section is not required to determine or 
report its unfunded vested benefits under Sec. 4006.4 and does not owe a 
variable-rate premium under Sec. 4006.3(b).
    (1) Plans without vested participants. A plan is described in this 
paragraph if it does not have any participants with vested benefits as 
of the UVB valuation date.
    (2) Section 412(e)(3) plans. A plan is described in this paragraph 
if the plan is a plan described in section 412(e)(3) of the Code and the 
regulations thereunder on the UVB valuation date.
    (3) 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 it 
makes a final distribution of assets in a standard termination during 
the premium payment year or 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 before the beginning of the premium payment year.
    (4) Certain small new and newly covered plans. A plan is described 
in this paragraph if--
    (i) It is a small plan other than a continuation plan, and
    (ii) It is a new plan or a newly covered plan.
    (b) Reporting exemption for plans paying capped variable-rate 
premium. A plan that qualifies for the variable-rate premium cap 
described in ERISA section 4006(a)(3)(H) is not required to determine or 
report its unfunded vested benefits under Sec. 4006.4 if it reports that 
it qualifies for the cap and pays a variable-rate premium equal to the 
amount of the cap.
    (c) Participant count date; in general. Except as provided in 
paragraphs (d) and (e) of this section, the participant count date of a 
plan is the last day of the plan year preceding the premium payment 
year.
    (d) Participant count date; new and newly covered plans. The 
participant count date of a new plan or a newly covered plan is the 
first day of the premium payment year. For this purpose, a new plan's 
premium payment year begins on the plan's effective date.
    (e) Participant count date; certain mergers and spinoffs. (1) The 
participant count date of a plan described in paragraph (e)(2) of this 
section is the first day of the premium payment year.
    (2) A plan is described in this paragraph (e)(2) for a plan year 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

[[Page 938]]

of this chapter (in the case of multiemployer plans), as applicable;
    (ii) The merger or spinoff is effective at the beginning of the 
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 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 or newly covered plan. A new plan becomes effective less 
than one full year before the beginning of its second plan year, or a 
newly covered plan becomes covered on a date other than the first day of 
its plan year. (Cessation of coverage before the end of a plan year does 
not give rise to proration under this section.)
    (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.
    (g) Alternative premium funding target. A plan's alternative premium 
funding target is determined in the same way as its standard premium 
funding target except that the discount rates described in ERISA section 
4006(a)(3)(E)(iv) are not used. Instead, the alternative premium funding 
target is determined using the discount rates that would have been used 
to determine the funding target for the plan under ERISA section 303 for 
the purpose of determining the plan's minimum contribution under ERISA 
section 303 for the UVB valuation year if the segment rate stabilization 
provisions of ERISA section 303(h)(2)(iv) were disregarded. A plan may 
elect to compute unfunded vested benefits using the alternative premium 
funding target instead of the standard premium funding target described 
in Sec. 4006.4(b)(2), and may revoke such an election, in accordance 
with the provisions of this paragraph (g). A plan must compute its 
unfunded vested benefits using the alternative premium funding target 
instead of the standard premium funding target described in 
Sec. 4006.4(b)(2) if an election under this paragraph (g) to use the 
alternative premium funding target is in effect for the premium payment 
year.
    (1) An election under this paragraph (g) to use the alternative 
premium funding target for a plan must specify the premium payment year 
to which it first applies and must be filed by the plan's variable-rate 
premium due date for that premium payment year. The premium payment year 
to which the election first applies must begin at least five years after 
the beginning of the premium payment year to which a revocation of a 
prior election first applied. The election will be effective--
    (i) For the premium payment year for which made and for all plan 
years that begin less than five years thereafter, and
    (ii) For all succeeding plan years until the premium payment year to 
which a revocation of the election first applies.
    (2) A revocation of an election under this paragraph (g) to use the 
alternative premium funding target for a plan must specify the premium 
payment year to which it first applies and must be filed by the plan's 
variable-rate premium due date for that premium payment year. The 
premium payment year to which the revocation first applies must begin at 
least five years after the beginning of the premium payment year to 
which the election first applied.

[61 FR 34016, July 1, 1996, as amended at 62 FR 60428, Nov. 7, 1997; 65 
FR 75163, Dec. 1, 2000; 71 FR 31081, June 1, 2005; 73 FR 15075, Mar. 21, 
2008; 79 FR 13560, Mar. 11, 2014]

[[Page 939]]



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.
    (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, 2008. On 
December 31, 2008 (the participant count date for the plan's 2009 
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, 2008; 
and Mary, but not John, must be counted as a participant for purposes of 
computing the plan's 2009 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, 2010, 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, 2008. 
However, John has credit for only 492 hours of service in the service 
computation period that began July 1, 2009. On February 1, 2010, John 
terminates his employment. On December 31, 2010 (the participant count 
date for the 2011 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 2011 premium.
    Example 3. On January 1, 2012, 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, 2013, 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, 2014. Under the provisions of this section, Jane is treated as not 
having an accrued benefit on December 31, 2013 (the participant count 
date for the 2014 premium), because Jane's benefit is treated as having 
been paid on December 30, 2013. Thus, Jane is not counted as a 
participant for purposes of computing the plan's 2014 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, 2014, Jane 
would be treated under the provisions of this section as having an 
accrued benefit on December 31, 2013, and would thus be counted as a 
participant for purposes of computing the plan's 2014 premium.

[65 FR 75163, Dec. 1, 2000, as amended at 73 FR 15076, Mar. 21, 2008]



Sec. 4006.7  Premium rate for certain terminated single-employer 
plans.

    (a) The premium under this section (``termination premium'') applies 
to a DRA 2005 termination described in Sec. 4007.13 of this chapter.
    (b) The amount of the premium under this section that is payable 
with respect to each applicable 12-month period (as described in 
Sec. 4007.13 of this chapter) is the number of participants

[[Page 940]]

in the plan, determined as of the day before the termination date, 
multiplied by the termination premium rate. In general, the termination 
premium rate is $1,250. However, the termination premium rate is $2,500 
for an ``eligible plan'' under section 402(c)(1) of the Pension 
Protection Act of 2006 (dealing with certain plans of commercial 
passenger airlines and airline catering services) while an election 
under section 402(a)(1) of the Pension Protection Act of 2006 (dealing 
with alternative funding schedules) is in effect for the plan if the 
plan terminates during the five-year period beginning on the first day 
of the first applicable plan year (as defined in section 402(c)(2) of 
that Act) with respect to the plan, unless the Secretary of Labor 
determines that the plan terminated as a result of extraordinary 
circumstances such as a terrorist attack or other similar event.
    (c) The premium under this section is in addition to any other 
premium under this part.
    (d) See Sec. 4007.13 of this chapter for further rules about 
termination premiums.

[72 FR 71229, Dec. 17, 2007, as amended at 79 FR 13561, Mar. 11, 2014]



PART 4007_PAYMENT OF PREMIUMS--Table of Contents



Sec.
4007.1  Purpose and scope.
4007.2  Definitions.
4007.3   Filing requirement; method of filing.
4007.4  Where to file.
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.
4007.13  Premiums for certain terminated single-employer plans.

Appendix to Part 4007--Policy guidelines on premium penalties

    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, IRS, notice of intent to terminate, 
PBGC, plan, plan administrator, plan year, single-employer plan, and 
termination date.
    (b) For purposes of this part, the following terms are defined in 
Sec. 4006.2 of this chapter: continuation plan, new plan, newly covered 
plan, participant, participant count, premium funding target, premium 
payment year short plan year, small plan, and UVB valuation date.

[61 FR 34020, July 1, 1996, as amended at 73 FR 15076, Mar. 21, 2008; 79 
FR 13561, Mar. 11, 2014]



Sec. 4007.3  Filing requirement; method of filing.

    (a) In general. The estimation, determination, declaration, and 
payment of premiums must be made in accordance with the premium 
instructions on PBGC's Web site (www.pbgc.gov). Subject to the 
provisions of Sec. 4007.13, the plan administrator of each covered plan 
is responsible for filing prescribed premium information and payments. 
Each required premium payment and related information, certified as 
provided in the premium instructions, must be filed by the applicable 
due date specified in this part in the manner and format prescribed in 
the instructions.
    (b) Electronic filing. Information must be filed electronically 
except to the extent that PBGC grants an exemption for good cause in 
appropriate circumstances. (The requirement to file electronically 
applies to all estimated and final flat-rate and variable-rate premium 
filings (including amended filings) but does not apply to information 
filed to comply with a PBGC request under (4007.10(c) (dealing with

[[Page 941]]

providing record information in connection with a premium compliance 
review).) Unless an exemption applies, filing on paper or in any other 
manner other than by a prescribed electronic filing method does not 
satisfy the requirement to file. Failure to file electronically as 
required is subject to penalty under ERISA section 4071.

[71 FR 31081, June 1, 2006, as amended at 72 FR 71229, Dec. 17, 2007; 73 
FR 15076, Mar. 21, 2008; 79 FR 13561, Mar. 11, 2014]



Sec. 4007.4  Where to file.

    See Sec. 4000.4 of this chapter for information on where to file.

[71 FR 31081, June 1, 2006]



Sec. 4007.5  Date of filing.

    The PBGC applies the rules in subpart C of part 4000 of this chapter 
to determine the date that a submission under this part was filed with 
the PBGC.

[68 FR 61352, Oct. 28, 2003]



Sec. 4007.6  Computation of time.

    The PBGC applies the rules in subpart D of part 4000 of this chapter 
to compute any time period under this part. However, for purposes of 
determining the amount of a late payment interest charge under 
Sec. 4007.7 or of a late payment penalty charge under Sec. 4007.8, the 
rule in Sec. 4000.43(a) of this chapter governing periods ending on 
weekends or Federal holidays does not apply.

[68 FR 61352, Oct. 28, 2003]



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 this part, 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) With respect to any PBGC bill for a premium underpayment and/or 
interest thereon, interest will accrue only until the date of the bill 
if the premium underpayment and interest billed are paid within 30 days 
after the date of the bill.

[61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007; 73 
FR 15076, Mar. 21, 2008]



Sec. 4007.8  Late payment penalty charges.

    (a) Penalty charge. Subject to the provisions of Sec. 4007.13, if 
any premium payment due under this part is not paid by the due date 
under this part, 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 (h) of this section. The amount 
determined under this paragraph (a) 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. The penalty rate is--
    (1) For any amount of unpaid premium that is paid on or before the 
date PBGC issues the first written notice to any person liable for the 
premium that there is or may be a premium delinquency (for example, a 
premium bill, a letter initiating a premium compliance review, a notice 
of filing error in premium determination, or a letter questioning a 
failure to make a premium filing), \1/2\ percent per month, to a maximum 
penalty charge of 25 percent of the unpaid premium; or
    (2) For any amount of unpaid premium that is paid after that date, 
2\1/2\ percent per month, to a maximum penalty charge of 50 percent of 
the 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 waivers. PBGC will waive all or part of a late 
payment penalty charge if PBGC determines that there is reasonable cause 
for the late payment. Policy guidelines for applying the ``reasonable 
cause'' standard are in Secs. 22 through 25 of the appendix to this 
part.
    (d) Other waivers. PBGC may waive all or part of a late payment 
penalty charge in other circumstances without regard to whether there is 
reasonable cause. Policy guidelines for waivers without reasonable cause 
are in Sec. 21(b)(1), (b)(3), (b)(4), and (b)(5) of the appendix to this 
part.

[[Page 942]]

    (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) Filings not more than 7 days late. PBGC will waive premium 
payment penalties that arise solely because premium payments are late by 
not more than seven calendar days, as described in this paragraph (f). 
In applying this waiver, PBGC will assume that each premium payment with 
respect to a plan year was made seven calendar days before it was 
actually made. All other rules will then be applied as usual. If the 
result of this procedure is that no penalty would arise for that plan 
year, then any penalty that would apply on the basis of the actual 
payment date(s) will be waived.
    (g) Variable-rate premium penalty relief. PBGC will waive the 
penalty on any underpayment of the variable-rate premium for the period 
that ends on the earlier of the date the reconciliation filing is due or 
the date the reconciliation filing is made if, by the date the variable-
rate premium for the premium payment year is due under 
Sec. 4007.11(a)(1),--
    (1) The plan administrator reports--
    (i) The fair market value of the plan's assets for the premium 
payment year, and
    (ii) An estimate of the plan's premium funding target for the 
premium payment year that is certified by an enrolled actuary to be a 
reasonable estimate that takes into account the most current data 
available to the enrolled actuary and that has been determined in 
accordance with generally accepted actuarial principles and practices; 
and
    (2) The plan administrator pays at least the amount of variable-rate 
premium determined from the value of assets and estimated premium 
funding target so reported.
    (h) Demonstrated compliance. PBGC will waive 80 percent of the 
premium payment penalty assessed under paragraph (a)(2) of this section 
if the criteria in paragraphs (h)(1) and (2) of this section are met.
    (1) For each plan year within the last five plan years of coverage 
preceding the plan year for which the penalty rate is being 
determined,--
    (i) Any required premium filing for the plan has been made; and
    (ii) PBGC has not required payment of a penalty for the plan under 
this section.
    (2) For the plan year for which the penalty rate is being 
determined, the total amount of premium is paid no later than 30 days 
after PBGC issues the first written notice as described in paragraph 
(a)(1) of this section.

[64 FR 66385, Nov. 26, 1999, as amended at 65 FR 75164, Dec. 1, 2000; 71 
FR 66869, Nov. 17, 2006; 72 FR 71229, Dec. 17, 2007; 73 FR 15076, Mar. 
21, 2008; 79 FR 350, Jan. 3, 2014; 79 FR 13561, Mar. 11, 2014; 81 FR 
65545, Sept. 23, 2016]



Sec. 4007.9  Coverage for guaranteed basic benefits.

    (a) The failure to pay the premiums due under this part will not 
result in a 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.

[61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007]



Sec. 4007.10  Recordkeeping; audits; disclosure of information.

    (a) Retention of records to support premium payments--(1) In 
general. The designated recordkeeper under paragraph (a)(3) of this 
section must retain, for a period of six years after the premium due 
date, all plan records that are necessary to establish, support, and 
validate the amount of any premium required to be paid and any 
information required to be reported (``premium-related information'') 
under this part and part 4006 of this chapter and under PBGC's premium 
filing instructions. 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 support and demonstrate the 
calculation of unfunded vested benefits.

[[Page 943]]

    (2) Electronic recordkeeping. A designated recordkeeper may use 
electronic media for maintenance and retention of records required by 
this part in accordance with the requirements of subpart E of part 4000 
of this chapter.
    (3) Designated recordkeepers.
    (i) With respect to the flat-rate and variable-rate premiums 
described in Sec. 4006.3 of this chapter, the plan administrator is the 
designated recordkeeper.
    (ii) With respect to the premium for certain terminated single-
employer plans described in Sec. 4006.7 of this chapter, each person who 
was a contributing sponsor of such a plan, or was a member of a 
contributing sponsor's controlled group, as of the day before the plan's 
termination date is a designated recordkeeper.
    (4) Records. (i) Records that must be retained pursuant to paragraph 
(a)(1) of this section include, but are not limited to, records prepared 
by the plan administrator, a plan sponsor, an employer required to 
contribute to the plan with respect to its employees, an enrolled 
actuary performing services for the plan, or an insurance carrier 
issuing any contract to pay benefits under the plan.
    (ii) For purposes of this section, ``records'' include, but are not 
limited to, plan documents; participant data records; personnel and 
payroll records; actuarial tables, worksheets, and reports; records of 
computations, projections, and estimates; benefit statements, 
disclosures, and applications; financial and tax records; insurance 
contracts; records of plan procedures and practices; and any other 
records, whether in written, electronic, or other format, that are 
relevant to the determination of the amount of any premium required to 
be paid or any premium-related information required to be reported.
    (iii) When a record to be produced for PBGC inspection and copying 
exists in more than one format, it must be produced in the format 
specified by PBGC.
    (b) PBGC audit--(1) In general. In order to determine the 
correctness of any premium paid or premium-related information reported 
or to determine the amount of any premium required to be paid or any 
premium-related information required to be reported, PBGC may--
    (i) Audit any premium filing,
    (ii) Inspect and copy any records that are relevant to the 
determination of the amount of any premium required to be paid and any 
premium-related information required to be reported, including (without 
limitation) the records described in paragraph (a) of this section, and
    (iii) Require disclosure of any manual or automated system or 
process used to determine any premium paid or premium-related 
information reported, and demonstration of its operation in order to 
permit PBGC to determine the effectiveness of the system or process and 
the reliability of information produced by the system or process.
    (2) Deficiencies found on audit. If, upon audit, PBGC determines 
that a premium due under this part was underpaid, late payment interest 
and penalty charges will apply as provided for in this part. If, upon 
audit, PBGC determines that required information was not timely and 
accurately reported, a penalty may be assessed under ERISA section 4071.
    (3) Insufficient records. In determining the premium due, if, in the 
judgment of PBGC, a plan's records fail to establish the participant 
count or (for a single-employer plan) the plan's unfunded vested 
benefits for any premium payment year, PBGC may rely on data it obtains 
from other sources (including the IRS and the Department of Labor) for 
presumptively establishing the participant count and/or unfunded vested 
benefits for premium computation purposes.
    (c) Providing record information--(1) In general. A designated 
recordkeeper must make the records retained pursuant to paragraph (a) of 
this section available to PBGC promptly upon request for inspection and 
photocopying (or, for electronic records, inspection, electronic 
copying, and printout) at the location where they are kept (or another, 
mutually agreeable, location). If PBGC requests in writing that records 
retained pursuant to paragraph (a) of this section, or information in 
such records, be submitted to PBGC, the designated recordkeeper must 
submit the requested materials to PBGC

[[Page 944]]

either electronically or by hand, mail, or commercial delivery service 
within 45 days of the date of PBGC's request therefor, or by a different 
time specified in the request.
    (2) Extension. Except as provided in paragraph (c)(3) of this 
section, a designated recordkeeper 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 designated 
recordkeeper 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 the interests of PBGC may be prejudiced 
by a delay in the receipt of the information (e.g., where 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; 68 
FR 61352, Oct. 28, 2003; 72 FR 71229, Dec. 17, 2007; 73 FR 15077, Mar. 
21, 2008]



Sec. 4007.11  Due dates.

    (a) In general. In general:
    (1) The flat-rate and variable-rate premium filing due date is the 
fifteenth day of the tenth calendar month that begins on or after the 
first day of the premium payment year.
    (2) If the variable-rate premium paid by the premium filing due date 
is estimated as described in Sec. 4007.8(g)(1)(ii), a reconciliation 
filing and any required variable-rate premium payment must be made by 
the end of the sixth calendar month that begins on or after the premium 
filing due date.
    (3) Small plan transition rule. Notwithstanding paragraph (a)(1) of 
this section, if a plan had fewer than 100 participants for whom flat-
rate premiums were payable for the plan year preceding the last plan 
year that began before 2014, then the plan's due date for the first plan 
year beginning after 2013 is the fifteenth day of the fourteenth 
calendar month that begins on or after the first day of that plan year.
    (b) Plans that change plan years. For a plan that changes its plan 
year, the flat-rate and variable-rate premium filing due date for the 
short plan year is as specified in paragraph (a) of this section. For 
the plan year that follows a short plan year, the due date is the later 
of --
    (1) The due date specified in paragraph (a) of this section, or
    (2) 30 days after the date on which the amendment changing the plan 
year was adopted.
    (c) New and newly covered plans. For a new plan or newly covered 
plan, the flat-rate and variable-rate premium filing due date for the 
first plan year of coverage is the latest of--
    (1) The due date specified in paragraph (a) of this section, or
    (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, or
    (4) In the case of a small plan that is a continuation plan, 90 days 
after the plan's UVB valuation date.
    (d) Terminating plans. For a plan that terminates in a standard 
termination, the flat-rate and variable-rate premium filing due date for 
the plan year in which all plan assets are distributed pursuant to the 
plan's termination is the earlier of--
    (1) The due date specified in paragraph (a) of this section, or
    (2) The date when the post-distribution certification under 
Sec. 4041.29 of this chapter is filed.

[[Page 945]]

    (e) Continuing obligation to file. The obligation to make flat-rate 
and variable-rate premium filings and payments under this part 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.

[79 FR 13561, Mar. 11, 2014]



Sec. 4007.12  Liability for single-employer premiums.

    (a) The designation under this part of the plan administrator as the 
person required to make flat-rate and variable-rate premium filings and 
payments under this part 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 flat-rate and variable-rate 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) After a plan administrator issues (pursuant to section 
4041(a)(2) of ERISA) the first notice of intent to terminate in a 
distress termination under section 4041(c) of ERISA or PBGC issues a 
notice of determination under section 4042(a) of ERISA, 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)

[61 FR 34020, July 1, 1996, as amended at 72 FR 71229, Dec. 17, 2007; 79 
FR 13562, Mar. 11, 2014]



Sec. 4007.13  Premiums for certain terminated single-employer plans.

    (a) Applicability--(1) In general. This section applies where there 
is a ``DRA 2005 termination'' of a plan. Subject to paragraph (a)(2) of 
this section, there is a DRA 2005 termination where a single-employer 
plan's termination date is after 2005 and either--
    (i) The plan terminates under section 4042 of ERISA, or
    (ii) The plan terminates under section 4041(c) of ERISA and at least 
one contributing sponsor or member of a contributing sponsor's 
controlled group meets the requirements of section 4041(c)(2)(B)(ii) or 
(iii) of ERISA.
    (2) Plans terminated during reorganization proceedings. Except as 
provided in paragraph (a)(3) of this section, a DRA 2005 termination of 
a plan does not occur where as of the plan's termination date--
    (i) A bankruptcy proceeding has been filed by or against any person 
that was a contributing sponsor of the plan on the day before the plan's 
termination date or that was on that day a member of any controlled 
group of which any such contributing sponsor was a member,
    (ii) The proceeding is pending as a reorganization proceeding under 
chapter 11 of title 11, United States Code (or under any similar law of 
a State or political subdivision of a State),
    (iii) The person has not been discharged from the proceeding, and
    (iv) The proceeding was filed before October 18, 2005.
    (3) Special rule for certain airline-related plans. Paragraph (a)(2) 
of this section does not apply to an ``eligible plan'' under section 
402(c)(1) of the Pension Protection Act of 2006 (dealing with certain 
plans of commercial passenger airlines and airline catering services) 
while an election under section 402(a)(1) of the Pension Protection Act 
of 2006 (dealing with alternative funding schedules) is in effect for 
the plan.
    (4) Termination premium. A premium as described in Sec. 4006.7 of 
this chapter is payable to PBGC with respect to a DRA 2005 termination 
each year for three years after the termination (the ``termination 
premium'').

[[Page 946]]

    (b) Filing requirements; method of filing. Notwithstanding 
Sec. 4007.3, in the case of a DRA 2005 termination of a plan, each 
person that was a contributing sponsor of the plan on the day before the 
plan's termination date or that was on that day a member of any 
controlled group of which any such contributing sponsor was a member is 
responsible for filing prescribed termination premium information and 
payments. Any such person may file on behalf of all such persons.
    (c) Late payment penalty charges. Notwithstanding Sec. 4007.8(a), if 
any required termination premium payment is not filed by the due date 
under paragraph (d) of this section, PBGC may assess a late payment 
penalty charge based on the facts and circumstances, subject to waiver 
under Sec. 4007.8(b), (c), (d), or (e). The charge will not exceed the 
amount of termination premium not timely filed.
    (d) Due dates. Notwithstanding Sec. 4007.11, the due date for the 
termination premium is the 30th day of each of three applicable 12-month 
periods. The three applicable 12-month periods with respect to a DRA 
2005 termination of a plan are--
    (1) First applicable 12-month period. Except as provided in 
paragraph (e) or (f) of this section, the period of 12 calendar months 
beginning with the first calendar month following the calendar month in 
which occurs the plan's termination date, and
    (2) Subsequent applicable 12-month periods. Each of the first two 
periods of 12 calendar months that immediately follow the first 
applicable 12-month period.
    (e) Certain reorganization cases. (1) This paragraph (e) applies 
with respect to a DRA 2005 termination of a plan if the conditions in 
both paragraph (e)(2) and paragraph (e)(3) of this section are 
satisfied.
    (2) The condition of this paragraph (e)(2) is that either--
    (i) The plan terminates under section 4042 of ERISA, or
    (ii) The plan terminates under section 4041(c) of ERISA and at least 
one contributing sponsor or member of a contributing sponsor's 
controlled group meets the requirements of section 4041(c)(2)(B)(ii) of 
ERISA.
    (3) The condition of this paragraph (e)(3) is that as of the plan's 
termination date--
    (i) A bankruptcy proceeding has been filed by or against any person 
that was a contributing sponsor of the plan on the day before the plan's 
termination date or that was on that day a member of any controlled 
group of which any such contributing sponsor was a member,
    (ii) The proceeding is pending as a reorganization proceeding under 
chapter 11 of title 11, United States Code (or under any similar law of 
a State or political subdivision of a State), and
    (iii) The person has not been discharged from the proceeding.
    (4) If this paragraph (e) applies with respect to a DRA 2005 
termination of a plan, then except as provided in paragraph (f) of this 
section, the first applicable 12-month period with respect to the plan 
is the period of 12 calendar months beginning with the first calendar 
month following the calendar month in which occurs the earliest date 
when, for every person that was a contributing sponsor of the plan on 
the day before the plan's termination date, or that was on that day a 
member of any controlled group of which any such contributing sponsor 
was a member, either--
    (i) There is not pending any bankruptcy proceeding that was filed by 
or against such person and that was, as of the plan's termination date, 
a reorganization proceeding under chapter 11 of title 11, United States 
Code (or under any similar law of a State or political subdivision of a 
State), or
    (ii) The person has been discharged in any such proceeding, or
    (iii) The person no longer exists.
    (f) Plan termination date in past when set. If a plan's termination 
date is in the past when it is established by agreement or court action 
as described in section 4048 of ERISA, then the first applicable 12-
month period for determining the due dates of the termination premium 
begins with the later of--
    (1) The first calendar month following the calendar month in which 
the termination date is established by agreement or court action as 
described in section 4048 of ERISA, or

[[Page 947]]

    (2) The first calendar month specified in paragraph (d)(1) of this 
section or (if paragraph (e) of this section applies) paragraph (e)(4) 
of this section.
    (g) Liability for termination premiums. In the case of a DRA 2005 
termination of a plan, each person that was a contributing sponsor of 
the plan on the day before the plan's termination date, or that was on 
that day a member of any controlled group of which any such contributing 
sponsor was a member, is jointly and severally liable for termination 
premiums with respect to the plan.

[72 FR 71230, Dec. 17, 2007, as amended at 79 FR 13562, Mar. 11, 2014]



   Sec. Appendix to Part 4007--Policy Guidelines On Premium Penalties

Sec.

                           General Provisions

1  What is the purpose of this Appendix?
2  What defined terms are used in this Appendix?
3  What is the purpose of a premium penalty?
4  What information is in this Appendix and how is it organized?

                       Premium Penalty Assessment

[Reserved]

                            Waiver Standards

21  What are the standards for waiving a premium penalty?
22  What is ``reasonable cause''?
23  What kinds of facts does PBGC consider in determining whether there 
          is reasonable cause for a failure to pay a premium?
24  What are some situations that might justify a ``reasonable cause'' 
          waiver?
25  What are some situations that might justify a partial ``reasonable 
          cause'' waiver?

                               Procedures

[Reserved]

                           General Provisions

1  What is the purpose of this Appendix?
    This appendix sets forth principles and guidelines that we intend to 
follow in assessing, reviewing, and waiving premium penalties. However, 
this is only general policy guidance. Our action in each case is guided 
by the facts and circumstances of the case.
2  What defined terms are used in this Appendix?
    The following terms are defined in part 4001 of this chapter: 
contributing sponsor, ERISA, PBGC, person, plan, and plan administrator. 
In addition, in this appendix:
    (a) Premium penalty means a penalty under ERISA section 4007 and 
under this part for failing to pay a premium in full and on time.
    (b) Waiver means reduction or elimination of a premium penalty that 
is being or has been assessed.
    (c) We means PBGC.
    (d) You means, according to the context,--
    (1) A plan administrator, contributing sponsor, or other person, 
if--
    (i) The person's action or inaction may be the basis for a premium 
penalty assessment,
    (ii) The person may be required to pay the premium penalty, or
    (iii) The person is requesting review of the premium penalty; or
    (2) An employee or agent of, or advisor to, any of these persons.
3  What is the purpose of a premium penalty?
    The basic purpose of a premium penalty is to encourage you to pay 
premiums in full and on time and to voluntarily self-correct any failure 
to do so.
4  What information is in this Appendix and how is it organized?
    This Appendix has four divisions:
    (a) General provisions. The General Provisions division (Secs. 1-4) 
tells you the purpose and organization of the Appendix, the purpose of a 
premium penalty, and the definitions of terms used in the Appendix.
    (b) Premium penalty assessment. The Premium Penalty Assessment 
division is reserved.
    (c) Waiver standards. The Waiver Standards division (Secs. 21-25) 
explains the principles that PBGC follows in waiving premium penalties.
    (1) Reasonable cause. We waive premium penalties for reasonable 
cause, as explained in Secs. 22-25.
    (2) Other waivers. We also waive premium penalties in some other 
circumstances, such as mistake of law, as explained in Sec. 21.
    (d) Procedures. The Procedures division is reserved.

                       Premium Penalty Assessment

    [Reserved]

                            Waiver Standards

21  What are the standards for waiving a premium penalty?
    (a) Facts and circumstances. In deciding whether to waive a premium 
penalty in whole or in part under paragraph (b), we consider the facts 
and circumstances of each case.
    (b) Waivers.
    (1) Provisions of law. We waive all or part of a premium penalty if 
a statute or regulation requires that we do so. For example, ERISA 
section 4007(b) and Sec. 4007.8 of this part provide for a waiver in 
certain circumstances

[[Page 948]]

involving business hardship, and Sec. 4007.8 of this part also provides 
, and for a waiver of a premium penalty that accrues after the date of a 
bill for a premium underpayment if you pay the premium owed within 30 
days after the date of the bill, and for waivers in certain cases where 
you pay not more than a week late or where you estimate the variable-
rate premium and then timely correct any underpayment.
    (2) Reasonable cause. We waive a premium penalty if you show 
reasonable cause for a failure to pay a premium in full and on time. See 
Secs. 22 through 25 for guidelines on ``reasonable cause'' waivers. If 
there is reasonable cause for only part of a failure to pay a premium, 
we waive the premium penalty only for that part.
    (3) Legal errors. We may waive all or part of a premium penalty if 
the failure to pay a premium in full and on time that gives rise to the 
premium penalty results from certain kinds of legal errors.
    (i) Erroneous legal interpretation--disclosed. If a failure to pay a 
premium in full and on time results from your reliance on an erroneous 
interpretation of the law, we waive a premium penalty that arises from 
the failure if you promptly and adequately call our attention to the 
interpretation and the relevant facts, and the erroneous interpretation 
is not frivolous. If the interpretation affects a filing that you make 
with us, you should call our attention to the interpretation in writing 
with the filing. If you rely on the interpretation to justify not making 
a filing with us, you should call our attention to the interpretation in 
writing by the time prescribed for the filing not made.
    (ii) Erroneous legal interpretation--undisclosed. If a failure to 
pay a premium in full and on time results from your reliance on an 
erroneous interpretation of the law, and you do not promptly and 
adequately call our attention to the interpretation and the relevant 
facts, we may nevertheless waive a premium penalty if the weight of 
authority supporting the interpretation is substantial in relation to 
the weight of opposing authority and it is reasonable for you to rely on 
the interpretation.
    (iii) Recent change in the law. We may waive all or part of a 
premium penalty if the law changes shortly before the date a premium 
payment is due and the premium payment that you make by the due date 
would have been correct under the law as in effect before the change. In 
determining whether and to what extent to grant a waiver in a case of 
this kind, we consider such factors as the length of time between the 
change in the law and the premium due date, the nature and timing of any 
publicity given to the change in the law, the complexity of the legal 
issues, and your general familiarity with those issues.
    (4) Pendency of PBGC procedures. We may waive all or a part of a 
premium penalty that is attributable to the pendency of PBGC review or 
other procedures. For example:
    (i) If you request review of a premium penalty, and you make a non-
frivolous argument in your request for review that you were not required 
to pay the premium or that you were, and still are, unable to obtain the 
information needed to determine the premium, we may waive the portion of 
the premium penalty that accrues during the review process. If you make 
such a non-frivolous argument with respect to a portion of the premium, 
we may apply this principle to that portion.
    (ii) We may waive all or a part of a premium penalty if we believe 
that the pendency of PBGC procedures for identifying a premium 
delinquency and notifying you of the delinquency contributed to your 
failure to correct the delinquency more promptly.
    (5) Other circumstances. We may waive all or part of a premium 
penalty in other circumstances if we determine that it is appropriate to 
do so.
    (c) Action or inaction of outside parties. In some cases an 
accountant, actuary, lawyer, pension consultant, or other individual or 
firm that is not part of your organization may assist you in complying 
with PBGC requirements. If the outside individual's or firm's action, 
inaction, or advice causes or contributes to a failure to pay a premium 
in full and on time, we apply our waiver authority as if the outside 
individual or firm were part of your organization. In the case of an 
outside individual who is part of a firm, we generally consider both the 
individual and the firm to be part of your organization.
22  What is ``reasonable cause''?
    (a) General rule. In general, there is ``reasonable cause'' for a 
failure to pay a premium in full and on time to the extent that--
    (1) The failure arises from circumstances beyond your control, and
    (2) You could not avoid the failure by the exercise of ordinary 
business care and prudence.
    (b) Overlooking legal requirements. Overlooking legal requirements 
does not constitute reasonable cause.
    (c) Action or inaction of outside parties. If an accountant, 
actuary, lawyer, pension consultant, or other individual or firm that is 
not part of your organization assists you in complying with PBGC 
requirements, there is generally no reasonable cause for a failure to 
pay a premium in full and on time that arises from circumstances within 
the control of the outside individual or firm, or could be avoided by 
the exercise of ordinary business care and prudence by the outside 
individual or firm. The fact that you exercised care and prudence in 
selecting and monitoring the

[[Page 949]]

outside individual or firm is not a basis for a reasonable cause waiver.
    (d) Size of organization. If an organization or one or more of its 
employees is responsible for taking action, the size of the organization 
may affect what ordinary business care and prudence would require. For 
example, ordinary business care and prudence would typically require a 
larger organization to establish more comprehensive backup procedures 
than a smaller organization for dealing with situations such as computer 
failure, the loss of important records, and the inability of an 
individual to carry out assigned responsibilities. Thus, there may be 
reasonable cause for a small organization's failure to pay a premium in 
full and on time even though, if the organization were larger, the 
exercise of ordinary business care and prudence would have avoided the 
failure.
    (e) Size of premium underpayment. In general, the larger a premium, 
the more care and prudence you should use to make sure that you pay it 
in full and on time. Thus, there may be reasonable cause for a small 
underpayment even though, under the same circumstances, we would 
conclude that a larger underpayment could have been avoided by the 
exercise of ordinary business care and prudence.
    (f) Collection and enforcement. In determining whether reasonable 
cause exists, we do not consider either--
    (i) The likelihood or cost of collecting the premium penalty, or
    (ii) The costs and risks of enforcing the premium penalty by 
litigation.
23  What kinds of facts does PBGC consider in determining whether there 
          is reasonable cause for a failure to pay a premium?
    In determining the extent to which a failure to pay a premium in 
full and on time arose from circumstances beyond your control and the 
extent to which you could have avoided the failure by the exercise of 
ordinary business care and prudence--and thus the extent to which waiver 
of a premium penalty for reasonable cause is appropriate--we consider 
facts such as the following:
    (a) What event or circumstance caused the underpayment and when the 
event happened or the circumstance arose. The dates you give should 
clearly correspond with the underpayment upon which the premium penalty 
is based.
    (b) How that event or circumstance kept you from paying the premium 
in full and on time. The explanation you give should relate directly to 
the failure to pay a premium that is the subject of the premium penalty.
    (c) Whether you could have anticipated the event or circumstance.
    (d) How you responded to the event or circumstance, including what 
steps you took, and how quickly you took them, to pay the premium and 
how you conducted other business affairs. Knowing how you responded to 
the event or circumstance may help us determine what degree of business 
care and prudence you were capable of exercising during that period and 
thus whether the failure to pay the premium could or could not have been 
avoided by the exercise of ordinary business care and prudence.
24  What are some situations that might justify a ``reasonable cause'' 
          waiver?
    The following examples illustrate some of the reasons often given 
for failures to pay premiums for which we may assess penalties. The 
situation described in each example may constitute reasonable cause, and 
each example lists factors we consider in determining whether to grant a 
premium penalty waiver for reasonable cause in a case of that kind.
    (a) An individual with responsibility for taking action was suddenly 
and unexpectedly absent or unable to act. We consider such factors as 
the following: The nature of the event that caused the individual's 
absence or inability to act, for example, the resignation of the 
individual or the death or serious illness of the individual or a member 
of the individual's immediate family; the size of the organization and 
what kind of backup procedures it had to cope with such events; how 
close the event was to the deadline that was missed; how abrupt and 
unanticipated the event was; how the individual's absence or inability 
to act prevented compliance; how expensive it would have been to comply 
without the absent individual; whether and how other business operations 
and obligations were affected; how quickly and prudently a replacement 
for the absent individual was selected or other arrangements for 
compliance were made; and how quickly a replacement for the absent 
individual took appropriate action.
    (b) A fire or other casualty or natural disaster destroyed relevant 
records or prevented compliance in some other way. We consider such 
factors as the following: The nature of the event; how close the event 
was to the deadline that was missed; how the event caused the failure to 
pay the premium; whether other efforts were made to get needed 
information; how expensive it would have been to comply; and how you 
responded to the event.
    (c) You reasonably relied on erroneous oral or written advice given 
by a PBGC employee. We consider such factors as the following: Whether 
there was a clear relationship between your situation and the advice 
sought; whether you provided the PBGC employee with adequate and 
accurate information; and whether the surrounding circumstances should 
have led you to question the correctness of the advice or information 
provided.
    (d) You were unable to obtain information, including records and 
calculations, needed to comply. We consider such factors as the 
following: What information was needed; why the information was 
unavailable; when and

[[Page 950]]

how you discovered that the information was not available; what attempts 
you made to get the information or reconstruct it through other means; 
and how much it would have cost to comply.
25  What are some situations that might justify a partial ``reasonable 
          cause'' waiver?
    (a) Assume that a fire destroyed the records needed to compute a 
premium payment. If in the exercise of ordinary business care and 
prudence it should take you one month to reconstruct the records and pay 
the premium, but the payment was made two months late, it might be 
appropriate to waive that part of the premium penalty attributable to 
the first month the payment was late, but not the part attributable to 
the second month.
    (b) Assume that a plan administrator underpaid the plan's flat-rate 
premium because of reasonable reliance on erroneous advice from a PBGC 
employee, and also underpaid the plan's variable-rate premium because 
the plan actuary used the wrong interest rate. A PBGC audit revealed 
both errors. PBGC billed the plan for a premium penalty of $5,000--
$1,000 for underpayment of the flat-rate premium and $4,000 for 
underpayment of the variable-rate premium. The plan administrator 
requested a waiver of the premium penalty. While the erroneous PBGC 
advice constituted reasonable cause for underpaying the flat-rate 
premium, there was no showing of reasonable cause for the error in the 
variable-rate premium. Therefore, we would waive only the part of the 
premium penalty based on underpayment of the flat-rate portion of the 
premium ($1,000).

                               Procedures

    [Reserved]

[71 FR 66869, Nov. 17, 2006, as amended at 79 FR 13562, Mar. 11, 2014]

[[Page 951]]



       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.
4010.12  Alternative method of compliance for certain sponsors of 
          multiple employer plans.
4010.13  Confidentiality of information submitted.
4010.14  Penalties.
4010.15  OMB control number.

    Authority: 29 U.S.C. 1302(b)(3), 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 PBGC 
under ERISA section 4010.

[61 FR 34022, July 1, 1996, as amended at 74 FR 11029, Mar. 16, 2009]



Sec. 4010.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
earliest retirement age at valuation date, ERISA, expected retirement 
age (XRA), fair market value, IRS, PBGC, person, plan, plan year, and 
unreduced retirement age (URA).
    In addition, for purposes of this part:
    At-risk status means, with respect to a plan for a plan year, at-
risk status as defined in ERISA section 303(i)(4) and Code section 
430(i)(4).
    Exempt entity means a person that does not have to file information 
and about which information does not have to be filed, as described in 
Sec. 4010.4(c).
    Exempt plan means a plan about which actuarial information does not 
have to be filed, as described in Sec. 4010.8(c).
    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.
    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.
    4010 funding target attainment percentage means, with respect to a 
plan for a plan year, the percentage as determined under Sec. 4010.4(b) 
for the plan year.
    Funding target means, with respect to a plan for a plan year, the 
funding target as provided under ERISA section 303(d)(1) and Code 
section 430(d)(1) determined as of the valuation date for the plan year.
    Information year means the information year determined under 
Sec. 4010.5.
    Valuation date means, with respect to a plan for a plan year, the 
valuation date as determined under ERISA section 303(g)(2) and Code 
section 430(g)(2).

[61 FR 34022, July 1, 1996, as amended at 74 FR 11029, Mar. 16, 2009; 81 
FR 15439, Mar. 23, 2016]



Sec. 4010.3  Filing requirement.

    (a) General. Except as provided in Sec. 4010.8(c) (relating to 
exempt plans) and except where one or more waivers under Sec. 4010.11 
apply, each filer must submit to 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 the filer's controlled group. Under 
Sec. 4000.3(b) of this chapter, except as otherwise provided by PBGC, 
the information must be submitted electronically in accordance with the 
instructions on PBGC's Web site, http://www.pbgc.gov.
    (b) Single controlled group submission. Any filer or other person 
may submit

[[Page 952]]

the information specified in Sec. 4010.6(a) on behalf of one or more 
members of a filer's controlled group.

[70 FR 11544, Mar. 9, 2005, as amended at 74 FR 11029, Mar. 16, 2009]



Sec. 4010.4  Filers.

    (a) General. Unless a waiver in Sec. 4010.11 of this part applies, a 
contributing sponsor of a plan and each member of the contributing 
sponsor's controlled group on the last day of the information year is a 
filer with respect to an information year (unless exempted under 
paragraph (c) of this section) if--
    (1) For any plan (including an exempt plan) maintained by the 
members of the contributing sponsor's controlled group on the last day 
of the information year, the 4010 funding target attainment percentage 
for the plan year ending within the information year is less than 80 
percent;
    (2) Any member of the 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 ERISA section 303(k) or 
306(g) and Code section 430(k) or 433(g) have 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 the controlled group has been 
granted one or more minimum funding waivers under ERISA section 302(c) 
and Code section 412(c) totaling in excess of $1 million, and as of the 
end of the plan year ending within the information year, any portion 
thereof is still outstanding.
    (b) 4010 Funding target attainment percentage--(1) General. The 4010 
funding target attainment percentage for a plan for a plan year equals 
the funding target attainment percentage as provided under ERISA section 
303(d)(2) and Code section 430(d)(2) determined without regard to the 
interest rate stabilization provisions of ERISA section 303(h)(2)(C)(iv) 
and Code section 430(h)(2)(C)(iv).
    (2) Assets used to determine 4010 funding target attainment 
percentage. For purposes of determining the 4010 funding target 
attainment percentage for a plan for the plan year, the value of plan 
assets determined under ERISA section 303(g)(3) and Code section 
430(g)(3) may (but need not) be substituted for the asset value 
determined without regard to the interest rate stabilization provisions 
of ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv).
    (3) Prefunding balance and funding standard carryover balance 
elections. For purposes of determining the 4010 funding target 
attainment percentage for a plan for the plan year, prefunding balances 
and funding standard carryover balances must reflect any elections (or 
deemed elections) under ERISA section 303(f) and Code section 430(f) 
that affect the value of such balances as of the beginning of the plan 
year, regardless of when the elections (or deemed elections) are made.
    (c) Exempt entities. A person is an exempt entity for an information 
year if the conditions of paragraphs (c)(1) through (4) of this section 
are satisfied.
    (1) The person is not a contributing sponsor of a plan (other than 
an exempt plan) as of the last day of the information year.
    (2) The person has revenue for its fiscal year ending within the 
controlled group's information year that is five percent or less of the 
revenue of the person's controlled group for the fiscal year(s) ending 
within the information year.
    (3) The person 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.
    (4) The person 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.
    (d) Minimum funding waiver--(1) General. For purposes of 
Sec. 4010.4(a)(3), a portion of the minimum funding waiver

[[Page 953]]

for a plan is considered outstanding unless prior to the plan year 
ending within the information year the statutory amortization period has 
ended, or, as of the valuation date for the plan year ending within the 
information year, the amortization bases are deemed to be reduced to 
zero pursuant to ERISA section 303(e)(5) and Code section 430(e)(5).
    (2) Example. Company A sponsors Plan X, which received a minimum 
funding waiver of $700,000 for the plan year ending December 31, 2004, 
and another waiver of $500,000 for the plan year ending December 31, 
2008. Assume that the amortization bases of the waivers are not reduced 
to zero pursuant to ERISA section 303(e)(5) and Code section 430(e)(5), 
and the waivers are therefore outstanding for the full five-year 
statutory amortization period. Also, assume Company A has a calendar 
information year. For the 2009 information year, Company A must report 
under ERISA section 4010. However, for the 2010 information year, 
Company A, assuming no other obligation to report under ERISA section 
4010, is not required to report.
    (e) Certain plans to which special funding rules apply. Except for 
purposes of determining the information to be submitted under 
Sec. 4010.8(h) (in connection with the actuarial valuation report), the 
following statutory provisions are disregarded for purposes of this 
part:
    (1) Section of 402(b) of the Pension Protection Act of 2006, Public 
Law 109-280, dealing with certain frozen plans of commercial passenger 
airlines and airline caterers.
    (2) Section 104 of the Pension Protection Act of 2006 as amended by 
the Preservation of Access to Care for Medicare Beneficiaries and 
Pension Relief Act of 2010, Public Law 111-192, dealing with eligible 
charity plans and plans of certain rural cooperatives.
    (3) The Cooperative and Small Employer Charity Pension Flexibility 
Act, Public Law 113-97, dealing with certain defined benefit pension 
plans maintained by certain cooperatives and charities.

[74 FR 11030, Mar. 16, 2009, as amended at 81 FR 15439, Mar. 23, 2016]



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-
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 is 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-- If 
members of a controlled group (disregarding any exempt entity) report 
financial information on the basis of different fiscal years, the 
information year is the calendar year. (If any two members of the 
controlled group report financial information on the basis of different 
fiscal years, the determination of whether an entity is an exempt entity 
is based on a calendar year information year for purposes of this 
paragraph (c) and Sec. 4010.4(c).)
    (d) Examples. The following examples illustrate the rule in 
paragraph (c) of this section.
    (1) Example 1. Companies A and B are the only members of the same 
controlled group, and both are contributing sponsors to nonexempt plans. 
Company A has a July 1 fiscal year, and Company B has an October 1 
fiscal year. The information year is the calendar year. Company A's 
financial information with respect to its fiscal year ending June 30, 
2009, and Company B's financial information with respect to its fiscal 
year ending September 30, 2009, must be submitted to the PBGC following 
the end of the 2009 calendar year information year.
    (2) Example 2. The facts are the same as in Example 1 except that 
Company B is not a contributing sponsor of a plan and would be an exempt 
entity using the calendar year as the information year. Because Company 
B is an exempt

[[Page 954]]

entity based on a calendar year information year, it is excluded when 
determining the information year. Thus, the information year is the July 
1 fiscal year. Note that Company B is an exempt entity even if it would 
not be exempt based on the July information year.
    (3) Example 3. The facts are the same as in Example 2 except that 
Company B would not be an exempt entity using the calendar year 
information year but would be exempt based on an information year that 
is the July 1 fiscal year. Since Company B is not exempt based on a 
calendar year information year, it may not be excluded when determining 
the information year. Therefore, the information year is the calendar 
year and Company B is not an exempt entity.
    (e) Special rules for certain plan years. If a plan maintained by 
the members of the contributing sponsor's controlled group has two plan 
years that end in the information year or has no plan year that ends in 
the information year, the last plan year ending on or immediately before 
the end of information year is deemed to be the plan year ending within 
the information year.

[61 FR 34022, July 1, 1996, as amended at 70 FR 11544, Mar. 9, 2005; 74 
FR 11031, Mar. 16, 2009]



Sec. 4010.6  Information to be filed.

    (a) General--(1) Current filers. 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) with 
respect to each member of the filer's controlled group and each plan 
maintained by any member of the filer's controlled group, and any other 
information relating to the information specified in Secs. 4010.7 
through 4010.9, as specified in the instructions on PBGC's Web site, 
http://www.pbgc.gov.
    (2) Previous filers. If a filer for the immediately preceding 
information year is not required to file for the current information 
year, the filer must submit information, in accordance with the 
instructions on PBGC's Web site, http://www.pbgc.gov, demonstrating why 
a filing is not required for the current information year.
    (b) Additional information. By written notification, 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 (including information on exempt entities and 
exempt plans). 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 PBGC, a filer may incorporate this information 
into the required submission by referring to the previous submission.

[61 FR 34022, July 1, 1996, as amended at 70 FR 11544, Mar. 9, 2005; 74 
FR 11031, Mar. 16, 2009]



Sec. 4010.7  Identifying information.

    (a) Filers. Each filer is required to provide, in accordance with 
the instructions on PBGC's Web site, http://www.pbgc.gov, the following 
identifying information with respect to each member of the filer's 
controlled group (excluding exempt entities)--
    (1) Current members. For an entity that is a member of the 
controlled group as of the end of the filer's information year--
    (i) The name, address, and telephone number of the entity and the 
legal relationships with other members of the controlled group (for 
example, parent, subsidiary);
    (ii) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the entity (or if there is no EIN for the entity, an 
explanation); and
    (iii) If the entity became a member of the controlled group during 
the information year, the date the entity became a member of the 
controlled group; and
    (2) Former members. For any entity that ceased to be a member of the 
controlled group during the filer's information year, the date the 
entity ceased to be a member of the controlled group

[[Page 955]]

and the identifying information required by paragraph (a)(1) of this 
section as of the day before the entity left the controlled group.
    (b) Plans. Each filer is required to provide, in accordance with the 
instructions on PBGC's Web site, http://www.pbgc.gov, the following 
identifying information with respect to each plan (including exempt 
plans) maintained by any member of the filer's controlled group 
(including exempt entities)--
    (1) Current plans. For a plan that is maintained by the controlled 
group as of the last day of the filer's information year--
    (i) The name of the plan;
    (ii) The EIN and the three-digit Plan Number (PN) assigned by the 
contributing sponsor to the plan (or if there is no EIN or PN for the 
plan, an explanation);
    (iii) If the EIN or PN of the plan has changed during the filer's 
information year, the previous EIN or PN and an explanation;
    (iv) If the plan was not maintained by the controlled group 
immediately before the filer's information year, the date the plan was 
first maintained by the controlled group during the information year;
    (v) If, as of any day during the information year, the plan was 
frozen (for eligibility or benefit accrual purposes), a description of 
the date and the nature of the freeze (e.g., service is frozen but pay 
is not); and
    (vi) In the case of a multiple employer plan, a list of the 
contributing sponsors as of the end of the plan year ending within the 
filer's information year, including the name, employer identification 
number, contact information, fiscal year, and a statement as to whether 
each contributing sponsor is a publicly-traded company; and
    (2) Former plans. For a plan that ceased to be maintained by the 
controlled group during the filer's information year, the date the plan 
ceased to be so maintained, identification of the controlled group 
currently maintaining the plan (if applicable), and the identifying 
information required by paragraph (b)(1) of this section as of the day 
before that date.

[70 FR 11544, Mar. 9, 2005, as amended at 74 FR 11031, Mar. 16, 2009]



Sec. 4010.8  Plan actuarial information.

    (a) Required information. Except as provided elsewhere in this part, 
for each plan (other than an exempt plan) maintained by any member of 
the filer's controlled group, each filer is required to provide, in 
accordance with the instructions on PBGC's Web site, http://
www.pbgc.gov, the following actuarial information determined (except as 
specified below) as of the end of plan year ending within the filer's 
information year--
    (1) The number of--
    (i) Retired participants and beneficiaries receiving payments,
    (ii) Terminated vested participants, and
    (iii) Active participants;
    (2) The fair market value of the plan's assets (excluding any 
contributions received after year-end);
    (3) The amount of benefit liabilities under the plan, setting forth 
separately the amount of the liabilities attributable to retired 
participants and beneficiaries receiving payments, terminated vested 
participants, and active participants, determined, for this purpose in 
accordance with paragraph (d) of this section;
    (4) A description of the actuarial assumptions used to determine the 
benefit liabilities in paragraph (a)(3) of this section;
    (5) The at-risk funding target for the plan year ending within the 
information year determined under ERISA section 303(i) and Code section 
430(i)--
    (i) As if the plan has been in at-risk status for a consecutive 
period of at least five years, and
    (ii) Without regard to the interest rate stabilization provisions of 
ERISA section 303(h)(2)(C)(iv) and Code section 430(h)(2)(C)(iv);
    (6) The 4010 funding target attainment percentage (as of the 
valuation date) for the plan year ending within the information year;
    (7) The adjusted funding target attainment percentage as defined in 
ERISA section 206(g)(9)(B) and Code section 436(j)(2) for the plan year 
ending within the information year;
    (8) Whether the plan, at any time during the plan year, was subject 
to any of the limitations described in ERISA section 206(g) and Code 
section

[[Page 956]]

436, and, if so, which limitations applied, when such limitations 
applied, and when (if applicable) they were lifted;
    (9) Whether a required installment or other required payment to the 
plan was not made, and, as a result, a lien described in ERISA section 
303(k) or 306(g) and Code section 430(k) or 433(g) was triggered during 
the information year, and the required installment or other required 
payment was not made within ten days after its due date;
    (10) Whether any portion of the total minimum funding waiver(s) in 
excess of $1 million granted with respect to such plan is outstanding;
    (11) A copy of the actuarial valuation report for the plan year 
ending within the filer's information year that contains or is 
supplemented by the following information for that plan year--
    (i) The funding target calculated pursuant to ERISA section 303 
without regard to subsection 303(i)(1) (and Code section 430 without 
regard to subsection 430(i)(1)), setting forth separately the value of 
the liabilities attributable to retirees and beneficiaries receiving 
payment, terminated vested participants, and active participants 
(showing vested and nonvested benefits separately);
    (ii) A summary of the actuarial assumptions and methods used for 
purposes of ERISA section 303 and Code section 430, including the form 
of payment and benefit commencement date assumptions for all active and 
deferred vested participants not yet receiving benefits, information on 
how lump sums are valued (for plans that provide lump sums other than de 
minimis lump sums), and any changes in those assumptions and methods 
since the previous valuation and the justifications for such changes.
    (iii) The effective interest rate (as defined in ERISA section 
303(h)(2)(A) and Code section 430(h)(2)(A));
    (iv) The target normal cost calculated pursuant to ERISA section 303 
without regard to subsection 303(i)(2) (and Code section 430 without 
regard to subsection 430(i)(2));
    (v) For the plan year and each of the four preceding plan years, a 
statement as to whether the plan was in at-risk status for that plan 
year;
    (vi) In the case of a plan that is in at-risk status, the target 
normal cost and funding target calculated pursuant to ERISA section 303 
and Code section 430 as if the plan has been in at-risk status for five 
consecutive years;
    (vii) The value of the plan's assets (reflecting any averaging 
method) as of the valuation date and the fair market value of the plan's 
assets as of the valuation date;
    (viii) The funding standard carryover balance and the prefunding 
balance (maintained pursuant to ERISA section 303(f)(1) and Code section 
430(f)(1)) as of the beginning of the plan year and a summary of any 
changes in such balances in the past year (e.g., amounts used to offset 
the minimum funding requirement, amounts reduced in accordance with any 
elections under ERISA section 303(f)(5) and Code section 430(f)(5), 
interest credited to such balances, and excess contributions used to 
increase such balances);
    (ix) A list of amortization bases (shortfall and waiver) under ERISA 
section 303 and Code section 430, including the year each base was 
established, the original amount, the installment amount, and the 
remaining balance at the beginning of the plan year;
    (x) An age/service scatter for active participants including average 
compensation information for pay-related plans and average account 
balance information for hybrid plans presented in a format similar to 
that described in the instructions to Schedule SB of the Form 5500;
    (xi) Expected disbursements (benefit payments and expenses) during 
the plan year;
    (xii) 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 the plan year, and the plan's early retirement factors; 
in the case of a plan that provides lump sums, other than de minimis 
lump sums, the summary must include information on how annuity benefits 
are converted to lump sum

[[Page 957]]

amounts (e.g., whether early retirement subsidies are reflected); and
    (xiii) Any other similar information as specified in instructions on 
PBGC's Web site, http://www.pbgc.gov; and
    (12) 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 301.6059-1(d).
    (b) Alternative methods of compliance--(1) At-risk funding target. 
Notwithstanding any other provision of this section, a filer is not 
required to provide the information specified in paragraph (a)(5) of 
this section for the plan year for which actuarial information is being 
reported unless PBGC requests in writing that the information be 
provided, in which case the filer must provide the information within 30 
days of such request or such later date as PBGC specifies in the 
request.
    (2) Actuarial valuation report. If any of the information specified 
in paragraph (a)(11) 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--
    (i) Including a statement, with the material that is submitted to 
PBGC, that the filer will file the unavailable information by the 
alternative due date specified in Sec. 4010.10(b), and
    (ii) Filing such information (along with a certification by an 
enrolled actuary under paragraph (a)(12) of this section) with PBGC by 
that alternative due date.
    (c) Exempt plan. The actuarial information specified in this section 
is not required with respect to a plan if the plan satisfies the 
conditions in paragraph (c)(1) through (3).
    (1) The plan--
    (i) Has fewer than 500 participants as of the end of the plan year 
ending within the information year or as of the valuation date for that 
plan year and has a 4010 funding shortfall (as defined in 
Sec. 4010.11(a)(1)) for the plan year ending within the information year 
that is not in excess of $15 million, or
    (ii) Has benefit liabilities as of the end of the plan year ending 
within the filer's information year, (determined in accordance with 
paragraph (d) of this section) equal to or less than the fair market 
value of the plan's assets.
    (2) The plan has received, by or within ten days after the due 
dates, all required installments or other payments required to be made 
during the information year under ERISA sections 302 and 303 and Code 
sections 412 and 430.
    (3) The plan has no outstanding minimum funding waivers (as 
described in Sec. 4010.4(a)(3)) 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 must 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 must 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 are 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 are required where there has been a significant event (such as a 
plan amendment or a plant shutdown) that has not been reflected in the 
projection data.
    (2) Actuarial assumptions and methods. The value of benefit 
liabilities must be determined using the following rules in paragraphs 
(d)(2)(i) through (iv) of this section:
    (i) Assumptions included in Secs. 4044.51 through 4044.57. Interest, 
form of payment, expenses, mortality and retirement assumptions must be 
as prescribed in Secs. 4044.51 through 4044.57 of this chapter.

[[Page 958]]

    (ii) Assumptions not included in Secs. 4044.51 through 4044.57. 
Assumptions for decrements other than mortality and retirement (such as 
turnover or disability) used to determine the minimum required 
contribution under ERISA section 303 and Code section 430 for the plan 
year ending within the filer's information year may be used, but only if 
all such assumptions are used. For plans where there is no distinction 
between termination and retirement assumptions, any termination/
retirement rates at ages after the Earliest PBGC Retirement Date (as 
defined in Sec. 4022.10 of this chapter) must be treated as retirement 
rates and replaced by expected retirement ages; termination/retirement 
rates at ages below the Earliest PBGC Retirement Date must be treated as 
pre-retirement decrements. Assumptions used to determine the minimum 
required contribution for the plan year ending within the filer's 
information year, other than assumptions for decrements, interest, form 
of payment and expenses (e.g., cost-of-living increases, marital 
status), must be used.
    (iii) Benefits to be valued. Benefits to be valued include all 
benefits earned or accrued under the plan as of the end of the plan year 
ending within the information year and other benefits payable from the 
plan including, but not limited to, ancillary benefits and retirement 
supplements, regardless of whether such benefits are protected by the 
anti-cutback provisions of Code section 411(d)(6).
    (iv) Future service. Future service expected to be accrued by an 
active participant in an ongoing plan during future employment (based on 
the assumptions used to determine benefit liabilities) must be included 
in determining the earliest and unreduced retirement ages used to 
determine the expected retirement age and in determining an active 
participant's entitlement to early retirement subsidies and supplements 
at the expected retirement age. See the examples in paragraph (e) of 
this section.
    (3) Special actuarial assumptions for exempt plan determination. 
Solely for purposes of determining whether a plan is an exempt plan for 
an information year, the value of benefit liabilities may be determined 
by substituting for the retirement age assumptions in paragraph (d)(2) 
of this section the retirement age assumptions used by the plan for the 
plan year ending within the information year for purposes of section 303 
of ERISA without regard to the at-risk assumption of subsection 303(i) 
of ERISA and Code section 430 without regard to the at-risk assumption 
of subsection 430(i).
    (e) Examples. The following examples demonstrate how XRA is 
determined and applied for purposes of determining benefit liabilities 
under paragraph (d) of this section:
    (1) Example 1--(i) Facts. Plan X has a normal retirement age of 65, 
but allows benefits to commence as early as age 55 for participants who 
complete at least 10 years of service before termination. Early 
retirement benefits are reduced for participants with fewer than 25 
years of service. Employee A is an active participant who is age 40 and 
has completed 5 years of service. Assume the ``medium'' XRA look-up 
table applies, and that for purposes of Sec. 4010.8(d), the filer has 
decided not to take pre-retirement decrements other than mortality table 
into account as permitted under Sec. 4010.8(d)(2)(i).
    (ii) Determination of XRA. If A continues working, the earliest age 
A could start receiving benefit is age 55. Therefore, A's earliest 
retirement age at valuation (ERA) is 55. Because the earliest that A can 
receive an unreduced benefit is when A completed 25 years of service (at 
age 60), A's URA is age 60. Under the medium XRA look-up table, A's XRA 
is 58.
    (iii) Determination of Benefit Liabilities. The benefit liability is 
the present value of A's benefit accrued as of the measurement date 
assuming A retires at age 58 and elects to have benefits commence 
immediately. Since A will not be eligible to receive unreduced benefits 
at that time, the accrued benefit is reduced in accordance with the 
plan's early retirement reduction provisions, including any subsidies to 
which A will be entitled under the assumption that A works until age 58.
    (2) Example 2. Employee B is also an active participant in plan X 
and is age

[[Page 959]]

40 with 15 years of service. B will complete 25 years of service at age 
50. However, because the plan does not allow for benefit commencement 
before age 55, B's ERA, URA and thus, XRA are all age 55. The benefit 
liability is the present value of B's benefit accrued as of the 
measurement date assuming B retires at age 55 and elects to commence 
benefits immediately. Since B will be eligible to receive an unreduced 
benefit at that time, the full unreduced benefit amount is valued.
    (3) Example 3--(i) Facts. Assume the same facts as in Example 1, 
except that for purposes of Sec. 4010.8(d), the filer has decided to 
take pre-retirement decrements other than mortality into account as 
permitted under Sec. 4010.8(d)(2)(i). Assume the only pre-retirement 
decrement other than mortality is turnover. The plan's turnover rates go 
from age 21 to age 54, and the retirement rates go from age 55 to age 
65.
    (ii) Determination of XRA. If A terminates employment at or before 
age 45, A will not be eligible to receive benefits until age 65. 
Therefore, the portion of Employee A that is assumed to terminate before 
age 45 has an ERA, URA, and XRA of age 65. The portion of A that remains 
in service to age 45, after the application of the applicable turnover 
decrements, and then terminates at or after age 45, but before age 55, 
will be entitled to receive a reduced benefit as early as 55. Therefore, 
the portion of A that is assumed to terminate during this period has an 
ERA of 55, a URA of 65 and an XRA of 60. Since the turnover rates stop 
at age 55, the portion of A that remains in service to age 55 is assumed 
to remain in service until the XRA for that portion of A. For that 
portion of A, the ERA is 55, the URA is 60 and the XRA is 58. (For 
purposes of Sec. 4010.8(d), the plan's assumed retirement rates are 
replaced by XRAs.)
    (iii) Determination of benefit liabilities. The benefit liability of 
A is the sum of the present value of A's full accrued benefit at age 65 
for the portion of A that terminates between age 40 and age 45, the 
present value of A's accrued benefit reduced for commencement at age 60 
for the portion of A that terminates between age 45 and age 54, and the 
present value of A's accrued benefit reduced for commencement at age 58 
for the portion of A that remains employed until age 55.
    (4) Example 4. Assume the same facts as in Example 3, except that 
Employee B, the sole active participant, is age 40 with 15 years of 
service. The portion of B that is assumed to terminate before age 50 
would be entitled to receive a reduced benefit as early as age 55 or an 
unreduced benefit at age 65. That portion of B has an ERA of 55, a URA 
of 65, and an XRA of 60. The benefit liability for that portion of B is 
the present value of B's benefit accrued as of the measurement date 
assuming B commences a reduced benefit at age 60. The portion of B that 
survives to age 50 would be entitled to receive an unreduced benefit as 
early as age 55. That portion of B has an ERA, URA and XRA of 55. The 
benefit liability for this portion of B is the present value of B's 
benefit accrued as of the measurement date assuming B retires and 
commences unreduced payments at age 55.
    (f) Multiple employer plans. If, with respect to a multiple employer 
plan, the actuarial information required under this section 4010 for the 
plan year ending within the filer's information year has been filed 
under part 4010 by another filer, the filer may include this actuarial 
information by reference. The filer must report the name, EIN and plan 
number of the multiple employer plan and the name of the other filer 
that submitted this information.
    (g) Previous filing for plan year. If the actuarial information for 
the plan year as required under this Sec. 4010.8 has been submitted by 
the filer in a previous 4010 submission, the filing may include that 
actuarial information by reference to the previous submission.
    (h) Plans subject to special funding rules. Instead of the 
requirements of paragraph (a)(11) of this section:
    (1) In the case of a plan year for which a plan is subject to 
section 402(b) of the Pension Protection Act of 2006, Public Law 109-
280, dealing with certain frozen plans of commercial passenger airlines 
and airline caterers, the plan must meet the requirements in

[[Page 960]]

connection with the actuarial valuation report in accordance with 
instructions on PBGC's Web site, http://www.pbgc.gov.
    (2) In the case of a plan year for which the application of new 
funding rules is deferred for a plan under section 104 of the Pension 
Protection Act of 2006, Public Law 109-280, as amended by the 
Preservation of Access to Care for Medicare Beneficiaries and Pension 
Relief Act of 2010, Public Law 111-192, dealing with eligible charity 
plans and plans of certain rural cooperatives, the plan must meet the 
requirements in paragraph (a)(5) of this section (in connection with the 
actuarial valuation report) in effect as of December 31, 2007.
    (3) In the case of a plan year for which a plan is subject to the 
Cooperative and Small Employer Charity Pension Flexibility Act, Public 
Law 113-97, dealing with certain defined benefit pension plans 
maintained by more than one employer, the plan must meet the 
requirements in connection with the actuarial valuation report in 
accordance with instructions on PBGC's Web site, http://www.pbgc.gov.

[74 FR 11031, Mar. 16, 2009, as amended at 81 FR 15439, Mar. 23, 2016]



Sec. 4010.9  Financial information.

    (a) General. Except as provided in this section, each filer is 
required to provide, in accordance with the instructions on PBGC's Web 
site, http://www.pbgc.gov, the following financial information for each 
member of the filer's controlled group (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 (other than an exempt entity), the member'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 they are prepared. If federal tax returns 
are submitted as provided in paragraph (a)(3) of this section, audited 
and unaudited financial statements, if prepared 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 
PBGC, may include a statement with the other information that is 
submitted to PBGC indicating when such financial information was made 
available to the public and where 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

[[Page 961]]

include financial information of persons who are not controlled group 
members (e.g., joint ventures) or are exempt entities.

[61 FR 34022, July 1, 1996, as amended at 70 FR 11545, Mar. 9, 2005; 74 
FR 11034, Mar. 16, 2009]



Sec. 4010.10  Due date and filing with the PBGC.

    (a) Due date. Except as permitted under paragraph (b) of this 
section, a filer must file the information required under this part with 
PBGC on or before the 105th day after the close of the filer's 
information year. The filing deadline is extended to the 106th date 
after the close of the filer's information year if the 105-day reporting 
period includes February 29.
    (b) Alternative due date. A filer that includes the statement 
specified in Sec. 4010.8(b)(1) with its submission to 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 and where to file.PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with PBGC under this part. See Sec. 4000.4 of this chapter for 
information on where to file.
    (d) Date of filing.PBGC applies the rules in subpart C of part 4000 
of this chapter to determine the date that a submission under this part 
was filed with PBGC.
    (e) Computation of time.PBGC applies the rules in subpart D of part 
4000 of this chapter to compute any time period under this part.

[61 FR 34022, July 1, 1996, as amended at 68 FR 61353, Oct. 28, 2003; 74 
FR 11034, Mar. 16, 2009]



Sec. 4010.11  Waivers.

    (a) Aggregate funding shortfall not in excess of $15 million waiver. 
Unless reporting is required by Sec. 4010.4(a)(2) or (3), reporting is 
waived for a person (that would be a filer if not for the waiver) for an 
information year if, for the plan year ending within the information 
year, the aggregate 4010 funding shortfall for all plans (including any 
exempt plans) maintained by the person's controlled group (disregarding 
those plans with no 4010 funding shortfall) does not exceed $15 million, 
as determined under paragraphs (a)(1) and (2) of this section.
    (1) 4010 funding shortfall; in general. A plan's 4010 funding 
shortfall for a plan year equals the funding shortfall for the plan year 
as provided under ERISA section 303(c)(4) and Code section 430(c)(4), 
with the following exceptions:
    (i) The funding target used to calculate the 4010 funding shortfall 
is determined without regard to the interest rate stabilization 
provisions of ERISA section 303(h)(2)(C)(iv) and Code section 
430(h)(2)(C)(iv).
    (ii) The value of plan assets used to calculate the 4010 funding 
shortfall is determined without regard to the reduction under ERISA 
section 303(f)(4)(B) and Code section 430(f)(4)(B) (dealing with 
reduction of assets by the amount of prefunding and funding standard 
carryover balances).
    (2) Multiple employer plans. For purposes of Sec. 4010.8(c) and 
paragraph (a) of this section, the entire 4010 funding shortfall of any 
multiple employer plan of which the filer or any member of the filer's 
controlled group is a contributing sponsor is included.
    (b) Smaller plans waiver--(1) General. Unless reporting is required 
by Sec. 4010.4(a)(2) or (a)(3), reporting is waived for a person (that 
would be a filer if not for the waiver) for an information year if, for 
the plan year ending within the information year, the aggregate number 
of participants in all plans (including any exempt plans) maintained by 
the person's controlled group is fewer than 500. For this purpose, the 
number of participants in any plan may be determined either as of the 
end of the plan year ending within the information year or as of the 
valuation date for that plan year.
    (2) Multiple employer plans. For purposes of this paragraph (b), the 
aggregate number of participants in all plans maintained by a person's 
controlled group includes any participants covered by a multiple 
employer plan in

[[Page 962]]

which the person participates (including participants covered by the 
multiple employer plan who are not or were not employed by the person).
    (c) Missed contributions resulting in a lien or outstanding minimum 
funding waivers. Reporting is waived for a person (that would be a filer 
if not for the waiver) for an information year if, for the plan year 
ending within the information year, reporting would have been required 
solely under Sec. 4010.4(a)(2) or (3), provided that the missed 
contributions or applications for minimum funding waivers (as 
applicable) were reported to PBGC under part 4043 of this chapter by the 
due date for the 4010 filing.
    (d) Other waiver authority. 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. 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 PBGC at the address provided in Sec. 4010.10(c) no 
later than 15 days before the applicable due date specified in 
Sec. 4010.10, and must state the facts and circumstances on which the 
request is based.

[81 FR 15440, Mar. 23, 2016]



Sec. 4010.12  Alternative method of compliance for certain sponsors
of multiple employer plans.

    (a) In general. Subject to paragraph (b) of this section, an 
eligible contributing sponsor (as defined in paragraph (c) of this 
section) of a multiple employer plan satisfies the requirements of this 
part for an information year if any contributing sponsor of the multiple 
employer plan provides a timely filing under this part for an 
information year that coincides with or overlaps with the eligible 
contributing sponsor's information year.
    (b) PBGC request for additional information. PBGC may request some 
or all of the information that would otherwise be required under this 
part from an eligible contributing sponsor that uses the alternative 
method of compliance in this section. PBGC will make such a request no 
earlier than the date the information would otherwise have been due. The 
eligible contributing sponsor must provide the requested information no 
later than 30 days after PBGC makes the request. The requested 
information need not be submitted electronically.
    (c) Eligible contributing sponsor. For purposes of this section, an 
eligible contributing sponsor of a multiple employer plan is a 
contributing sponsor that would not be subject to reporting if the plan 
were disregarded in applying the gateway tests in Sec. 4010.4(a).

[74 FR 11035, Mar. 16, 2009]



Sec. 4010.13  Confidentiality of information submitted.

    In accordance with Sec. 4901.21(a)(3) of this chapter and ERISA 
section 4010(c), any information or documentary material that is not 
publicly available and is submitted to PBGC pursuant to this part will 
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.

[61 FR 34022, July 1, 1996. Redesignated and amended at 74 FR 11035, 
Mar. 16, 2009]



Sec. 4010.14  Penalties.

    If all of the information required under this part is not provided 
within the specified time limit, PBGC may assess a separate penalty 
under ERISA section 4071 against the filer and each member of the 
filer's controlled group (other than an exempt entity). 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. 
Redesignated and amended at 74 FR 11035, Mar. 16, 2009; 81 FR 29766, May 
13, 2016]



Sec. 4010.15  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.

[61 FR 34022, July 1, 1996. Redesignated at 74 FR 11035, Mar. 16, 2009]

[[Page 963]]



                   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.
4022.11  Guarantee of benefits relating to uniformed service.

              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  Phase-in of guarantee of unpredictable contingent event 
          benefits.
4022.28  Effect of tax disqualification.

                   Subpart C_Section 4022(c) Benefits

4022.51  Determination of section 4022(c) benefits in a PPA 2006 
          bankruptcy termination.

            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

    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

[[Page 964]]

by plan administrators after initiating 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, bankruptcy filing date, Code, employer, ERISA, guaranteed 
benefit, mandatory employee contributions, nonforfeitable benefit, non-
PPA 2006 bankruptcy termination, normal retirement age, notice of intent 
to terminate, PBGC, person, plan, plan administrator, plan year, PPA 
2006 bankruptcy termination, proposed termination date, statutory hybrid 
plan, 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, an unpredictable contingent event benefit, 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. An annuity 
benefit resulting from a rollover amount is a pension benefit.
    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.
    Unpredictable contingent event (UCE) has the same meaning as 
unpredictable contingent event in section 206(g)(1)(C) of ERISA and 
Treas. Reg. Sec. 1.436-1(j)(9) (26 CFR 1.436-1(j)(9)). It includes a 
plant shutdown (full or partial) or a similar event (such as a full or 
partial closing of another type of facility, or a layoff or other 
workforce reduction), or any event other than the attainment of any age, 
performance of any service, receipt or derivation of any compensation, 
or occurrence of death or disability.

[[Page 965]]

    Unpredictable contingent event benefit (UCEB) has the same meaning 
as unpredictable contingent event benefit in section 206(g)(1)(C) of 
ERISA and Treas. Reg. Sec. 1.436-1(j)(9) (26 CFR 1.436-1(j)(9)). Thus, a 
UCEB is any benefit or benefit increase to the extent that it would not 
be payable but for the occurrence of a UCE. A benefit or benefit 
increase that is conditioned upon the occurrence of a UCE does not cease 
to be a UCEB as a result of the contingent event having occurred or its 
occurrence having become reasonably predictable.

[61 FR 34028, July 1, 1996, as amended at 74 FR 59096, Nov. 17, 2009; 76 
FR 34601, June 14, 2011; 79 FR 25672, May 6, 2014; 79 FR 70094, Nov. 25, 
2014]



Sec. 4022.3  Guaranteed benefits.

    (a) General. 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--
    (1) The benefit is, on the termination date, a nonforfeitable 
benefit;
    (2) The benefit qualifies as a pension benefit as defined in 
Sec. 4022.2; and
    (3) The participant is entitled to the benefit under Sec. 4022.4.
    (b) PPA 2006 bankruptcy termination--(1) Substitution of bankruptcy 
filing date. In a PPA 2006 bankruptcy termination, ``bankruptcy filing 
date'' is substituted for ``termination date'' each place that 
``termination date'' appears in paragraph (a) of this section.
    (2) Condition for entitlement satisfied between bankruptcy filing 
date and termination date. If a participant becomes entitled to a 
subsidized early retirement or other benefit 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) but on or after the bankruptcy filing 
date (or after the bankruptcy filing 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 subsidy or other benefit is not 
guaranteed because the participant had not satisfied the conditions for 
entitlement by the bankruptcy filing date. In such a case, the 
participant may have been put into pay status with the subsidized early 
retirement or other benefit by the plan administrator, because the plan 
was ongoing at the time. Even though the subsidy or other benefit is not 
guaranteed, the participant may be entitled to another benefit from PBGC 
(at that time or in the future). If so, PBGC will continue paying the 
participant a benefit, but in an amount reduced to reflect that the 
subsidy or other benefit is not guaranteed. PBGC will also allow a 
similarly situated participant who had not started receiving a 
subsidized early retirement or other benefit before PBGC became trustee 
of the plan to begin receiving a benefit (if the participant would have 
been allowed under the plan to begin receiving benefits and has reached 
his Earliest PBGC Retirement Date, as defined in Sec. 4022.10), but in 
an amount that does not include the subsidy or other benefit.
    (3) Examples--(i) Vesting. A plan provides for 5-year ``cliff'' 
vesting--i.e., benefits become 100% vested when the participant 
completes five years of service; before the five-year mark, benefits are 
0% vested. The contributing sponsor of the plan files a bankruptcy 
petition on November 15, 2006. The plan terminates with a termination 
date of December 4, 2007, and PBGC becomes statutory trustee of the 
plan. A participant had four years and six months of service at the 
bankruptcy filing date and became vested in May 2007. None of the 
participant's benefit is guaranteed because none of the benefit was 
nonforfeitable as of the bankruptcy filing date.
    (ii) Subsidized early retirement benefit. The facts regarding the 
plan are the same as in Example (i) (paragraph (b)(3)(i) of this 
section), but the plan also provides that a participant may retire from 
active employment at any age with a fully subsidized (i.e., not 
actuarially reduced) early retirement benefit if he has completed 30 
years of service. The plan also provides that a participant who is age 
60 and has completed 20 years of service may retire from active 
employment with an early retirement benefit, reduced by three

[[Page 966]]

percent for each year by which the participant's age at benefit 
commencement is less than 65. A participant was age 61 and had 29 years 
and 6 months of service at the bankruptcy filing date. The participant 
continued working for another six months, then retired as of June 1, 
2007, and immediately began receiving from the plan the fully subsidized 
``30-and-out'' early retirement benefit. PBGC will continue paying the 
participant a benefit, but PBGC's guarantee does not include the full 
subsidy for the ``30-and-out'' benefit, because the participant 
satisfied the conditions for that benefit after the bankruptcy filing 
date. The guarantee does include, however, the partial subsidy 
associated with the ``60/20'' early retirement benefit, because the 
participant satisfied the conditions for that benefit before the 
bankruptcy filing date.
    (iii) Accruals after bankruptcy filing date. The facts regarding the 
plan are the same as in Example (i) (paragraph (b)(3)(i) of this 
section). A participant has a vested, accrued benefit of $500 per month 
as of the bankruptcy filing date. At the plan's termination date, the 
participant has a vested, accrued benefit of $512 per month. His 
guaranteed benefit is limited to $500 per month--the accrued, 
nonforfeitable benefit as of the bankruptcy filing date.

[61 FR 34028, July 1, 1996; 61 FR 67943, Dec. 26, 1996; 76 FR 34601, 
June 14, 2011]



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:
    (1) The benefit was in pay status on the termination date of the 
plan.
    (2) The benefit is payable in an optional life-annuity form of 
benefit that the participant or beneficiary elected on or before the 
termination date of the plan or, if later, the date on which PBGC became 
statutory trustee 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.
    (c) In a PPA 2006 bankruptcy termination, ``bankruptcy filing date'' 
is substituted for ``termination date'' each place that ``termination 
date'' appears in paragraphs (a)(1) and (3) of this section. In making 
this substitution for purposes of paragraph (a)(3) of this section, the 
rule in Sec. 4022.3(b)(2) (dealing with the situation where the 
condition for entitlement was satisfied between the bankruptcy filing 
date and the termination date) shall apply.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002; 76 
FR 34602, June 14, 2011]



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

[[Page 967]]

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 otherwise provided in 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.
    (d) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for ``termination 
date'' in paragraph (a) of this section.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002; 76 
FR 34602, June 14, 2011]



Sec. 4022.7  Benefits payable in a single installment.

    (a) Alternative benefit. If a benefit that is guaranteed under this 
part is 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

[[Page 968]]

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, except as provided in paragraph 
(b)(2)(iii) of this section, 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.)

    (iii) Rollover amounts. The rule in paragraph (b)(2) of this section 
(dealing with return of employee contributions) does not apply to a 
participant's accumulated mandatory employee contributions resulting 
from rollover amounts (as determined under Sec. 4044.12(c)(4)(i) of this 
chapter) or the benefit derived from such mandatory employee 
contributions.
    (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 (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. Except in the case of accumulated mandatory employee 
contributions resulting from rollover amounts (as determined under 
Sec. 4044.12(c)(4)(i) of this chapter), 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.

[[Page 969]]

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; 79 FR 70094, 
Nov. 25, 2014]



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 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;

[[Page 970]]

    (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 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.
    (f) Rollover amounts. The annuity benefit resulting from rollover 
amounts (as determined under Sec. 4044.12(c)(4) of this chapter) is 
combined with any other benefit under the plan and paid in the same form 
and at the same time as the other benefit.

[67 FR 16954, Apr. 8, 2002, as amended at 79 FR 70095, Nov. 25, 2014]



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

[[Page 971]]

for benefits not made in accordance with its forms and instructions.
    (d) Filing with the PBGC--(1) Method and date of filing. The PBGC 
applies the rules in subpart A of part 4000 of this chapter to determine 
permissible methods of filing with the PBGC under this part. Benefit 
applications and related submissions are treated as filed on the date 
received by the PBGC unless the instructions for the applicable form 
provide for an earlier date. Subpart C of part 4000 of this chapter 
provides rules for determining when the PBGC receives a submission.
    (2) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (3) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing under 
this part.

[67 FR 16955, Apr. 8, 2002, as amended at 68 FR 61353, Oct. 28, 2003]



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.
    (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

[[Page 972]]

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, 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

[[Page 973]]

    (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]



Sec. 4022.11  Guarantee of benefits relating to uniformed service.

    This section applies to a benefit of a participant who becomes 
reemployed after service in the uniformed services that is covered by 
the Uniformed Services Employment and Reemployment Rights Act of 1994 
(USERRA).
    (a) A benefit described in paragraph (b) of this section that would 
satisfy the requirements of Sec. 4022.3(a) and (c) (together with any 
benefit earned for the period preceding military service) except for the 
fact that the participant was not reemployed on or before the 
termination date will be deemed to satisfy those requirements if PBGC 
determines, based upon a demonstration by the participant or otherwise, 
that he or she became reemployed after the termination date and entitled 
to the benefit under USERRA.
    (b) A benefit described in this paragraph (b) is a benefit 
attributable to a period of service commencing before the termination 
date and ending on the termination date during which the participant was 
serving in the uniformed services as defined in 38 U.S.C. 4303(13) (or 
was in a subsequent reemployment eligibility period) and to which the 
participant is entitled under USERRA.
    (c) Example: A plan's vesting requirement is 5 years of service with 
the employer. A participant has completed 4 years of service when he 
leaves employment for uniformed service. The plan terminates while the 
participant is in military service. As of the termination date, the 
participant would have had 5 years of service and 5 years of benefit 
accruals if he had remained continuously employed. Upon reemployment 
after the termination date but within the time limits set by USERRA, the 
participant would have had 6 years of service under the plan for vesting 
and benefit accrual purposes, if the plan had not terminated. PBGC would 
treat the participant as having a vested, nonforfeitable plan benefit 
with 5 years of vesting service and benefit accruals as of the 
termination date.
    (d) In the case of a PPA 2006 bankruptcy termination, ``bankruptcy 
filing date'' is substituted for ``termination date'' each place that 
``termination date'' appears in this section.

[74 FR 59096, Nov. 17, 2009]



              Subpart B_Limitations on Guaranteed Benefits



Sec. 4022.21  Limitations; in general.

    (a)(1) Subject to paragraphs (b), (c), (d), and (e) 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

[[Page 974]]

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.
    (e) PPA 2006 bankruptcy termination. (1) Substitution of bankruptcy 
filing date. In a PPA 2006 bankruptcy termination, ``bankruptcy filing 
date'' is substituted for ``termination date'' each place that 
``termination date'' appears in paragraph (a)(1) of this section.
    (2) Examples. (i) Straight-life annuity. A plan provides for normal 
retirement at age 65. If a participant terminates employment at or after 
age 55 with 25 years of service, the plan will pay an unreduced early 
retirement benefit, plus a temporary supplement of $400 per month until 
the participant reaches age 62. When the plan's contributing sponsor 
files a bankruptcy petition in 2008, a participant who is still working 
has a vested, accrued benefit of $1,500 per month (as a straight-life 
annuity) and has satisfied the age and service requirements for the 
unreduced early retirement benefit. The participant retires eight months 
later, when his vested, accrued benefit is $1,530 per month (as a 
straight-life annuity). He elects to receive his benefit as a straight-
life annuity, and begins receiving a total benefit of $1,930: His $1,530 
accrued benefit plus the $400 temporary supplement. The plan terminates 
six months later, during the sponsor's bankruptcy. No Title IV 
limitations apply to the participant's benefit, other than the 
limitation in paragraph (a)(1) of this section. PBGC will guarantee 
$1,500, the amount of the participant's accrued benefit (as a straight-
life annuity) as of the bankruptcy filing date.
    (ii) Joint-and-survivor annuity. The facts are the same as Example 
(i) (paragraph (e)(2)(i) of this section), except that the participant 
elects to receive his benefit as a 50% joint-and-survivor annuity. 
Before plan termination, the participant was receiving a total benefit 
of $1,777: His $1,530 accrued benefit, reduced by 10% for the survivor 
benefit, plus the $400 temporary supplement. From the termination date 
until the participant reaches age 62, PBGC will guarantee $1,500: The 
$1,500 accrued benefit (as a straight-life annuity) as of the bankruptcy 
filing date, reduced to $1,350 to reflect the 10% reduction for the 
survivor benefit, plus $150 of the temporary supplement that, in 
combination with the $1,350, does not exceed the $1,500 accrued-at-
normal limit. When the participant reaches age 62, his guaranteed 
benefit is reduced to $1,350, because under plan provisions the 
temporary supplement ceases at that time.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002; 76 
FR 34602, June 14, 2011]



Sec. 4022.22  Maximum guaranteeable benefit.

    (a) In general. Subject to section 4022B of ERISA and part 4022B of 
this chapter, and except as provided in paragraph (b) of this section, 
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--
    (1) 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; or
    (2) $750 multiplied by the fraction x/$13,200 where ``x'' is the 
Social Security

[[Page 975]]

contribution and benefit base determined under section 230 of the Social 
Security Act in effect at the termination date of the plan.
    (b) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination--
    (1) The five-year period described in paragraph (a)(1) of this 
section shall not include any calendar years that end after the 
bankruptcy filing date.
    (2) ``Bankruptcy filing date'' is substituted for ``termination date 
of the plan'' in paragraph (a)(2) of this section. Example: A 
contributing sponsor files a bankruptcy petition in 2007. The sponsor's 
plan terminates in a distress termination with a termination date in 
2008. PBGC will compute participants' maximum guaranteeable benefits 
based on the amount determined under paragraph (a)(2) for 2007 
($4,125.00 as a straight-life annuity starting at age 65).
    (c) Gross income. For purposes of paragraph (a)(1) of this section--
    (1) Gross income means ``earned income'' as defined in section 
911(d)(2) of the Code, determined without regard to any community 
property laws.
    (2) 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.
    (d) Rollover amounts. Any portion of a benefit derived from 
mandatory employee contributions resulting from rollover amounts (as 
determined under Sec. 4044.12(c)(4)(i) of this chapter) is disregarded 
in applying the provisions of Secs. 4022.22 and 4022.23. However, any 
portion of a benefit derived from employer contributions resulting from 
rollover amounts (as determined under Sec. 4044.12(c)(4)(ii) of this 
chapter) is combined with any other benefit under the plan for purposes 
of determining the maximum guaranteeable benefit under Secs. 4022.22 and 
4022.23. For example, assume that a participant has an $80,000 total 
annual plan benefit at age 65, of which $15,000 is derived from 
mandatory employee contributions resulting from rollover amounts and 
$5,000 is derived from employer contributions resulting from rollover 
amounts. The $15,000 benefit derived from employee contributions 
resulting from rollover amounts would be excluded in the determination 
of the participant's maximum guaranteeable amount. The participant's 
remaining $65,000 benefit (including the $5,000 benefit derived from 
employer contributions resulting from rollover amounts) would be subject 
to the maximum guaranteeable benefit limitation. Assuming the plan 
terminated in 2014, the participant's maximum guaranteeable benefit of 
approximately $59,000 for a straight life annuity at age 65 would 
effectively be increased by the $15,000 benefit derived from employee 
contributions resulting from rollover amounts, resulting in total 
guaranteeable benefits of approximately $74,000. (The maximum 
guaranteeable benefit limitation would apply to the participant's 
benefit derived from employer contributions; as a result, $6,000 of the 
participant's benefit derived from employer contributions would not be 
guaranteeable by PBGC.)

[76 FR 34602, June 14, 2011, as amended at 79 FR 70095, Nov. 25, 2014]



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

[[Page 976]]

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 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

[[Page 977]]

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
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

[[Page 978]]

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.
    (g) PPA 2006 bankruptcy termination. (1) In a PPA 2006 bankruptcy 
termination, except as provided in the next sentence, ``bankruptcy 
filing date'' is substituted for ``termination date'' and ``date of plan 
termination'' each place that ``termination date'' or ``date of plan 
termination'' appears in paragraphs (c), (d), and (f) of this section. 
In any case in which an event (such as the death of a participant or 
beneficiary who was alive on the bankruptcy filing date) that affects 
who is receiving or will receive a benefit from PBGC has occurred on or 
before the termination date, PBGC will determine the factors in 
paragraphs (d), (e), and (f) based on the form of benefit that was being 
paid (or was payable) and the person who was receiving or was entitled 
to receive the benefit from PBGC as of the termination date. (The case 
of Participant C in the example below illustrates this exception.)
    (2) Example. (i) Facts. The contributing sponsor of a plan files a 
bankruptcy petition in July 2007, and the sponsor's plan terminates in a 
PBGC-initiated termination with a termination date in July 2008. At the 
bankruptcy filing date:
    (A) Participant A was age 64 and receiving a benefit from the plan 
in the form of a 10-year certain-and-continuous annuity, with 4 years 
remaining in the certain period.
    (B) Participant B was age 60 and 6 months and was still working. She 
began receiving a benefit from the plan in the form of a 50% joint-and-
survivor annuity when she turned 61 in January 2008. Her spouse was the 
same age as she.
    (C) Participant C was age 60 and was receiving a $3,000/month 
benefit from the plan in the form of a 50% joint-and-survivor annuity, 
with his spouse, age 58, as his beneficiary. Participant C he died in 
February 2008 and in March 2008 his spouse began receiving a 50% 
survivor annuity of $1,500/month.
    (D) Participant D was age 59 and was still working; he began 
receiving a straight-life annuity from the PBGC in July 2010 when he was 
62 years old.
    (ii) Conclusions. In accordance with Sec. 4022.22(b)(2), PBGC 
computes the maximum guaranteeable monthly benefit for Participants A, 
B, and D and for the spouse of Participant C based on the $4,125.00 
amount determined under Sec. 4022.22(a)(2) for 2007. (The gross-income-
based limitation in Sec. 4022.22(a)(1) does not apply to any of these 
participants.)
    (A) Participant A's maximum guaranteeable monthly benefit is 
$3,759.53 [$4,125.00  x  .93 (7% reduction for a benefit starting at age 
64)  x  .98 (2% reduction for a certain-and-continuous annuity with 4 
years remaining in the certain period)].
    (B) Participant B's maximum guaranteeable monthly benefit is 
$2,673.00 [$4,125.00  x  .72 (28% reduction for a benefit starting at 
age 61)  x  .90 (10% reduction due to the 50% joint-and-survivor 
feature)].
    (C) Participant C's spouse's maximum guaranteeable monthly benefit 
is $2,351.25 [$4,125.00  x  .57 (43% reduction for a benefit starting at 
age 58; no reduction for the form of benefit because the spouse's 
survivor benefit is a straight-life annuity)]. Because that amount 
exceeds the spouse's $1,500 monthly survivor benefit, the spouse's 
benefit is not reduced by the maximum guaranteeable benefit limitation.
    (D) Participant D's maximum guaranteeable monthly benefit is 
$3,258.75 [$4,125.00  x  .79 (21% reduction for a benefit starting at 
age 62)].

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996; 76 FR 34603, 
June 14, 2011]



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

[[Page 979]]

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 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

[[Page 980]]

in paragraph (d) of that section, and for the purposes of Sec. 4022.26, 
as appropriate.
    (e) Except as provided in Sec. 4022.27(c), for the purposes of 
Secs. 4022.22 through 4022.28, a benefit increase is deemed to be in 
effect commencing on the later of its adoption date or its effective 
date.
    (f) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, except as provided in the next sentence, ``bankruptcy 
filing date'' is substituted for ``termination date'' each place that 
``termination date'' appears in paragraphs (a) and (c) of this section. 
In any case in which an event (such as the death of a participant or 
beneficiary who was alive on the bankruptcy filing date) that affects 
who is receiving or will receive a benefit from PBGC has occurred on or 
before the termination date, PBGC will compute the benefit based on the 
form of benefit that was being paid (or was payable) and the person who 
was receiving or was entitled to receive the benefit from PBGC as of the 
termination date, consistent with Sec. 4022.23(g).
    (g) Rollover amounts. Any portion of a benefit derived from 
mandatory employee contributions resulting from rollover amounts (as 
determined under Sec. 4044.12 (c)(4)(i) of this chapter) is disregarded 
in applying the provisions of Secs. 4022.24 through 4022.26. However, 
any portion of a benefit derived from employer contributions resulting 
from rollover amounts (as determined under Sec. 4044.12(c)(4)(ii) of 
this chapter) is combined with any other benefit under the plan in 
applying the provisions of Secs. 4022.24 through 4022.26. In such case, 
the benefit increase is deemed to be in effect on the date the rollover 
amounts are received by the plan.

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 62 
FR 67728, Dec. 30, 1997; 76 FR 34603, June 14, 2011; 79 FR 25672, May 6, 
2014; 79 FR 70095, Nov. 25, 2014]



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 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.
    (f) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for ``termination 
date'' each place that ``termination date'' appears in paragraphs (c) 
and (d) of this section. Example: A plan amendment that was adopted and 
effective in February 2007 increased a participant's benefit by $300 per 
month (as computed under Sec. 4022.24). The contributing sponsor of the 
plan filed a bankruptcy petition in March 2009 and the plan has a 
termination date in April 2010. PBGC's guarantee of the participant's 
benefit increase is limited to $120 ($300  x  40%), because the increase 
was made more than 2 years but less than 3 years before the bankruptcy 
filing date.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002; 76 
FR 34603, June 14, 2011]



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

[[Page 981]]

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  Phase-in of guarantee of unpredictable contingent
event benefits.

    (a) Scope. This section applies to a benefit increase, as defined in 
Sec. 4022.2, that is an unpredictable contingent event benefit (UCEB) 
and that is payable with respect to an unpredictable contingent event 
(UCE) that occurs after July 26, 2005.
    (1) Examples of benefit increases within the scope of this section 
include unreduced early retirement benefits or other early retirement 
subsidies, or other benefits to the extent that such benefits would not 
be payable but for the occurrence of one or more UCEs.
    (2) Examples of UCEs within the scope of this section include full 
and partial closings of plants or other facilities, and permanent 
workforce reductions, such as permanent layoffs. Permanent layoffs 
include layoffs during which an idled employee continues to earn 
credited service (creep-type layoff) for a period of time at the end of 
which the layoff is deemed to be permanent. Permanent layoffs also 
include layoffs that become permanent upon the occurrence of an 
additional event such as a declaration by the employer that the 
participant's return to work is unlikely or a failure by the employer to 
offer the employee suitable work in a specified area.
    (3) The examples in this section are not an exclusive list of UCEs 
or UCEBs and are not intended to narrow the statutory definitions, as 
further delineated in Treasury Regulations.
    (b) Facts and circumstances. If PBGC determines that a benefit is a 
shutdown benefit or other type of UCEB, the benefit will be treated as a 
UCEB for purposes of this subpart. PBGC will make such determinations 
based on the facts and circumstances, consistent with these regulations; 
how a benefit is characterized by the employer or other parties may be 
relevant but is not determinative.
    (c) Date phase-in begins. (1) The date the phase-in of PBGC's 
guarantee of a UCEB begins is determined in accordance with subpart B of 
this part. For purposes of this subpart, a UCEB is deemed to be in 
effect as of the latest of--

[[Page 982]]

    (i) The adoption date of the plan provision that provides for the 
UCEB,
    (ii) The effective date of the UCEB, or
    (iii) The date the UCE occurs.
    (2) The date the phase-in of PBGC's guarantee of a UCEB begins is 
not affected by any delay that may occur in placing participants in pay 
status due to removal of a restriction under section 436(b) of the Code. 
See the example in paragraph (e)(8) of this section.
    (d) Date UCE occurs. For purposes of this section, PBGC will 
determine the date the UCE occurs based on plan provisions and other 
facts and circumstances, including the nature and level of activity at a 
facility that is closing and the permanence of the event. PBGC will also 
consider, to the extent relevant, statements or determinations by the 
employer, the plan administrator, a union, an arbitrator under a 
collective bargaining agreement, or a court, but will not treat such 
statements or determinations as controlling.
    (1) The date a UCE occurs is determined on a participant-by-
participant basis, or on a different basis, such as a facility-wide or 
company-wide basis, depending upon plan provisions and the facts and 
circumstances. For example, a benefit triggered by a permanent layoff of 
a participant would be determined with respect to each participant, and 
thus layoffs that occur on different dates would generally be distinct 
UCEs. In contrast, a benefit payable only upon a complete plant shutdown 
would apply facility-wide, and generally the shutdown date would be the 
date of the UCE for all participants who work at that plant. Similarly, 
a benefit payable only upon the complete shutdown of the employer's 
entire operations would apply plan-wide, and thus the shutdown date of 
company operations generally would be the date of the UCE for all 
participants.
    (2) For purposes of paragraph (c)(1)(iii) of this section, if a 
benefit is contingent upon more than one UCE, PBGC will apply the rule 
under Treas. Reg. Sec. 1.436-1(b)(3)(ii) (26 CFR 1.436-1(b)(3)(ii)) 
(i.e., the date the UCE occurs is the date of the latest UCE).
    (e) Examples. The following examples illustrate the operation of the 
rules in this section. Except as provided in Example 8, no benefit 
limitation under Code section 436 applies in any of these examples. 
Unless otherwise stated, the termination is not a PPA 2006 bankruptcy 
termination.

    Example 1. Date of UCE. (i) Facts: On January 1, 2006, a Company 
adopts a plan that provides an unreduced early retirement benefit for 
participants with specified age and service whose continuous service is 
broken by a permanent plant closing or permanent layoff that occurs on 
or after January 1, 2007. On January 1, 2013, the Company informally and 
without announcement decides to close Facility A within a two-year 
period. On January 1, 2014, the Company's Board of Directors passes a 
resolution directing the Company's officers to close Facility A on or 
before September 1, 2014. On June 1, 2014, the Company issues a notice 
pursuant to the Worker Adjustment and Retraining Notification (WARN) 
Act, 29 U.S.C. 2101, et seq., that Facility A will close, and all 
employees will be permanently laid off, on or about August 1, 2014. The 
Company and the Union representing the employees enter into collective 
bargaining concerning the closing of Facility A and on July 1, 2014, 
they jointly agree and announce that Facility A will close and employees 
who work there will be permanently laid off as of November 1, 2014. 
However, due to unanticipated business conditions, Facility A continues 
to operate until December 31, 2014, when operations cease and all 
employees are permanently laid off. The plan terminates as of December 
1, 2015.
    (ii) Conclusion: PBGC would determine that the UCE is the facility 
closing and permanent layoff that occurred on December 31, 2014. Because 
the date that the UCE occurred (December 31, 2014) is later than both 
the date the plan provision that established the UCEB was adopted 
(January 1, 2006) and the date the UCEB became effective (January 1, 
2007), December 31, 2014, would be the date the phase-in period under 
ERISA section 4022 begins. In light of the plan termination date of 
December 1, 2015, the guarantee of the UCEBs of participants laid off on 
December 31, 2014, would be 0 percent phased in.
    Example 2. Sequential layoffs. (i) Facts: The same facts as Example 
1, with these exceptions: Not all employees are laid off on December 31, 
2014. The Company and Union agree to and subsequently implement a 
shutdown in which employees are permanently laid off in stages--one 
third of the employees are laid off on October 31, 2014, another third 
are laid off on November 30, 2014, and the remaining one-third are laid 
off on December 31, 2014.
    (ii) Conclusion: Because the plan provides that a UCEB is payable in 
the event of either a permanent layoff or a plant shutdown,

[[Page 983]]

PBGC would determine that phase-in begins on the date of the UCE 
applicable to each of the three groups of employees. Because the first 
two groups of employees were permanently laid off before the plant 
closed, October 31, 2014, and November 30, 2014, are the dates that the 
phase-in period under ERISA section 4022 begins for those groups. 
Because the third group was permanently laid off on December 31, 2014, 
the same date the plant closed, the phase-in period would begin on that 
date for that group. Based on the plan termination date of December 1, 
2015, participants laid off on October 31, 2014, and November 30, 2014, 
would have 20 percent of the UCEBs (or $20 per month, if greater) 
guaranteed under the phase-in rule. The guarantee of the UCEBs of 
participants laid off on December 31, 2014, would be 0 percent phased 
in.
    Example 3. Skeleton shutdown crews. (i) Facts: The same facts as 
Example 1, with these exceptions: The plan provides for an unreduced 
early retirement benefit for age/service-qualified participants only in 
the event of a break in continuous service due to a permanent and 
complete plant closing. A minimal skeleton crew remains to perform 
primarily security and basic maintenance functions until March 31, 2015, 
when skeleton crew members are permanently laid off and the facility is 
sold to an unrelated investment group that does not assume the plan or 
resume business operations at the facility. The plan has no specific 
provision or past practice governing benefits of skeleton shutdown 
crews. The plan terminates as of January 1, 2015.
    (ii) Conclusion: Because the continued employment of the skeleton 
crew does not effectively continue operations of the facility, PBGC 
would determine that there is a permanent and complete plant closing 
(for purposes of the plan's plant closing provision) as of December 31, 
2014, which is the date the phase-in period under ERISA section 4022 
begins with respect to employees who incurred a break in continuous 
service at that time. The UCEB of those participants would be a 
nonforfeitable benefit as of the plan termination date, but PBGC's 
guarantee of the UCEB would be 0 percent phased in. In the case of the 
skeleton crew members, such participants would not be eligible for the 
UCEB because they did not incur a break in continuous service until 
after the plan termination date. (If the plan had a provision that there 
is no shutdown until all employees, including any skeleton crew are 
terminated, or if the plan were reasonably interpreted to so provide in 
light of past practice, PBGC would determine that the date that the UCE 
occurred was after the plan termination date. Thus the UCEB would not be 
a nonforfeitable benefit as of the plan termination date and therefore 
would not be guaranteeable.)
    Example 4. Creep-type layoff benefit/bankruptcy of contributing 
sponsor. (i) Facts: A plan provides that participants who are at least 
age 55 and whose age plus years of continuous service equal at least 80 
are entitled to an unreduced early retirement benefit if their 
continuous service is broken due to a permanent layoff. The plan further 
provides that a participant's continuous service is broken due to a 
permanent layoff when the participant is terminated due to the permanent 
shutdown of a facility, or the participant has been on layoff status for 
two years. These provisions were adopted and effective in 1990. 
Participant A is 56 years old and has 25 years of continuous service 
when he is laid off in a reduction-in-force on May 15, 2014. He is not 
recalled to employment, and on May 15, 2016, under the terms of the 
plan, his continuous service is broken due to the layoff. He goes into 
pay status on June 1, 2016, with an unreduced early retirement benefit. 
The contributing sponsor of Participant A's plan files a bankruptcy 
petition under Chapter 11 of the U.S. Bankruptcy Code on September 1, 
2017, and the plan terminates during the bankruptcy proceedings with a 
termination date of October 1, 2018. Under section 4022(g) of ERISA, 
because the plan terminated while the contributing sponsor was in 
bankruptcy, the five-year phase-in period ended on the bankruptcy filing 
date.
    (ii) Conclusion: PBGC would determine that the guarantee of the UCEB 
is phased in beginning on May 15, 2016, the date of the later of the two 
UCEs necessary to make this benefit payable (i.e., the first UCE is the 
initial layoff and the second UCE is the expiration of the two-year 
period without rehire). Since that date is more than one year (but less 
than two years) before the September 1, 2017, bankruptcy filing date, 20 
percent of Participant A's UCEB (or $20 per month, if greater) would be 
guaranteed under the phase-in rule.
    Example 5. Creep-type layoff benefit with provision for declaration 
that return to work unlikely. (i) Facts: A plan provides that 
participants who are at least age 60 and have at least 20 years of 
continuous service are entitled to an unreduced early retirement benefit 
if their continuous service is broken by a permanent layoff. The plan 
further provides that a participant's continuous service is broken by a 
permanent layoff if the participant is laid off and the employer 
declares that the participant's return to work is unlikely. Participants 
may earn up to 2 years of credited service while on layoff. The plan was 
adopted and effective in 1990. On March 1, 2014, Participant B, who is 
age 60 and has 20 years of service, is laid off. On June 15, 2014, the 
employer declares that Participant B's return to work is unlikely. 
Participant B retires and goes into pay status as of July 1, 2014. The 
employer files for bankruptcy on September 1, 2016, and the plan 
terminates during the bankruptcy.
    (ii) Conclusion: PBGC would determine that the phase-in period of 
the guarantee of the

[[Page 984]]

UCEB would begin on June 15, 2014--the later of the two UCEs necessary 
to make the benefit payable (i.e., the first UCE is the initial layoff 
and the second UCE is the employer's declaration that it is unlikely 
that Participant B will return to work). The phase-in period would end 
on September 1, 2016, the date of the bankruptcy filing. Thus 40 percent 
of Participant B's UCEB (or $40 per month, if greater) would be 
guaranteed under the phase-in rule.
    Example 6. Shutdown benefit with special post-employment eligibility 
provision. (i) Facts: A plan provides that, in the event of a permanent 
shutdown of a plant, a participant age 60 or older who terminates 
employment due to the shutdown and who has at least 20 years of service 
is entitled to an unreduced early retirement benefit. The plan also 
provides that a participant with at least 20 years of service who 
terminates employment due to a plant shutdown at a time when the 
participant is under age 60 also will be entitled to an unreduced early 
retirement benefit, provided the participant's commencement of benefits 
is on or after attainment of age 60 and the time required to attain age 
60 does not exceed the participant's years of service with the plan 
sponsor. The plan imposes no other conditions on receipt of the benefit. 
Plan provisions were adopted and effective in 1990. On January 1, 2014, 
Participant C's plant is permanently shut down. At the time of the 
shutdown, Participant C had 20 years of service and was age 58. On June 
1, 2015, Participant C reaches age 60 and retires. The plan terminates 
as of September 1, 2015.
    (ii) Conclusion: PBGC would determine that the guarantee of the 
shutdown benefit is phased in from January 1, 2014, which is the date of 
the only UCE (the permanent shutdown of the plant) necessary to make the 
benefit payable. Thus 20 percent of Participant C's UCEB (or $20 per 
month, if greater) would be guaranteed under the phase-in rule.
    Example 7. Phase-in of retroactive UCEB. (i) Facts: As the result of 
a settlement in a class-action lawsuit, a plan provision is adopted on 
September 1, 2014, to provide that age/service-qualified participants 
are entitled to an unreduced early retirement benefit if permanently 
laid off due to a plant shutdown occurring on or after January 1, 2014. 
Benefits under the provision are payable prospectively only, beginning 
March 1, 2015. Participant A, who was age/service-qualified, was 
permanently laid off due to a plant shutdown occurring on January 1, 
2014, and therefore he is scheduled to be placed in pay status as of 
March 1, 2015. The unreduced early retirement benefit is paid to 
Participant A beginning on March 1, 2015. The plan terminates as of 
February 1, 2017.
    (ii) Conclusion: PBGC would determine that the guarantee of the UCEB 
is phased in beginning on March 1, 2015. This is the date the benefit 
was effective (since it was the first date on which the new benefit was 
payable), and it is later than the adoption date of the plan provision 
(September 1, 2014) and the date of the UCE (January 1, 2014). Thus 20 
percent of Participant A's UCEB (or $20 per month, if greater) would be 
guaranteed under the phase-in rule.
    Example 8. Removal of IRC section 436 restriction. (i)(A) Facts: A 
plan provision was adopted on September 1, 1989, to provide that age/
service-qualified participants are entitled to an unreduced early 
retirement benefit if permanently laid off due to a plant shutdown 
occurring after January 1, 1990. Participant A, who was age/service-
qualified, was permanently laid off due to a plant shutdown occurring on 
April 15, 2014. The plan is a calendar year plan.
    (B) Under the rules of Code section 436 (ERISA section 206(g)) and 
Treasury regulations thereunder, a plan cannot provide a UCEB payable 
with respect to an unpredictable contingent event, if the event occurs 
during a plan year in which the plan's adjusted funding target 
attainment percentage is less than 60%. On March 17, 2014, the plan's 
enrolled actuary issued a certification stating that the plan's adjusted 
funding target attainment percentage for 2014 is 58%. Therefore, the 
plan restricts payment of the unreduced early retirement benefit payable 
with respect to the shutdown on April 15, 2014.
    (C) On August 15, 2014, the plan sponsor makes an additional 
contribution to the plan that is designated as a contribution under Code 
section 436(b)(2) to eliminate the restriction on payment of the 
shutdown benefits. On September 15, 2014, the plan's enrolled actuary 
issues a certification stating that, due to the additional section 
436(b)(2) contribution, the plan's adjusted funding target attainment 
percentage for 2014 is 60%. On October 1, 2014, Participant A is placed 
in pay status for the unreduced early retirement benefit and, as 
required under Code section 436 and Treasury regulations thereunder, is 
in addition paid retroactively the unreduced benefit for the period May 
1, 2014 (the date the unreduced early retirements would have become 
payable) through September 1, 2014. The plan terminates as of September 
1, 2016.
    (ii) Conclusion: PBGC would determine that the guarantee of the UCEB 
is phased in beginning on April 15, 2014, the date the UCE occurred. 
Because April 15, 2014, is later than both the date the UCEB was adopted 
(September 1, 1989) and the date the UCEB became effective (January 1, 
1990), it would be the date the phase-in period under ERISA section 4022 
begins. Commencement of the phase-in period is not affected by the delay 
in providing the unreduced early retirement benefit to Participant A due 
to the operation of the rules of Code section 436 and the Treasury 
regulations thereunder. Thus 40

[[Page 985]]

percent of Participant A's UCEB (or $40 per month, if greater) would be 
guaranteed under the phase-in rule.

[79 FR 25672, May 6, 2014]



Sec. 4022.28  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 
stating that the trust or plan meets such requirements; or
    (3) The plan amendment is revoked retroactively to its original 
effective date.



                   Subpart C_Section 4022(c) Benefits



Sec. 4022.51  Determination of section 4022(c) benefits in a PPA 
2006 bankruptcy termination.

    (a) Amount of unfunded nonguaranteed benefits. For purposes of this 
section, and subject to paragraph (b) of this section, a plan's amount 
of unfunded nonguaranteed benefits means the plan's outstanding amount 
of benefit liabilities, as defined in section 4001(a)(19) of ERISA, 
determined as of the plan's termination date. A plan's amount of 
unfunded nonguaranteed benefits is multiplied by the applicable recovery 
ratio to determine the aggregate amount to be allocated with respect to 
participants of the plan under section 4022(c)(1) of ERISA.
    (b) Benefits included in unfunded nonguaranteed benefits. For 
purposes of computing benefits under section 4022(c) of ERISA in a PPA 
2006 bankruptcy termination, unfunded nonguaranteed benefits are 
benefits under a plan as of the plan's termination date that are neither 
guaranteed by PBGC (taking into account section 4022(g) of ERISA) nor 
funded by the plan's assets (taking into account section 4044(e) of 
ERISA).
    (c) Determination of recovery ratio. In a PPA 2006 bankruptcy 
termination, the recovery ratio under section 4022(c)(3) of ERISA is 
determined as follows. The numerator is based on PBGC's recoveries under 
section 4062, 4063, or 4064, valued as of the plan's (or plans') 
termination date (or dates). The denominator of the recovery ratio is 
based on the amount of unfunded benefit liabilities, as defined in 
section 4001(a)(18) of ERISA, as of the plan's (or plans') termination 
date (or dates).

[76 FR 34603, June 14, 2011]



            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.

[[Page 986]]

    (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(a)(2) of this part, adjusted for age and benefit form, for 
the year of the proposed termination date. In a PPA 2006 bankruptcy 
termination, the maximum guaranteeable benefit is determined as of the 
bankruptcy filing date, in accordance with Secs. 4022.22(b) and 
4022.23(g).
    (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. 
(For examples addressing issues specific to a PPA 2006 bankruptcy 
termination, see Secs. 4022.21(e), 4022.22(b), and 4022.23(g).)

    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 ($2,352.27  x  0.90  x  0.91) 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 (0.50  x  $1,926.51) 
per month.
    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).

[[Page 987]]

    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 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; 76 
FR 34604, June 14, 2011]



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.

[[Page 988]]

    (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) Non-PPA 2006 bankruptcy termination. In a non-PPA 2006 
bankruptcy termination:
    (i) 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.
    (ii) 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 service and compensation as of the proposed termination date.
    (2) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination:
    (i) For benefits payable with respect to a participant who is in pay 
status on or before the bankruptcy filing date, the plan administrator 
shall use the participant's age and benefit payable under the plan as of 
the bankruptcy filing date.
    (ii) For benefits payable with respect to a participant who enters 
pay status after the bankruptcy filing date, the plan administrator 
shall use the participant's age as of the benefit commencement date and 
his service and compensation as of the bankruptcy filing 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).
    (5) Nothing in this paragraph (b) overrides the provisions of 
subparts A and B of part 4022 with respect to the requirements necessary 
for a benefit to be guaranteed by PBGC.
    (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 since the plan was established, if it has never 
been amended to provide for a new benefit). ``New benefit'' means a

[[Page 989]]

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. ``New benefits'' also 
result from increases that become payable by reason of the occurrence of 
an unpredictable contingent event (provided the event occurred after 
July 26, 2005), to the extent the increase would not be payable but for 
the occurrence of the event; in the case of such new benefits, the date 
of the occurrence of the unpredictable contingent event is treated as 
the amendment date for purposes of Table I. 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 (a)      during last  during last
                                                  year (b)     year (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 990]]

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) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for ``proposed 
termination date'' each place that ``proposed termination date'' appears 
in paragraph (c) of this section.
    (f) * * * (For an example addressing issues specific to a PPA 2006 
bankruptcy termination, see Sec. 4022.25(f).).
    (f) Examples. This section is illustrated by the following examples. 
(For an example addressing issues specific to a PPA 2006 bankruptcy 
termination, see Sec. 4022.25(f).).

    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 (0.55  x  $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 (0.80  x  $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 ($2,000  x  \5/30\) per month, or

[[Page 991]]

    (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 ($800  x  2  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; 76 FR 34604, 
June 14, 2011; 79 FR 25674, May 6, 2014]



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.
    (3) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for ``proposed 
termination date'' in the first sentence of paragraph (b)(2) of this 
section.
    (c) In general--(1) 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--
    (i) 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
    (ii) 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

[[Page 992]]

benefit commencement date or the proposed termination date.
    (2) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, ``bankruptcy filing date'' is substituted for ``proposed 
termination date'' each place that ``proposed termination date'' appears 
in paragraph (c)(1) of this section.
    (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 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.
    PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, the methodology would be the same, but ``bankruptcy filing 
date'' would be substituted for ``proposed termination date'' each place 
that ``proposed termination date'' appears in the example, and the 
numbers would change accordingly.

[[Page 993]]

    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 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, as amended at 76 
FR 34604, June 14, 2011]



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

[[Page 994]]

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) PPA 2006 bankruptcy termination. The provisions of paragraphs 
(c)(1) and (2) of this section regarding the overpayments and 
underpayments that will be included in the account balance apply 
regardless of whether the termination is a PPA 2006 bankruptcy 
termination.
    (4) 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
    (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.
    (5) 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; 76 
FR 34604, June 14, 2011]

[[Page 995]]



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.
    (i) Non-PPA 2006 bankruptcy termination. In a non-PPA bankruptcy 
termination, 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.
    (ii) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination, PBGC will determine the amount of benefit payable with 
respect to the participant under title IV of ERISA taking into account 
the limitations in sections 4022(g) and 4044(e) (and corresponding 
provisions of these regulations), and will determine the present value 
of that amount as of the termination date, using PBGC interest rates and 
factors in effect on the termination date.
    (iii) Facts and circumstances. 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 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, as amended at 76 FR 34604, June 14, 2011]



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

[[Page 996]]

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 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

[[Page 997]]

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.
    (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,

[[Page 998]]

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 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

[[Page 999]]

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.



         Sec. 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
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]



 Sec. 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 1), interest rate

[[Page 1000]]

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 1 + 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
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

[[Page 1001]]

 
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
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
118..................................     8-1-03     9-1-03         3.00    4.00    4.00    4.00       7       8
119..................................     9-1-03    10-1-03         3.50    4.00    4.00    4.00       7       8
120..................................    10-1-03    11-1-03         3.50    4.00    4.00    4.00       7       8
121..................................    11-1-03    12-1-03         3.25    4.00    4.00    4.00       7       8
122..................................    12-1-03     1-1-04         3.25    4.00    4.00    4.00       7       8
123..................................     1-1-04     2-1-04         3.25    4.00    4.00    4.00       7       8
124                                       2-1-04     3-1-04         3.25    4.00    4.00    4.00       7       8
125..................................     3-1-04     4-1-04         3.00    4.00    4.00    4.00       7       8
126..................................     4-1-04     5-1-04         3.00    4.00    4.00    4.00       7       8
127..................................     5-1-04     6-1-04         3.00    4.00    4.00    4.00       7       8
128..................................     6-1-04     7-1-04         3.50    4.00    4.00    4.00       7       8
129..................................     7-1-04     8-1-04         3.50    4.00    4.00    4.00       7       8
130..................................     8-1-04     9-1-04         3.50    4.00    4.00    4.00       7       8
131..................................     9-1-04    10-1-04         3.25    4.00    4.00    4.00       7       8
132..................................    10-1-04    11-1-04         3.00    4.00    4.00    4.00       7       8

[[Page 1002]]

 
133..................................    11-1-04    12-1-04         2.75    4.00    4.00    4.00       7       8
134..................................    12-1-04     1-1-05         2.75    4.00    4.00    4.00       7       8
135..................................     1-1-05     2-1-05         3.00    4.00    4.00    4.00       7       8
136..................................     2-1-05     3-1-05         3.00    4.00    4.00    4.00       7       8
137..................................     3-1-05     4-1-05         2.75    4.00    4.00    4.00       7       8
138..................................     4-1-05     5-1-05         2.75    4.00    4.00    4.00       7       8
139..................................     5-1-05     6-1-05         2.75    4.00    4.00    4.00       7       8
140..................................     6-1-05     7-1-05         2.50    4.00    4.00    4.00       7       8
141..................................     7-1-05     8-1-05         2.50    4.00    4.00    4.00       7       8
142..................................     8-1-05     9-1-05         2.25    4.00    4.00    4.00       7       8
143..................................     9-1-05    10-1-05         2.50    4.00    4.00    4.00       7       8
144..................................    10-1-05    11-1-05         2.25    4.00    4.00    4.00       7       8
145..................................    11-1-05    12-1-05         2.50    4.00    4.00    4.00       7       8
146..................................    12-1-05     1-1-06         2.75    4.00    4.00    4.00       7       8
147..................................     1-1-06     2-1-06         2.75    4.00    4.00    4.00       7       8
148..................................     2-1-06     3-1-06         2.75    4.00    4.00    4.00       7       8
149..................................     3-1-06     4-1-06         2.75    4.00    4.00    4.00       7       8
150..................................     4-1-06     5-1-06         2.75    4.00    4.00    4.00       7       8
151..................................     5-1-06     6-1-06         3.00    4.00    4.00    4.00       7       8
152..................................     6-1-06     7-1-06         3.25    4.00    4.00    4.00       7       8
153..................................     7-1-06     8-1-06         3.50    4.00    4.00    4.00       7       8
154..................................     8-1-06     9-1-06         3.50    4.00    4.00    4.00       7       8
155..................................     9-1-06    10-1-06         3.25    4.00    4.00    4.00       7       8
156..................................    10-1-06    11-1-06         3.00    4.00    4.00    4.00       7       8
157..................................    11-1-06    12-1-06         2.75    4.00    4.00    4.00       7       8
158..................................    12-1-06     1-1-07         3.00    4.00    4.00    4.00       7       8
159..................................     1-1-07     2-1-07         2.75    4.00    4.00    4.00       7       8
160..................................     2-1-07     3-1-07         3.00    4.00    4.00    4.00       7       8
161..................................     3-1-07     4-1-07         3.00    4.00    4.00    4.00       7       8
162..................................     4-1-07     5-1-07         2.75    4.00    4.00    4.00       7       8
163..................................     5-1-07     6-1-07         3.00    4.00    4.00    4.00       7       8
164..................................     6-1-07     7-1-07         3.00    4.00    4.00    4.00       7       8
165..................................     7-1-07     8-1-07         3.25    4.00    4.00    4.00       7       8
166..................................     8-1-07     9-1-07         3.50    4.00    4.00    4.00       7       8
167..................................     9-1-07    10-1-07         3.25    4.00    4.00    4.00       7       8
168..................................    10-1-07    11-1-07         3.25    4.00    4.00    4.00       7       8
169..................................    11-1-07    12-1-07         3.25    4.00    4.00    4.00       7       8
170..................................    12-1-07    01-1-08         3.00    4.00    4.00    4.00       7       8
171..................................    01-1-08    02-1-08         3.00    4.00    4.00    4.00       7       8
172..................................    02-1-08    03-1-08         3.25    4.00    4.00    4.00       7       8
173..................................    03-1-08    04-1-08         3.00    4.00    4.00    4.00       7       8
174..................................    04-1-08    05-1-08         3.25    4.00    4.00    4.00       7       8
175..................................    05-1-08    06-1-08         3.25    4.00    4.00    4.00       7       8
176..................................    06-1-08    07-1-08         3.25    4.00    4.00    4.00       7       8
177..................................    07-1-08    08-1-08         3.50    4.00    4.00    4.00       7       8
178..................................    08-1-08    09-1-08         3.25    4.00    4.00    4.00       7       8
179..................................    09-1-08    10-1-08         3.50    4.00    4.00    4.00       7       8
180..................................    10-1-08    11-1-08         3.25    4.00    4.00    4.00       7       8
181..................................    11-1-08    12-1-08         3.75    4.00    4.00    4.00       7       8
182..................................    12-1-08    01-1-09         4.75    4.00    4.00    4.00       7       8
183..................................     1-1-09     2-1-09         4.00    4.00    4.00    4.00       7       8
184..................................     2-1-09     3-1-09         3.00    4.00    4.00    4.00       7       8
185..................................     3-1-09     4-1-09         3.50    4.00    4.00    4.00       7       8
186..................................     4-1-09     5-1-09         3.25    4.00    4.00    4.00       7       8
187..................................     5-1-09     6-1-09         3.50    4.00    4.00    4.00       7       8
188..................................     6-1-09     7-1-09         3.75    4.00    4.00    4.00       7       8
189..................................     7-1-09     8-1-09         3.75    4.00    4.00    4.00       7       8
190..................................     8-1-09     9-1-09         3.00    4.00    4.00    4.00       7       8
191..................................     9-1-09    10-1-09         3.00    4.00    4.00    4.00       7       8
192..................................    10-1-09    11-1-09         2.50    4.00    4.00    4.00       7       8
193..................................    11-1-09    12-1-09         2.25    4.00    4.00    4.00       7       8
194..................................    12-1-09     1-1-10         2.50    4.00    4.00    4.00       7       8
195..................................     1-1-10     2-1-10         2.50    4.00    4.00    4.00       7       8
196..................................     2-1-10     3-1-10         2.75    4.00    4.00    4.00       7       8
197..................................     3-1-10     4-1-10         2.75    4.00    4.00    4.00       7       8
198..................................     4-1-10     5-1-10         2.75    4.00    4.00    4.00       7       8
199..................................     5-1-10     6-1-10         3.00    4.00    4.00    4.00       7       8
200..................................     6-1-10     7-1-10         2.75    4.00    4.00    4.00       7       8
201..................................     7-1-10     8-1-10         2.50    4.00    4.00    4.00       7       8
202..................................     8-1-10     9-1-10         2.25    4.00    4.00    4.00       7       8
203..................................     9-1-10    10-1-10         2.25    4.00    4.00    4.00       7       8

[[Page 1003]]

 
204..................................    10-1-10    11-1-10         1.75    4.00    4.00    4.00       7       8
205..................................    11-1-10    12-1-10         1.75    4.00    4.00    4.00       7       8
206..................................    12-1-10     1-1-11         2.25    4.00    4.00    4.00       7       8
207..................................     1-1-11     2-1-11         2.25    4.00    4.00    4.00       7       8
208..................................     2-1-11     3-1-11         2.50    4.00    4.00    4.00       7       8
209..................................     3-1-11     4-1-11         2.50    4.00    4.00    4.00       7       8
210..................................     4-1-11     5-1-11         2.50    4.00    4.00    4.00       7       8
211..................................     5-1-11     6-1-11         2.50    4.00    4.00    4.00       7       8
212..................................     6-1-11     7-1-11         2.50    4.00    4.00    4.00       7       8
213..................................     7-1-11     8-1-11         2.25    4.00    4.00    4.00       7       8
214..................................     8-1-11     9-1-11         2.25    4.00    4.00    4.00       7       8
215..................................     9-1-11    10-1-11         2.25    4.00    4.00    4.00       7       8
216..................................    10-1-11    11-1-11         1.75    4.00    4.00    4.00       7       8
217..................................    11-1-11    12-1-11         1.50    4.00    4.00    4.00       7       8
218..................................    12-1-11     1-1-12         1.50    4.00    4.00    4.00       7       8
219..................................     1-1-12     2-1-12         1.25    4.00    4.00    4.00       7       8
220..................................     2-1-12     3-1-12         1.25    4.00    4.00    4.00       7       8
221..................................     3-1-12     4-1-12         1.25    4.00    4.00    4.00       7       8
222..................................     4-1-12     5-1-12         1.25    4.00    4.00    4.00       7       8
223..................................     5-1-12     6-1-12         1.50    4.00    4.00    4.00       7       8
224..................................     6-1-12     7-1-12         1.25    4.00    4.00    4.00       7       8
225..................................     7-1-12     8-1-12         1.00    4.00    4.00    4.00       7       8
226..................................     8-1-12     9-1-12         1.00    4.00    4.00    4.00       7       8
227..................................     9-1-12    10-1-12         0.75    4.00    4.00    4.00       7       8
228..................................    10-1-12    11-1-12         0.75    4.00    4.00    4.00       7       8
229..................................    11-1-12    12-1-12         0.75    4.00    4.00    4.00       7       8
230..................................    12-1-12     1-1-13         0.75    4.00    4.00    4.00       7       8
231..................................     1-1-13     2-1-13         0.75    4.00    4.00    4.00       7       8
232..................................     2-1-13     3-1-13         0.75    4.00    4.00    4.00       7       8
233..................................     3-1-13     4-1-13         1.00    4.00    4.00    4.00       7       8
234..................................     4-1-13     5-1-13         1.00    4.00    4.00    4.00       7       8
235..................................     5-1-13     6-1-13         1.00    4.00    4.00    4.00       7       8
236..................................     6-1-13     7-1-13         0.75    4.00    4.00    4.00       7       8
237..................................     7-1-13     8-1-13         1.25    4.00    4.00    4.00       7       8
238..................................     8-1-13     9-1-13         1.75    4.00    4.00    4.00       7       8
239..................................     9-1-13    10-1-13         1.50    4.00    4.00    4.00       7       8
240..................................    10-1-13    11-1-13         1.75    4.00    4.00    4.00       7       8
241..................................    11-1-13    12-1-13         1.75    4.00    4.00    4.00       7       8
242..................................    12-1-13    01-1-14         1.75    4.00    4.00    4.00       7       8
243..................................     1-1-14     2-1-14         1.75    4.00    4.00    4.00       7       8
244..................................     2-1-14     3-1-14         1.75    4.00    4.00    4.00       7       8
245..................................     3-1-14     4-1-14         1.50    4.00    4.00    4.00       7       8
246..................................     4-1-14     5-1-14         1.50    4.00    4.00    4.00       7       8
247..................................     5-1-14     6-1-14         1.50    4.00    4.00    4.00       7       8
248..................................     6-1-14     7-1-14         1.25    4.00    4.00    4.00       7       8
249..................................     7-1-14     8-1-14         1.25    4.00    4.00    4.00       7       8
250..................................     8-1-14     9-1-14         1.25    4.00    4.00    4.00       7       8
251..................................     9-1-14    10-1-14         1.25    4.00    4.00    4.00       7       8
252..................................    10-1-14    11-1-14         1.00    4.00    4.00    4.00       7       8
253..................................    11-1-14    12-1-14         1.25    4.00    4.00    4.00       7       8
254..................................    12-1-14     1-1-15         1.00    4.00    4.00    4.00       7       8
255..................................     1-1-15     2-1-15         1.00    4.00    4.00    4.00       7       8
256..................................     2-1-15     3-1-15         1.00    4.00    4.00    4.00       7       8
257..................................     3-1-15     4-1-15         0.50    4.00    4.00    4.00       7       8
258..................................     4-1-15     5-1-15         0.75    4.00    4.00    4.00       7       8
259..................................     5-1-15     6-1-15         0.75    4.00    4.00    4.00       7       8
260..................................     6-1-15     7-1-15         0.75    4.00    4.00    4.00       7       8
261..................................     7-1-15     8-1-15         1.25    4.00    4.00    4.00       7       8
262..................................     8-1-15     9-1-15         1.50    4.00    4.00    4.00       7       8
263..................................     9-1-15    10-1-15         1.25    4.00    4.00    4.00       7       8
264..................................    10-1-15    11-1-15         1.25    4.00    4.00    4.00       7       8
265..................................    11-1-15    12-1-15         1.25    4.00    4.00    4.00       7       8
266..................................    12-1-15     1-1-16         1.25    4.00    4.00    4.00       7       8
267..................................     1-1-16     2-1-16         1.25    4.00    4.00    4.00       7       8
268..................................     2-1-16     3-1-16         1.25    4.00    4.00    4.00       7       8
269..................................     3-1-16     4-1-16         1.25    4.00    4.00    4.00       7       8
270..................................     4-1-16     5-1-16         1.00    4.00    4.00    4.00       7       8
271..................................     5-1-16     6-1-16         1.00    4.00    4.00    4.00       7       8
272..................................     6-1-16     7-1-16         0.75    4.00    4.00    4.00       7       8
273..................................     7-1-16     8-1-16         0.75    4.00    4.00    4.00       7       8
274..................................     8-1-16     9-1-16         0.50    4.00    4.00    4.00       7       8

[[Page 1004]]

 
275..................................     9-1-16    10-1-16         0.50    4.00    4.00    4.00       7       8
276..................................    10-1-16    11-1-16         0.50    4.00    4.00    4.00       7       8
277..................................    11-1-16    12-1-16         0.50    4.00    4.00    4.00       7       8
278..................................    12-1-16     1-1-17         0.75    4.00    4.00    4.00       7       8
279..................................     1-1-17     2-1-17         1.25    4.00    4.00    4.00       7       8
280..................................     2-1-17     3-1-17         1.25    4.00    4.00    4.00       7       8
281..................................     3-1-17     4-1-17         1.25    4.00    4.00    4.00       7       8
282..................................     4-1-17     5-1-17         1.00    4.00    4.00    4.00       7       8
283..................................     5-1-17     6-1-17         1.00    4.00    4.00    4.00       7       8
284..................................     6-1-17     7-1-17         1.00    4.00    4.00    4.00       7       8
285..................................     7-1-17     8-1-17         1.00    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 at www.fdsys.gov.



Sec. 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 1 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
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

[[Page 1005]]

 
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
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

[[Page 1006]]

 
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
118.................................................        8-1-03        9-1-03        3.00        4.00        4.00        4.00           7           8
119.................................................        9-1-03       10-1-03        3.50        4.00        4.00        4.00           7           8
120.................................................       10-1-03       11-1-03        3.50        4.00        4.00        4.00           7           8
121.................................................       11-1-03       12-1-03        3.25        4.00        4.00        4.00           7           8
122.................................................       12-1-03        1-1-04        3.25        4.00        4.00        4.00           7           8
123.................................................        1-1-04        2-1-04        3.25        4.00        4.00        4.00           7           8
124.................................................        2-1-04        3-1-04        3.25        4.00        4.00        4.00           7           8
125.................................................        3-1-04        4-1-04        3.00        4.00        4.00        4.00           7           8
126.................................................        4-1-04        5-1-04        3.00        4.00        4.00        4.00           7           8
127.................................................        5-1-04        6-1-04        3.00        4.00        4.00        4.00           7           8
 128................................................        6-1-04        7-1-04        3.50        4.00        4.00        4.00           7           8
129.................................................        7-1-04        8-1-04        3.50        4.00        4.00        4.00           7           8
130.................................................        8-1-04        9-1-04        3.50        4.00        4.00        4.00           7           8
131.................................................        9-1-04       10-1-04        3.25        4.00        4.00        4.00           7           8
132.................................................       10-1-04       11-1-04        3.00        4.00        4.00        4.00           7           8
133.................................................       11-1-04       12-1-04        2.75        4.00        4.00        4.00           7           8
134.................................................       12-1-04        1-1-05        2.75        4.00        4.00        4.00           7           8
135.................................................        1-1-05        2-1-05        3.00        4.00        4.00        4.00           7           8
136.................................................        2-1-05        3-1-05        3.00        4.00        4.00        4.00           7           8
137.................................................        3-1-05        4-1-05        2.75        4.00        4.00        4.00           7           8
138.................................................        4-1-05        5-1-05        2.75        4.00        4.00        4.00           7           8
139.................................................        5-1-05        6-1-05        2.75        4.00        4.00        4.00           7           8
140.................................................        6-1-05        7-1-05        2.50        4.00        4.00        4.00           7           8
141.................................................        7-1-05        8-1-05        2.50        4.00        4.00        4.00           7           8
142.................................................        8-1-05        9-1-05        2.25        4.00        4.00        4.00           7           8
143.................................................        9-1-05       10-1-05        2.50        4.00        4.00        4.00           7           8
144.................................................       10-1-05       11-1-05        2.25        4.00        4.00        4.00           7           8
145.................................................       11-1-05       12-1-05        2.50        4.00        4.00        4.00           7           8
146.................................................       12-1-05        1-1-06        2.75        4.00        4.00        4.00           7           8
147.................................................        1-1-06        2-1-06        2.75        4.00        4.00        4.00           7           8
148.................................................        2-1-06        3-1-06        2.75        4.00        4.00        4.00           7           8
149.................................................        3-1-06        4-1-06        2.75        4.00        4.00        4.00           7           8
150.................................................        4-1-06        5-1-06        2.75        4.00        4.00        4.00           7           8
151.................................................        5-1-06        6-1-06        3.00        4.00        4.00        4.00           7           8
152.................................................        6-1-06        7-1-06        3.25        4.00        4.00        4.00           7           8
153.................................................        7-1-06        8-1-06        3.50        4.00        4.00        4.00           7           8
154.................................................        8-1-06        9-1-06        3.50        4.00        4.00        4.00           7           8
155.................................................        9-1-06       10-1-06        3.25        4.00        4.00        4.00           7           8
156.................................................       10-1-06       11-1-06        3.00        4.00        4.00        4.00           7           8
157.................................................       11-1-06       12-1-06        2.75        4.00        4.00        4.00           7           8
158.................................................       12-1-06        1-1-07        3.00        4.00        4.00        4.00           7           8
159.................................................        1-1-07        2-1-07        2.75        4.00        4.00        4.00           7           8
160.................................................        2-1-07        3-1-07        3.00        4.00        4.00        4.00           7           8
161.................................................        3-1-07        4-1-07        3.00        4.00        4.00        4.00           7           8
162.................................................        4-1-07        5-1-07        2.75        4.00        4.00        4.00           7           8
163.................................................        5-1-07        6-1-07        3.00        4.00        4.00        4.00           7           8
164.................................................        6-1-07        7-1-07        3.00        4.00        4.00        4.00           7           8
165.................................................        7-1-07        8-1-07        3.25        4.00        4.00        4.00           7           8
166.................................................        8-1-07        9-1-07        3.50        4.00        4.00        4.00           7           8
167.................................................        9-1-07       10-1-07        3.25        4.00        4.00        4.00           7           8
168.................................................       10-1-07       11-1-07        3.25        4.00        4.00        4.00           7           8
169.................................................       11-1-07       12-1-07        3.25        4.00        4.00        4.00           7           8
170.................................................       12-1-07       01-1-08        3.00        4.00        4.00        4.00           7           8
171.................................................       01-1-08       02-1-08        3.00        4.00        4.00        4.00           7           8
172.................................................       02-1-08       03-1-08        3.25        4.00        4.00        4.00           7           8
173.................................................       03-1-08       04-1-08        3.00        4.00        4.00        4.00           7           8

[[Page 1007]]

 
174.................................................       04-1-08       05-1-08        3.25        4.00        4.00        4.00           7           8
175.................................................       05-1-08       06-1-08        3.25        4.00        4.00        4.00           7           8
176.................................................       06-1-08       07-1-08        3.25        4.00        4.00        4.00           7           8
177.................................................       07-1-08       08-1-08        3.50        4.00        4.00        4.00           7           8
178.................................................       08-1-08       09-1-08        3.25        4.00        4.00        4.00           7           8
179.................................................       09-1-08       10-1-08        3.50        4.00        4.00        4.00           7           8
180.................................................       10-1-08       11-1-08        3.25        4.00        4.00        4.00           7           8
181.................................................       11-1-08       12-1-08        3.75        4.00        4.00        4.00           7           8
182.................................................       12-1-08       01-1-09        4.75        4.00        4.00        4.00           7           8
183.................................................        1-1-09        2-1-09        4.00        4.00        4.00        4.00           7           8
184.................................................        2-1-09        3-1-09        3.00        4.00        4.00        4.00           7           8
185.................................................        3-1-09        4-1-09        3.50        4.00        4.00        4.00           7           8
186.................................................        4-1-09        5-1-09        3.25        4.00        4.00        4.00           7           8
187.................................................        5-1-09        6-1-09        3.50        4.00        4.00        4.00           7           8
188.................................................        6-1-09        7-1-09        3.75        4.00        4.00        4.00           7           8
189.................................................        7-1-09        8-1-09        3.75        4.00        4.00        4.00           7           8
190.................................................        8-1-09        9-1-09        3.00        4.00        4.00        4.00           7           8
191.................................................        9-1-09       10-1-09        3.00        4.00        4.00        4.00           7           8
192.................................................       10-1-09       11-1-09        2.50        4.00        4.00        4.00           7           8
193.................................................       11-1-09       12-1-09        2.25        4.00        4.00        4.00           7           8
194.................................................       12-1-09        1-1-10        2.50        4.00        4.00        4.00           7           8
195.................................................        1-1-10        2-1-10        2.50        4.00        4.00        4.00           7           8
196.................................................        2-1-10        3-1-10        2.75        4.00        4.00        4.00           7           8
197.................................................        3-1-10        4-1-10        2.75        4.00        4.00        4.00           7           8
198.................................................        4-1-10        5-1-10        2.75        4.00        4.00        4.00           7           8
199.................................................        5-1-10        6-1-10        3.00        4.00        4.00        4.00           7           8
200.................................................        6-1-10        7-1-10        2.75        4.00        4.00        4.00           7           8
201.................................................        7-1-10        8-1-10        2.50        4.00        4.00        4.00           7           8
202.................................................        8-1-10        9-1-10        2.25        4.00        4.00        4.00           7           8
203.................................................        9-1-10       10-1-10        2.25        4.00        4.00        4.00           7           8
204.................................................       10-1-10       11-1-10        1.75        4.00        4.00        4.00           7           8
205.................................................       11-1-10       12-1-10        1.75        4.00        4.00        4.00           7           8
206.................................................       12-1-10        1-1-11        2.25        4.00        4.00        4.00           7           8
207.................................................        1-1-11        2-1-11        2.25        4.00        4.00        4.00           7           8
208.................................................        2-1-11        3-1-11        2.50        4.00        4.00        4.00           7           8
209.................................................        3-1-11        4-1-11        2.50        4.00        4.00        4.00           7           8
210.................................................        4-1-11        5-1-11        2.50        4.00        4.00        4.00           7           8
211.................................................        5-1-11        6-1-11        2.50        4.00        4.00        4.00           7           8
212.................................................        6-1-11        7-1-11        2.50        4.00        4.00        4.00           7           8
213.................................................        7-1-11        8-1-11        2.25        4.00        4.00        4.00           7           8
214.................................................        8-1-11        9-1-11        2.25        4.00        4.00        4.00           7           8
215.................................................        9-1-11       10-1-11        2.25        4.00        4.00        4.00           7           8
216.................................................       10-1-11       11-1-11        1.75        4.00        4.00        4.00           7           8
217.................................................       11-1-11       12-1-11        1.50        4.00        4.00        4.00           7           8
218.................................................       12-1-11        1-1-12        1.50        4.00        4.00        4.00           7           8
219.................................................        1-1-12        2-1-12        1.25        4.00        4.00        4.00           7           8
220.................................................        2-1-12        3-1-12        1.25        4.00        4.00        4.00           7           8
221.................................................        3-1-12        4-1-12        1.25        4.00        4.00        4.00           7           8
222.................................................        4-1-12        5-1-12        1.25        4.00        4.00        4.00           7           8
223.................................................        5-1-12        6-1-12        1.50        4.00        4.00        4.00           7           8
224.................................................        6-1-12        7-1-12        1.25        4.00        4.00        4.00           7           8
225.................................................        7-1-12        8-1-12        1.00        4.00        4.00        4.00           7           8
226.................................................        8-1-12        9-1-12        1.00        4.00        4.00        4.00           7           8
227.................................................        9-1-12       10-1-12        0.75        4.00        4.00        4.00           7           8
228.................................................       10-1-12       11-1-12        0.75        4.00        4.00        4.00           7           8
229.................................................       11-1-12       12-1-12        0.75        4.00        4.00        4.00           7           8
230.................................................       12-1-12        1-1-13        0.75        4.00        4.00        4.00           7           8
231.................................................        1-1-13        2-1-13        0.75        4.00        4.00        4.00           7           8
232.................................................        2-1-13        3-1-13        0.75        4.00        4.00        4.00           7           8
233.................................................        3-1-13        4-1-13        1.00        4.00        4.00        4.00           7           8
234.................................................        4-1-13        5-1-13        1.00        4.00        4.00        4.00           7           8
235.................................................        5-1-13        6-1-13        1.00        4.00        4.00        4.00           7           8
236.................................................        6-1-13        7-1-13        0.75        4.00        4.00        4.00           7           8
237.................................................        7-1-13        8-1-13        1.25        4.00        4.00        4.00           7           8
238.................................................        8-1-13        9-1-13        1.75        4.00        4.00        4.00           7           8
239.................................................        9-1-13       10-1-13        1.50        4.00        4.00        4.00           7           8
240.................................................       10-1-13       11-1-13        1.75        4.00        4.00        4.00           7           8
241.................................................       11-1-13       12-1-13        1.75        4.00        4.00        4.00           7           8
242.................................................       12-1-13       01-1-14        1.75        4.00        4.00        4.00           7           8
243.................................................        1-1-14        2-1-14        1.75        4.00        4.00        4.00           7           8
244.................................................        2-1-14        3-1-14        1.75        4.00        4.00        4.00           7           8
245.................................................        3-1-14        4-1-14        1.50        4.00        4.00        4.00           7           8

[[Page 1008]]

 
246.................................................        4-1-14        5-1-14        1.50        4.00        4.00        4.00           7           8
247.................................................        5-1-14        6-1-14        1.50        4.00        4.00        4.00           7           8
248.................................................        6-1-14        7-1-14        1.25        4.00        4.00        4.00           7           8
249.................................................        7-1-14        8-1-14        1.25        4.00        4.00        4.00           7           8
250.................................................        8-1-14        9-1-14        1.25        4.00        4.00        4.00           7           8
251.................................................        9-1-14       10-1-14        1.25        4.00        4.00        4.00           7           8
252.................................................       10-1-14       11-1-14        1.00        4.00        4.00        4.00           7           8
253.................................................       11-1-14       12-1-14        1.25        4.00        4.00        4.00           7           8
254.................................................       12-1-14        1-1-15        1.00        4.00        4.00        4.00           7           8
255.................................................        1-1-15        2-1-15        1.00        4.00        4.00        4.00           7           8
256.................................................        2-1-15        3-1-15        1.00        4.00        4.00        4.00           7           8
257.................................................        3-1-15        4-1-15        0.50        4.00        4.00        4.00           7           8
258.................................................        4-1-15        5-1-15        0.75        4.00        4.00        4.00           7           8
259.................................................        5-1-15        6-1-15        0.75        4.00        4.00        4.00           7           8
260.................................................        6-1-15        7-1-15        0.75        4.00        4.00        4.00           7           8
261.................................................        7-1-15        8-1-15        1.25        4.00        4.00        4.00           7           8
262.................................................        8-1-15        9-1-15        1.50        4.00        4.00        4.00           7           8
263.................................................        9-1-15       10-1-15        1.25        4.00        4.00        4.00           7           8
264.................................................       10-1-15       11-1-15        1.25        4.00        4.00        4.00           7           8
265.................................................       11-1-15       12-1-15        1.25        4.00        4.00        4.00           7           8
266.................................................       12-1-15        1-1-16        1.25        4.00        4.00        4.00           7           8
267.................................................        1-1-16        2-1-16        1.25        4.00        4.00        4.00           7           8
268.................................................        2-1-16        3-1-16        1.25        4.00        4.00        4.00           7           8
269.................................................        3-1-16        4-1-16        1.25        4.00        4.00        4.00           7           8
270.................................................        4-1-16        5-1-16        1.00        4.00        4.00        4.00           7           8
271.................................................        5-1-16        6-1-16        1.00        4.00        4.00        4.00           7           8
272.................................................        6-1-16        7-1-16        0.75        4.00        4.00        4.00           7           8
273.................................................        7-1-16        8-1-16        0.75        4.00        4.00        4.00           7           8
274.................................................        8-1-16        9-1-16        0.50        4.00        4.00        4.00           7           8
275.................................................        9-1-16       10-1-16        0.50        4.00        4.00        4.00           7           8
276.................................................       10-1-16       11-1-16        0.50        4.00        4.00        4.00           7           8
277.................................................       11-1-16       12-1-16        0.50        4.00        4.00        4.00           7           8
278.................................................       12-1-16        1-1-17        0.75        4.00        4.00        4.00           7           8
279.................................................        1-1-17        2-1-17        1.25        4.00        4.00        4.00           7           8
280.................................................        2-1-17        3-1-17        1.25        4.00        4.00        4.00           7           8
281.................................................        3-1-17        4-1-17        1.25        4.00        4.00        4.00           7           8
282.................................................        4-1-17        5-1-17        1.00        4.00        4.00        4.00           7           8
283.................................................        5-1-17        6-1-17        1.00        4.00        4.00        4.00           7           8
284.................................................        6-1-17        7-1-17        1.00        4.00        4.00        4.00           7           8
285.................................................        7-1-17        8-1-17        1.00        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 at www.fdsys.gov.



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 1009]]



                     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.
4041.51  Disclosure of information by plan administrator in distress 
          termination.

    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 1010]]

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. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period under this part. A 
proposed termination date may be any day, including a weekend or Federal 
holiday.
    (b) Filing with the PBGC--(1) Method and date of filing. The PBGC 
applies the rules in subpart A of part 4000 of this chapter to determine 
permissible methods of filing with the PBGC under this part. The PBGC 
applies the rules in subpart C of part 4000 of this chapter to determine 
the date that a submission under this part was filed with the PBGC.
    (2) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (c) Issuance to third 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 Sec. 4041.23(c) or Sec. 4041.24(f) is treated as an affected 
party.
    (1) Method and date of issuance. The PBGC applies the rules in 
subpart B of part 4000 of this chapter to determine permissible methods 
of issuance under this part. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.
    (2) 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; or
    (ii) 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.
    (3) Deceased participants. In the case of a deceased participant, 
the plan administrator need not issue a notice to

[[Page 1011]]

the participant's estate if the estate is not entitled to a 
distribution.
    (4) 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.
    (5) 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.

[62 FR 60428, Nov. 7, 1997, as amended at 68 FR 61353, Oct. 28, 2003]



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.



Sec. 4041.5  Record retention and availability.

    (a) Retention requirement--(1) Persons subject to requirement; 
records to be retained. 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. If a contributing sponsor or the 
plan administrator maintains information in accordance with this 
section, 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.
    (3) Electronic recordkeeping. The contributing sponsor or plan 
administrator may use electronic media for maintenance and retention of 
records required by this part in accordance with the requirements of 
subpart E of part 4000 of this chapter.
    (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 (or, for electronic records, inspection, 
electronic copying, and printout) at the location where they are kept 
(or another, mutually agreeable, location) 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.

[68 FR 61353, Oct. 28, 2003]



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. 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.

[62 FR 60428, Nov. 7, 1997, as amended at 81 FR 29766, May 13, 2016]



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.

[[Page 1012]]

    (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 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

[[Page 1013]]

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.
    (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

[[Page 1014]]

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 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

[[Page 1015]]

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;
    (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

[[Page 1016]]

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;
    (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

[[Page 1017]]

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 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

[[Page 1018]]

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 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

[[Page 1019]]

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, 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--

[[Page 1020]]

    (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 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

[[Page 1021]]

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 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

[[Page 1022]]

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.
    (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

[[Page 1023]]

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 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

[[Page 1024]]

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--
    (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.

[[Page 1025]]

    (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);
    (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--

[[Page 1026]]

    (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 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

[[Page 1027]]

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)).
    (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

[[Page 1028]]

    (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 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

[[Page 1029]]

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 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)''.



Sec. 4041.51  Disclosure of information by plan administrator in
distress termination.

    (a) Request for Information--(1) In general. If a notice of intent 
to terminate under Sec. 4041.43 is issued with respect to a plan, an 
affected party may make a request to the plan administrator for 
information submitted to PBGC under sections 4041(a)(2) and 4041(c)(2) 
of ERISA and Secs. 4041.43 and 4041.45.
    (2) Requirements. A request under paragraph (a) of this section 
must:
    (i) Be in writing to the plan administrator;

[[Page 1030]]

    (ii) State the name of the plan and that the request is for 
information submitted to PBGC with respect to the application for a 
distress termination of the plan;
    (iii) State the name of the person making the request for 
information and such person's relationship to the plan (e.g., plan 
participant), and that such relationship meets the definition of 
affected party under Sec. 4001.2 of this chapter; and
    (iv) Be signed by the person making the request.
    (b) Response by Plan Administrator--(1) Information. The information 
that a plan administrator must provide in response to a request under 
paragraph (a) of this section includes PBGC Form 600, and any 
information submitted to PBGC pursuant to section 4041(c)(2) of ERISA 
and Sec. 4041.45.
    (2) Timing of response. A plan administrator that receives a request 
under paragraph (a) of this section must provide the information 
requested not later than the 15th business day (as defined in 
Sec. 4000.22 of this chapter) after receipt of the request.
    (3) Deferral of due date. If, at the time the plan administrator 
receives a request under paragraph (a) of this section, the plan 
administrator has not filed a PBGC Form 600, the plan administrator must 
provide the information requested under paragraph (a) not later than the 
15th business day (as defined in Sec. 4000.22 of this chapter) after a 
PBGC Form 600 is filed with PBGC.
    (4) Supplemental responses. If, at any time after the later of the 
receipt of a request under paragraph (a) of this section, or the filing 
of PBGC Form 600, the plan administrator submits additional information 
to PBGC with respect to the plan termination under section 4041(c)(2) of 
ERISA and Sec. 4041.45, the plan administrator must, not later than the 
15th business day (as defined in Sec. 4000.22 of this chapter) after 
each additional submission, provide the additional information to any 
affected party that has made a request under paragraph (a) of this 
section.
    (5) Confidential information. (i) In responding to a request under 
paragraph (a) of this section, the plan administrator shall not provide 
information that may, directly or indirectly, identify an individual 
participant or beneficiary of the plan.
    (ii) A plan administrator that has received a request under 
paragraph (a) of this section may seek a court order under which 
confidential information described in section 552(b) of title 5, United 
States Code--
    (A) Will be disclosed only to authorized representatives (within the 
meaning of section 4041(c)(2)(D)(iv) of ERISA) that agree to ensure the 
confidentiality of such information, and,
    (B) Will not be disclosed to other affected parties.
    (6) Reasonable fees. Under section 4041(c)(2)(D)(iii)(II) of ERISA, 
a plan administrator may charge a reasonable fee for any information 
provided under this section in other than electronic form.

[73 FR 68337, Nov. 18, 2008]



PART 4041A_TERMINATION OF MULTIEMPLOYER PLANS--Table of Contents



                      Subpart A_General Provisions

Sec.
4041A.1  Purpose and scope.
4041A.2  Definitions.
4041A.3  Method and date of filing; where to file; computation of time; 
          issuances to third parties.

                     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  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.

[[Page 1031]]



                      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, 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  Method and date of filing; where to file; computation
of time; issuances to third parties.

    (a) Method and date of filing. The PBGC applies the rules in subpart 
A of part 4000 of this chapter to determine permissible methods of 
filing with the PBGC under this part. The PBGC applies the rules in 
subpart C of part 4000 of this chapter to determine the date that a 
submission under this part was filed with the PBGC.
    (b) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (c) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing or 
issuance under this part.
    (d) Method and date of issuance. The PBGC applies the rules in 
subpart B of part 4000 of this chapter to determine permissible methods 
of issuance under this part. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.

[68 FR 61354, Oct. 28, 2003]



                     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

[[Page 1032]]

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.
    (d) How and where to file. Filings to PBGC under this subpart must 
be submitted in accordance with the rules in subpart A of part 4000 of 
this chapter. See Sec. 4000.4 of this chapter for information on where 
to file.

(Approved by the Office of Management and Budget under control number 
1212-0020)

[61 FR 34052, July 1, 1996, as amended at 80 FR 55745, Sept. 17, 2015]



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:
    (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

[[Page 1033]]

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
    (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   Plan valuations and monitoring.

    (a) Annual valuation. 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 not later than 150 days after 
the end of the plan year in which the plan terminates and each plan year 
thereafter except as provided in this paragraph. A plan year for which a 
valuation is performed is called a valuation year.
    (1) If the value of nonforfeitable benefits for the plan is $25 
million or less as determined for a valuation year, the plan sponsor may 
use the valuation for the next two plan years and, subject to paragraphs 
(a)(2) and (3) of this section, perform a new valuation pursuant to this 
paragraph for the third plan year after the previous valuation year.
    (2) No valuation is required for a plan year for which the plan 
receives financial assistance from PBGC under section 4261 of ERISA.
    (3) No valuation is required for the plan year in which the plan is 
closed out in accordance with subpart D of this part.

[[Page 1034]]

    (b) Plan monitoring. Upon receipt of the 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.

[61 FR 34052, July 1, 1996, as amended at 79 FR 30462, May 28, 2014]



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 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 to the PBGC and to plan participants and beneficiaries in 
accordance with part 4281, subpart D.

[61 FR 34052, July 1, 1996, as amended at 80 FR 55745, Sept. 17, 2015]



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

[[Page 1035]]

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 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 4042_SINGLE-EMPLOYER PLAN TERMINATION INITIATED BY PBGC--
Table of Contents



                      Subpart A_General Provisions

Sec.
4042.1  Purpose and scope.
4042.2  Definitions.
4042.3  Issuance rules.

Subpart B [Reserved]

                          Subpart C_Disclosure

4042.4  Disclosure of information by plan administrator or plan sponsor.
4042.5  Disclosure of administrative record by PBGC.

    Authority: 29 U.S.C. 1302(b)(3), 1342.

    Source: 73 FR 68338, Nov. 18, 2008, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 4042.1  Purpose and scope.

    This part sets forth rules and procedures relating to single-
employer plan terminations initiated by PBGC under section 4042 of 
ERISA.



Sec. 4042.2  Definitions.

    The following terms used in this part are defined in Sec. 4001.2 of 
this chapter: Affected party, ERISA, PBGC, and plan administrator.

[[Page 1036]]



Sec. 4042.3  Issuance rules.

    PBGC applies the rules in subpart B of part 4000 of this chapter to 
determine permissible methods of issuance under this part. PBGC applies 
the rules in subpart C of part 4000 of this chapter to determine the 
date that an issuance under this part was provided.

Subpart B [Reserved]



                          Subpart C_Disclosure



Sec. 4042.4  Disclosure of information by plan administrator 
or plan sponsor.

    (a) Request for Information--(1) In general. Beginning on the third 
business day (as defined in Sec. 4000.22 of this chapter) after PBGC has 
issued a notice under section 4042 of ERISA that a plan should be 
terminated, an affected party may make a request to the plan sponsor or 
the plan administrator (or both) for any information that such plan 
administrator or plan sponsor has submitted to PBGC in connection with 
the plan termination.
    (2) Requirements. A request under paragraph (a) of this section 
must:
    (i) Be in writing to the plan administrator or plan sponsor;
    (ii) State the name of the plan and that the request is for 
information submitted to PBGC in connection with the plan termination;
    (iii) State the name of the person making the request for 
information and such person's relationship to the plan (e.g., plan 
participant), and that such relationship meets the definition of 
affected party under Sec. 4001.2 of this chapter; and
    (iv) Be signed by the person making the request.
    (b) Response by Plan Administrator or Plan Sponsor--(1) Timing of 
response. A plan administrator or plan sponsor that receives a request 
under paragraph (a) of this section must provide the information 
requested not later than the 15th business day (as defined in 
Sec. 4000.22 of this chapter) after receipt of the request.
    (2) Supplemental responses. If, at any time after receipt of a 
request under paragraph (a), the plan administrator or plan sponsor 
submits additional information to PBGC in connection with the plan 
termination, the plan administrator or plan sponsor must provide such 
additional information to any affected party that has made a request 
under paragraph (a), not later than the 15th business day (as defined in 
Sec. 4000.22 of this chapter) after the information is submitted to 
PBGC.
    (3) Confidential information. (i) In responding to a request under 
paragraph (a) of this section, the plan administrator or plan sponsor 
shall not provide information that may, directly or indirectly, identify 
an individual participant or beneficiary.
    (ii) A plan administrator or plan sponsor that has received a 
request under paragraph (a) of this section may seek a court order under 
which confidential information described in section 552(b) of title 5, 
United States Code--
    (A) Will be disclosed only to authorized representatives (within the 
meaning of section 4041(c)(2)(D)(iv) of ERISA) that agree, to ensure the 
confidentiality of such information, and
    (B) Will not be disclosed to other affected parties.
    (4) Reasonable fees. Under section 4042(c)(3)(D)(ii) of ERISA, a 
plan administrator or plan sponsor may charge a reasonable fee for any 
information provided under this section in other than electronic form.



Sec. 4042.5  Disclosure of administrative record by PBGC.

    (a) Request for Administrative Record--(1) In general. Beginning on 
the third business day (as defined in Sec. 4000.22 of this chapter) 
after PBGC has issued a notice under section 4042 of ERISA that a plan 
should be terminated, an affected party with respect to the plan may 
make a request to PBGC for the administrative record of PBGC's 
determination that the plan should be terminated.
    (2) Requirements. A request under paragraph (a) of this section 
must:
    (i) Be in writing;
    (ii) State the name of the plan and that the request is for the 
administrative record with respect to a notice issued by PBGC under 
section 4042 of ERISA that a plan should be terminated;

[[Page 1037]]

    (iii) State the name of the person making the request, the person's 
relationship to the plan (e.g., plan participant), and that such 
relationship meets the definition of affected party under Sec. 4001.2 of 
this chapter; and
    (iv) Be signed by the person making the request.
    (3) A request under paragraph (a) of this section must be sent to 
PBGC's Disclosure Officer at the address provided on PBGC's Web site. To 
expedite processing, the request should be prominently identified as an 
``Administrative Record Request.''
    (b) PBGC Response to Request for Administrative Record--(1) 
Notification of plan administrator and plan sponsor. Upon receipt of a 
request under paragraph (a) of this section, PBGC will promptly notify 
the plan administrator and plan sponsor that it has received a request 
for the administrative record, and the date by which PBGC will provide 
the information to the affected party that made the request.
    (2) Confidential information. (i) In responding to a request under 
paragraph (a) of this section, PBGC will not disclose any portions of 
the administrative record that are prohibited from disclosure under the 
Privacy Act, 5 U.S.C. 552a.
    (ii) A plan administrator or plan sponsor that has received 
notification pursuant to paragraph (b)(1) of this section may seek a 
court order under which those portions of the administrative record that 
contain confidential information described in section 552(b) of title 5, 
United States Code--
    (A) Will be disclosed only to authorized representatives (within the 
meaning of section 4041(c)(2)(D)(iv) of ERISA) that agree to ensure the 
confidentiality of such information, and
    (B) Will not be disclosed to other affected parties.
    (iii) If, before the 15th business day (as defined in Sec. 4000.22 
of this chapter) after PBGC has received a request under paragraph (a), 
PBGC receives a court order as described in paragraph (b)(2)(ii) of this 
section, PBGC will disclose those portions of the administrative record 
that contain confidential information described in section 552(b) of 
title 5, United States Code, only as provided in the order.
    (3) Timing of response. PBGC will send the administrative record to 
the affected party that made the request not later than the 15th 
business day (as defined in Sec. 4000.22 of this chapter) after it 
receives the request.
    (4) Form and manner. PBGC will provide the administrative record 
using measures (including electronic measures) reasonably calculated to 
ensure actual receipt of the material by the intended recipient.



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.
4043.9  Company low-default-risk safe harbor.
4043.10  Well-funded plan safe harbor.

            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  Insolvency 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.

[[Page 1038]]

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  Insolvency 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. 1083(k), 1302(b)(3), 1343.

    Source: 80 FR 55002, Sept. 11, 2015, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 4043.1  Purpose and scope.

    This part prescribes the requirements for notifying PBGC of a 
reportable event under section 4043 of ERISA or of a failure to make 
certain required contributions under section 303(k)(4) of ERISA or 
section 430(k)(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 PBGC of a 
failure to make certain required contributions.



Sec. 4043.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
ERISA, fair market value, irrevocable commitment, multiemployer plan, 
PBGC, person, plan, plan administrator, plan year, 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 greater of--
    (i) 10 percent of the controlled group's annual operating income; or
    (ii) $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 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 a reportable event occurs.
    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 parent means a foreign entity that is a direct or indirect 
parent of a person that is a contributing sponsor of a plan.
    Low-default-risk has the meaning described in Sec. 4043.9.
    Notice due date means the deadline (including extensions) for filing 
notice of a reportable event with PBGC.
    Participant means a participant as defined in Sec. 4006.2 of this 
chapter.
    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.
    U.S. entity means an entity subject to the personal jurisdiction of 
the U.S. district court.

[[Page 1039]]

    Well-funded plan safe harbor has the meaning described in 
Sec. 4043.10.



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, 
must submit the information required under this part by the time 
specified in Sec. 4043.20 (for post-event notices), Sec. 4043.61 (for 
advance notices), or Sec. 4043.81 (for Form 200 filings). Any 
information filed with PBGC in connection with another matter may be 
incorporated by reference. If an event is subject to both post-event and 
advance notice requirements, the notice filed first satisfies both 
filing requirements.
    (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 of a notice with respect 
to a reportable event by any person required to file will be deemed to 
be a filing by all persons required to give PBGC notice of the event 
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 under subpart B or C of this part must file, by 
the notice date, the form specified by PBGC for that purpose, with the 
information specified in PBGC's reportable events instructions.
    (c) Reportable event forms and instructions. PBGC will issue 
reportable events forms and instructions and make them available on its 
Web site (http://www.pbgc.gov).
    (d) Requests for additional information. PBGC may, in any case, 
require the submission of additional relevant information not specified 
in its forms and instructions. Any such information must 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 PBGC, or 
within a different time period specified therein. PBGC may in its 
discretion shorten the time period where it determines that the 
interests of 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, PBGC may pursue any equitable or legal remedies available to it 
under the law, including assessing against each person required to 
provide the notice a separate penalty under section 4071 of ERISA.



Sec. 4043.4  Waivers and extensions.

    (a) Waivers and extensions--in general. 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 with PBGC in writing 
(which may be in electronic form) and must state the facts and 
circumstances on which the request is based.
    (b) Waivers and extensions--specific events. For some reportable 
events, automatic waivers from reporting 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, reporting is automatically waived 
for an occurrence that constitutes a reportable event under more than 
one section only if the requirements for an automatic waiver under each 
section are satisfied.
    (c) Multiemployer plans. The requirements of section 4043 of ERISA 
are waived with respect to multiemployer plans.
    (d) 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 under part 4041 of this chapter; 
or
    (2) A trustee is appointed for the plan under section 4042 of ERISA.
    (e) Events not described in this part. Notice of a reportable event 
described in section 4043(c) of ERISA is waived

[[Page 1040]]

except to the extent that reporting is required under this part.



Sec. 4043.5  How and where to file.

    Reportable event notices required under this part must be filed 
electronically in accordance with the instructions posted on PBGC's Web 
site, http://www.pbgc.gov. Filing guidance is provided by the 
instructions and by subpart A of part 4000 of this chapter.



Sec. 4043.6  Date of filing.

    (a) Post-event notice filings. PBGC applies the rules in subpart C 
of part 4000 of this chapter to determine the date that a submission 
under subpart B of this part was filed with PBGC.
    (b) Advance notice and Form 200 filings. Information filed under 
subpart C or D of this part is treated as filed on the date it is 
received by PBGC. Subpart C of part 4000 of this chapter provides rules 
for determining when PBGC receives a submission.



Sec. 4043.7  Computation of time.

    PBGC applies the rules in subpart D of part 4000 of this chapter to 
compute any time period under this part.



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 PBGC pursuant to subpart B or C 
of this part will 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. This provision does not apply to 
information or material submitted to PBGC pursuant to subpart D of this 
part, even where the submission serves as an alternative method of 
compliance with Sec. 4043.25.



Sec. 4043.9  Company low-default-risk safe harbor.

    (a) Low-default-risk. An entity (a ``company'') that is a 
contributing sponsor of a plan or the highest level U.S. parent of a 
contributing sponsor is ``low-default-risk'' on the date of an event if 
that date falls within a safe harbor period of the company as described 
in paragraph (b) of this section.
    (b) Safe harbor period. A safe harbor period for a company means a 
period that--
    (1) Begins on a financial information date (as described in 
paragraph (c) of this section) on which the company satisfies the low-
default-risk standard in paragraph (e) of this section, and
    (2) Ends 13 months later or (if earlier) on the company's next 
financial information date.
    (c) Financial information date. A financial information date for a 
company means--
    (1) A date on which the company files on Form 10-K with the 
Securities and Exchange Commission (``SEC'') audited annual financial 
statements (including balance sheets, income statements, cash flow 
statements, and notes to the financial statements) for the company's 
most recent completed fiscal year preceding the date of such filing;
    (2) The date (the ``closing date'') on which the company closes the 
annual accounting period that results in the production of audited or 
unaudited annual financial statements for the company's most recent 
completed fiscal year preceding the closing date, if audited annual 
financial statements are not required to be filed with the SEC; or
    (3) A date on which the company files with IRS an annual federal 
income tax return or IRS Form 990 (in either case, a ``return'') for the 
company's most recent completed fiscal year preceding the date of such 
filing, if at the time the return is filed there are no annual financial 
statements for the year of the return.
    (d) Supporting financial information. For purposes of this section, 
the ``supporting financial information'' is the annual financial 
statements or return associated with the establishment of the financial 
information date.
    (e) Low-default-risk standard--(1) Adequate capacity. For purposes 
of this part, except as provided in paragraph (e)(4) of this section, a 
company meets the low-default-risk standard as of a financial 
information date (the ``qualifying date'') if the company has adequate 
capacity to meet its obligations

[[Page 1041]]

in full and on time on the qualifying date as evidenced by satisfying 
either:
    (i) Both of the criteria described in paragraphs (e)(2)(i) and (ii) 
of this section, or
    (ii) Any four of the seven criteria described in paragraphs 
(e)(2)(i) through (vii) of this section.
    (2) Criteria evidencing adequate capacity. The criteria referred to 
in paragraph (e)(1) of this section are:
    (i) The probability that the company will default on its financial 
obligations is not more than four percent over the next five years or 
not more than 0.4 percent over the next year, in either case determined 
on the basis of widely available financial information on the company's 
credit quality.
    (ii) The company's secured debt (disregarding leases and debt 
incurred to acquire or improve property and secured only by that 
property) does not exceed 10 percent of the company's total assets.
    (iii) The company has a ratio of retained-earnings-to-total-assets 
of 0.25 or more.
    (iv) The company has a ratio of total-debt-to-EBITDA (earnings 
before interest, taxes, depreciation, and amortization) of 3.0 or less.
    (v) The company has positive net income for the two most recently 
completed fiscal years preceding the qualifying date.
    (vi) During the two-year period ending on the qualifying date, the 
company has not experienced an event described in Sec. 4043.34(a)(1) or 
(2) (dealing with a default on a loan with an outstanding balance of $10 
million or more) with respect to any loan with an outstanding balance of 
$10 million or more to the company regardless of whether reporting was 
waived under Sec. 4043.34(b).
    (vii) During the two-year period ending on the qualifying date, 
there has not been any failure to make when due any contribution 
described in Sec. 4043.25(a)(1) or (2) (dealing with failure to make 
required minimum funding payments), unless reporting was waived under 
Sec. 4043.25(c).
    (3) Using financial information to evaluate criteria--(i) Subject to 
paragraph (e)(3)(ii) of this section with respect to evaluating the 
criterion described in paragraph (e)(2)(v) of this section, to evaluate 
whether criteria described in paragraphs (e)(2)(ii) through (v) of this 
section are met, a company must use the supporting financial information 
described in paragraph (d) of this section associated with the 
qualifying date.
    (ii) In addition to the use of the supporting financial information 
to evaluate criteria as described in paragraph (e)(3)(i) of this 
section, to evaluate whether the criterion described in paragraph 
(e)(2)(v) of this section is met, the company must also use the 
supporting financial information as described in paragraph (d) of this 
section associated with the financial information date for the fiscal 
year preceding the fiscal year covered by the supporting financial 
information associated with the qualifying date.
    (iii) For purposes of paragraph (e)(2)(v) of this section, the 
excess of total revenue over total expenses as reported on the IRS Form 
990 is considered to be net income.
    (4) Exception. If a company receives an audit or review report for 
supporting financial information described in paragraph (d) of this 
section associated with the qualifying date that expresses a material 
adverse view or qualification, the company does not satisfy the low-
default-risk standard.



Sec. 4043.10  Well-funded plan safe harbor.

    For purposes of this part, a plan is in the well-funded plan safe 
harbor for an event year if no variable-rate premium was required to be 
paid for the plan under parts 4006 and 4007 of this chapter for the plan 
year preceding the event year.



            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 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 responsibility

[[Page 1042]]

for any failure to file or defective filing lies with 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) Waiver. 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) Waiver. Notice is waived for this event.



Sec. 4043.23  Active participant reduction.

    (a) Reportable event. A reportable event occurs for a plan:
    (1) Single-cause event. On the date in a plan year when, as a result 
of a single cause--such as a reorganization, the discontinuance of an 
operation, a natural disaster, a mass layoff, or an early retirement 
incentive program--the number of active participants is reduced to less 
than 80 percent of the number of active participants at the beginning of 
such plan year or less than 75 percent of the number of active 
participants at the beginning of the plan year preceding such plan year.
    (2) Attrition event. At the end of a plan year if the number of 
active participants covered by the plan at the end of such plan year is 
less than 80 percent of the number of active participants at the 
beginning of such plan year, or less than 75 percent of the number of 
active participants at the beginning of the plan year preceding such 
plan year.
    (b) Determination rules--(1) Determination dates. 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, and the number of active participants at the end of a plan year 
may be determined by using the number of active participants at the 
beginning of the next 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.
    (3) Employment relationship. The employment relationship referred to 
in this paragraph (b) is between the participant and all members of the 
plan's controlled group.
    (c) Reductions due to cessations and withdrawals. For purposes of 
paragraph (a)(1) of this section, a reduction in the number of active 
participants is to be disregarded to the extent that it--
    (1) Is attributable to an event described in ERISA section 4062(e) 
or 4063(a), and
    (2) Is timely reported to PBGC under ERISA section 4063(a).
    (d) Waivers--(1) Small plan. Notice under this section is waived if 
the plan had 100 or fewer participants for whom flat-rate premiums were 
payable for the plan year preceding the event year.
    (2) Low-default-risk. Notice under this section is waived if each 
contributing sponsor of the plan and the highest level U.S. parent of 
each contributing sponsor are low-default-risk on the date of the event.
    (3) Well-funded plan. Notice under this section is waived if the 
plan is in the well-funded plan safe harbor for the event year.
    (4) Public company. Notice under this section is waived if any 
contributing sponsor of the plan before the transaction is a public 
company and the contributing sponsor timely files a SEC Form 8-K 
disclosing the event under an item of the Form 8-K other than under Item 
2.02 (Results of Operations and Financial Condition) or in financial

[[Page 1043]]

statements under Item 9.01 (Financial Statements and Exhibits).
    (e) Extension--attrition event. For an event described in paragraph 
(a)(2) of this section, the notice date is extended until the premium 
due date for the plan year following the event year.



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) Waiver. Notice is waived for this event.



Sec. 4043.25  Failure to make required minimum funding payment.

    (a) Reportable event. A reportable event occurs when--
    (1) A contribution required under sections 302 and 303 of ERISA or 
sections 412 and 430 of the Code is not made by the due date for the 
payment under ERISA section 303(j) or Code section 430(j), or
    (2) Any other contribution required as a condition of a funding 
waiver is not made when due.
    (b) Alternative method of compliance--Form 200 filed. If, with 
respect to the same failure, a filing is made in accordance with 
Sec. 4043.81, that filing (while not considered to be submitted to PBGC 
pursuant to section 4043 of ERISA for purposes of section 4043(f) of 
ERISA) satisfies the requirements of this section.
    (c) Waivers--(1) Small plan. Notice under this section is waived 
with respect to a failure to make a required quarterly contribution 
under section 303(j)(3) of ERISA or section 430(j)(3) of the Code if the 
plan had 100 or fewer participants for whom flat-rate premiums were 
payable for the plan year preceding the event year.
    (2) 30-day grace period. Notice under this section is waived if the 
missed contribution is made by the 30th day after its due date.
    (3) Late funding balance election. Notice under this section is 
waived if the failure to make a timely required contribution is solely 
because of the plan sponsor's failure to timely make a funding balance 
election.



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 is not 
treated as being currently unable to pay benefits if its failure to pay 
is caused solely by--
    (i) A limitation under section 436 of the Code and section 206(g) of 
ERISA (dealing with funding-based limits on benefits and benefit 
accruals under single-employer plans),
    (ii) The inability to locate a person, or
    (iii) Any other administrative delay, including the need to verify a 
person's eligibility for benefits, to the extent that 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 
303(j)(4)(E) of ERISA and section 430(j)(4)(E) of the Code.
    (b) Waiver--plans subject to liquidity shortfall rules. Notice under 
this section is waived unless the reportable event occurs during a plan 
year for which the plan is exempt from the liquidity shortfall rules in 
section 303(j)(4) of ERISA and section 430(j)(4) of the Code because it 
is described in section 303(g)(2)(B) of ERISA and section 430(g)(2)(B) 
of the Code.



Sec. 4043.27  Distribution to a substantial owner.

    (a) Reportable event. A reportable event occurs for a plan when--

[[Page 1044]]

    (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;
    (4) Immediately after the distribution, the plan has nonforfeitable 
benefits (as provided in Sec. 4022.5 of this chapter) that are not 
funded; and
    (5) Either--
    (i) The sum of the values of all distributions to any one 
substantial owner within the one-year period ending with the date of the 
distribution is more than one percent of the end-of-year total amount of 
the plan's assets (as required to be reported on Schedule H or Schedule 
I to Form 5500) for each of the two plan years immediately preceding the 
event year, or
    (ii) The sum of the values of all distributions to all substantial 
owners within the one-year period ending with the date of the 
distribution is more than five percent of the end-of-year total amount 
of the plan's assets (as required to be reported on Schedule H or 
Schedule I to Form 5500) for each of the two plan years immediately 
preceding the event year.
    (b) 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 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.
    (c) Alternative method of compliance--annuity. In the case of an 
annuity for a substantial owner, a filing that satisfies the 
requirements of this section with respect to any payment under the 
annuity and that discloses the period, the amount of the payment, and 
the duration of the annuity satisfies the requirements of this section 
with respect to all subsequent payments under the annuity.
    (d) Waivers--(1) Low-default-risk. Notice under this section is 
waived if each contributing sponsor of the plan and the highest level 
U.S. parent of each contributing sponsor are low-default-risk on the 
date of the event.
    (2) Well-funded plan. Notice under this section is waived if the 
plan is in the well-funded plan safe harbor for the event year.
    (3) Public company. Notice under this section is waived if any 
contributing sponsor of the plan before the transaction is a public 
company and the contributing sponsor timely files a SEC Form 8-K 
disclosing the event under an item of the Form 8-K other than under Item 
2.02 (Results of Operations and Financial Condition) or in financial 
statements under Item 9.01 (Financial Statements and Exhibits).



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(l) of the Code.
    (b) Waiver. Notice under this section 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

[[Page 1045]]

transaction that results, or will result, in one or more persons' 
ceasing to be members of the plan's controlled group (other than by 
merger involving members of the same 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. Whether an agreement is legally binding is 
to be determined without regard to any conditions in the agreement. 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) Waivers. (1) De minimis 10-percent segment. Notice under this 
section 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 under this section 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) Small plan. Notice under this section is waived if the plan had 
100 or fewer participants for whom flat-rate premiums were payable for 
the plan year preceding the event year.
    (4) Low-default-risk. Notice under this section is waived if each 
post-event contributing sponsor of the plan and the highest level U.S. 
parent of each post-event contributing sponsor are low-default-risk on 
the date of the event.
    (5) Well-funded plan. Notice under this section is waived if the 
plan is in the well-funded plan safe harbor for the event year.
    (6) Public company. Notice under this section is waived if any 
contributing sponsor of the plan before the transaction is a public 
company and the contributing sponsor timely files a SEC Form 8-K 
disclosing the event under an item of the Form 8-K other than under Item 
2.02 (Results of Operations and Financial Condition) or in financial 
statements under Item 9.01 (Financial Statements and Exhibits).
    (c) Examples. The following examples assume that no waiver applies.
    (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 date the binding contract was 
executed), 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. The event is not reported before the notice date. 
If on the notice date 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 notice date, 
Company R has the reporting obligation.



Sec. 4043.30  Liquidation.

    (a) Reportable event. A reportable event occurs for a plan when a 
member of the plan's controlled group--

[[Page 1046]]

    (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) Waivers--(1) De minimis 10-percent segment. Notice under this 
section is waived if the person or persons that liquidate do not include 
any contributing sponsor of the plan and represent a de minimis 10-
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.
    (2) Foreign entity. Notice under this section is waived if each 
person that liquidates is a foreign entity other than a foreign parent.



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 or redeems its 
own stock and the amount or net value of the distribution, when combined 
with other such distributions during the same fiscal year of the person, 
exceeds the person's net income before after-tax gain or loss on any 
sale of assets, as determined in accordance with generally accepted 
accounting principles, for the prior fiscal year. A distribution by a 
person to a member of its controlled group is disregarded.
    (b) Determination rules. For purposes of paragraph (a) of this 
section, the net value of a non-cash distribution is the fair market 
value of assets transferred by the person making the distribution, 
reduced by the fair market value of any liabilities assumed or 
consideration given by the recipient in connection with the 
distribution. 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 is 
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.
    (c) Waivers--(1) De minimis 10-percent segment. Notice under this 
section is waived if the person making the distribution is a de minimis 
10-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.
    (2) Foreign entity. Notice under this section is waived if the 
person making the distribution is a foreign entity other than a foreign 
parent.
    (3) Small plan. Notice under this section is waived if the plan had 
100 or fewer participants for whom flat-rate premiums were payable for 
the plan year preceding the event year.
    (4) Low-default-risk. Notice under this section is waived if each 
contributing sponsor of the plan and the highest level U.S. parent of 
each contributing sponsor are low-default-risk on the date of the event.
    (5) Well-funded plan. Notice under this section is waived if the 
plan is in the well-funded plan safe harbor for the event year.
    (6) Public company. Notice under this section is waived if any 
contributing sponsor of the plan before the transaction is a public 
company and the contributing sponsor timely files a SEC Form 8-K 
disclosing the event under an item of the Form 8-K other than under Item 
2.02 (Results of Operations and Financial Condition) or in financial 
statements under Item 9.01 (Financial Statements and Exhibits).



Sec. 4043.32  Transfer of benefit liabilities.

    (a) Reportable event. A reportable event occurs for a plan when--
    (1) The plan 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
    (2) 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

[[Page 1047]]

the plan's total benefit liabilities. Both the benefit liabilities 
transferred and the plan's total benefit liabilities are to 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.
    (b) Determination rules--(1) Date of transfer. The date of transfer 
is to 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.
    (2) Distributions of lump sums and annuities. For purposes of 
paragraph (a) of this section, the payment of a lump sum, or purchase of 
an irrevocable commitment to provide an annuity, in satisfaction of 
benefit liabilities is not a transfer of benefit liabilities.
    (c) Waivers--(1) Small plan. Notice under this section is waived if 
the plan had 100 or fewer participants for whom flat-rate premiums were 
payable for the plan year preceding the event year.
    (2) Low-default-risk. Notice under this section is waived if each 
contributing sponsor of the plan and the highest level U.S. parent of 
each contributing sponsor are low-default-risk on the date of the event.
    (3) Well-funded plan. Notice under this section is waived if the 
plan is in the well-funded plan safe harbor for the event year.
    (4) Public company. Notice under this section is waived if any 
contributing sponsor of the plan before the transaction is a public 
company and the contributing sponsor timely files a SEC Form 8-K 
disclosing the event under an item of the Form 8-K other than under Item 
2.02 (Results of Operations and Financial Condition) or in financial 
statements under Item 9.01 (Financial Statements and Exhibits).



Sec. 4043.33  Application for minimum funding waiver.

    A reportable event for a plan occurs when an application for a 
minimum funding waiver for the plan is submitted under section 302(c) of 
ERISA or section 412(c) of the Code.



Sec. 4043.34  Loan default.

    (a) Reportable event. A reportable event occurs for a plan when, 
with respect to a loan with an outstanding balance of $10 million or 
more to a member of the plan's controlled group--
    (1) There is an acceleration of payment or a default under the loan 
agreement, or
    (2) The lender waives or agrees to an amendment of any covenant in 
the loan agreement the effect of which is to cure or avoid a breach that 
would trigger a default.
    (b) Waivers--(1) De minimis 10-percent segment. Notice under this 
section is waived if the debtor is not a contributing sponsor of the 
plan and represents a de minimis 10-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.
    (2) Foreign entity. Notice under this section is waived if the 
debtor is a foreign entity other than a foreign parent.



Sec. 4043.35  Insolvency or similar settlement.

    (a) Reportable event. A reportable event occurs for a plan when any 
member of the plan's controlled group--
    (1) Commences or has commenced against it any insolvency proceeding 
(including, but not limited to, the appointment of a receiver) other 
than a bankruptcy case under the Bankruptcy Code;
    (2) Commences, or has commenced against it, a proceeding to effect a 
composition, extension, or settlement with creditors;
    (3) Executes a general assignment for the benefit of creditors; or
    (4) Undertakes to effect any other nonjudicial composition, 
extension, or settlement with substantially all its creditors.
    (b) Waivers--(1) De minimis 10-percent segment. Notice under this 
section is waived if the person described in paragraph (a) of this 
section is not a contributing sponsor of the plan and represents a de 
minimis 10-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.

[[Page 1048]]

    (2) Foreign entity. Notice under this section is waived if the 
person described in paragraph (a) of this section is a foreign entity 
other than a foreign parent.



              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 is required to notify PBGC 
no later than 30 days before the effective date of a reportable event 
described in this subpart C if the contributing sponsor is subject to 
advance reporting for the reportable event. If there is a change in 
contributing sponsor, the responsibility for any failure to file or 
defective filing lies with the person who is the contributing sponsor of 
the plan on the notice date.
    (b) Persons subject to advance reporting. A contributing sponsor of 
a plan is subject to the advance reporting requirement under paragraph 
(a) of this section for a reportable event if --
    (1) On the notice date, neither the contributing sponsor nor any 
member of the plan's controlled group to which the event relates is a 
public company; and
    (2) The aggregate unfunded vested benefits, determined in accordance 
with paragraph (c) of this section, are more than $50 million; and
    (3) The aggregate value of plan assets, determined in accordance 
with paragraph (c) of this section, is less than 90 percent of the 
aggregate premium funding target, determined in accordance with 
paragraph (c) of this section.
    (c) Funding determinations. For purposes of paragraph (b) of this 
section, the aggregate unfunded vested benefits, aggregate value of plan 
assets, and aggregate premium funding target are determined by 
aggregating the unfunded vested benefits, values of plan assets, and 
premium funding targets (respectively), as determined in accordance with 
part 4006 of this chapter for purposes of the variable-rate premium for 
the plan year preceding the effective date of the event, of plans 
maintained (on the notice date) by the contributing sponsor and any 
members of the contributing sponsor's controlled group, disregarding 
plans with no unfunded vested benefits (as so determined).
    (d) Shortening of 30-day period. Pursuant to Sec. 4043.3(d), 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. Advance notice is required for a change in a 
plan's contributing sponsor or controlled group, as described in 
Sec. 4043.29(a).
    (b) Waivers--(1) Small and mid-size plans. Notice under this section 
is waived with respect to a change of contributing sponsor if the 
transferred plan has fewer than 500 participants.
    (2) De minimis 5-percent segment. Notice under this section 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. Advance notice is required for a liquidation 
of a member of a plan's controlled group, as described in Sec. 4043.30.
    (b) Waiver--de minimis 5-percent segment and ongoing plans. Notice 
under this section 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. Advance notice is required for a distribution 
by a member of a plan's controlled group, as described in 
Sec. 4043.31(a).
    (b) Waiver--de minimis 5-percent segment. Notice under this section 
is

[[Page 1049]]

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. Advance notice is required for a transfer of 
benefit liabilities, as described in Sec. 4043.32(a).
    (b) Waivers--(1) Complete plan transfer. Notice under this section 
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 under this 
section 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.
    (3) Section 414(l) safe harbor. Notice under this section is waived 
if the benefit liabilities of 500 or fewer participants are transferred 
and the transfer complies with section 414(l) of the Code using the 
actuarial assumptions prescribed for valuing benefits in trusteed plans 
under Secs. 4044.51 through 4044.57 of this chapter.
    (4) Fully funded plans. Notice under this section 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 as determined in accordance with 
Secs. 4044.51 through 4044.57 of this chapter and Sec. 4010.8(d)(1)(ii) 
of this chapter.



Sec. 4043.66  Application for minimum funding waiver.

    (a) Reportable event. Advance notice is required for an application 
for a minimum funding waiver, as described in Sec. 4043.33.
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.



Sec. 4043.67  Loan default.

    Advance notice is required for an acceleration of payment, a 
default, a waiver, or an agreement to an amendment with respect to a 
loan agreement described in Sec. 4043.34(a).



Sec. 4043.68  Insolvency or similar settlement.

    (a) Reportable event. Advance notice is required for an insolvency 
or similar settlement, as described in Sec. 4043.35.
    (b) Extension. For a case or proceeding under Sec. 4043.35(a)(1) or 
(2) that is not commenced by a member of the plan's controlled group, 
the notice date is extended to 10 days after the commencement of the 
case or proceeding.



       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 303(k)(4) of ERISA and section 430(k)(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 contribution payment required under 
sections 302 and 303 of ERISA and sections 412 and 430 of the Code 
(including interest), when added to the aggregate unpaid balance of all 
preceding such payments for which payment was not made when due 
(including interest), exceeds $1 million.
    (1) Form 200 must be filed with 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, PBGC will consider the 
notification requirement in section 303(k)(4) of ERISA and section 
430(k)(4) of the Code

[[Page 1050]]

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, PBGC 
concludes that it needs additional information in order to make 
decisions regarding enforcement of a lien imposed by section 303(k) of 
ERISA and section 430(k) of the Code, PBGC may require any member of the 
contributing sponsor's controlled group to supplement the Form 200 in 
accordance with Sec. 4043.3(d).
    (c) Ultimate parent. For purposes of this section, the term 
``ultimate parent'' means the parent at the highest level in the chain 
of corporations and/or other organizations constituting a parent-
subsidiary controlled group.



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.

    Source: 61 FR 34059, July 1, 1996, unless otherwise noted.
    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.



                     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

[[Page 1051]]

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 plans. Sections 4044.51 
through 4044.57 prescribe the benefit valuation rules for plans that 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.
    (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 not been placed into trusteeship by PBGC.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34605, June 14, 2011]



Sec. 4044.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, bankruptcy filing date, basic-type benefit, Code, distribution 
date, earliest retirement age at valuation date, ERISA, expected 
retirement age (XRA), fair market value, guaranteed benefit, insurer, 
IRS, irrevocable commitment, mandatory employee contributions, nonbasic-
type benefit, nonforfeitable benefit, non-PPA 2006 bankruptcy 
termination, normal retirement age, notice of intent to terminate, PBGC, 
person, plan, plan administrator, single-employer plan, substantial 
owner, termination date, unreduced retirement age (URA), 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.
    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.
    Non-trusteed plan means a single-employer plan which is able to 
close out by purchasing annuities in the private sector
    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.
    Valuation date means (1) for non-trusteed plans, the date of 
distribution and (2) for trusteed plans, the termination date.
    (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.

[[Page 1052]]

    (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.

[61 FR 34059, July 1, 1996, as amended at 67 FR 16959, Apr. 8, 2002; 74 
FR 11035, Mar. 16, 2009; 76 FR 34605, June 14, 2011]



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 under Sec. 4041.28 or 
Sec. 4041.50, 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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34605, June 14, 2011]



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 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

[[Page 1053]]

respect to each participant shall be determined as of the termination 
date, but, in a PPA 2006 bankruptcy termination, subject to the 
limitations in sections 4022(g) and 4044(e) of ERISA (and corresponding 
provisions of these regulations).
    (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 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

[[Page 1054]]

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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34605, June 14, 2011]



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 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

[[Page 1055]]

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.
    (4) Rollover amounts. In the case of a benefit resulting from 
rollover amounts, notwithstanding the provisions of paragraph (b)(2) of 
this section, the interest rates and conversion factors in paragraph 
(c)(4) of this section are used to determine the portion of the accrued 
benefit derived from the employee's contributions and, if any, the 
portion of the accrued benefit derived from employer contributions.
    (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, 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

[[Page 1056]]

under section 204(c) of ERISA and section 411(c) of the Code upon 
withdrawal of mandatory employee contributions.
    (4) Special rules for benefit resulting from rollover amounts--(i) 
Mandatory employee contributions. Notwithstanding paragraphs (c)(1) 
through (3) of this section, in the case of a benefit resulting from 
rollover amounts, the accrued benefit derived from mandatory employee 
contributions is determined using the interest rates and conversion 
factors under section 411(c)(2)(B) and (C) of the Code for purposes of 
computing an employee's accrued benefit derived from the employee's 
contributions. The annuity benefit and the pre-retirement death benefit, 
as determined on this basis, is the benefit resulting from rollover 
amounts in priority category 2.
    (ii) Employer contributions. Any portion of a participant's accrued 
benefit resulting from rollover amounts that is in excess of the accrued 
benefit derived from mandatory employee contributions determined in 
accordance with paragraph (c)(4)(i) of this section (i.e., the accrued 
benefit derived from employer contributions) is a guaranteeable benefit 
in priority category 3, priority category 4, or priority category 5, as 
applicable under this part.

[61 FR 34059, July 1, 1996, as amended at 79 FR 70095, Nov. 25, 2014]



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. For example, in a plan with a termination date of 
September 1, 2012, the benefits in priority category 3 are those annuity 
benefits that were in pay status on or before September 1, 2009, and 
those annuity benefits that could have been in pay status for 
participants who, on or before September 1, 2009, had reached their 
Earliest PBGC Retirement Date based on plan provisions in effect on 
September 1, 2009. Benefit increases, as defined in Sec. 4022.2, that 
were in effect 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. For example, in a plan 
with a termination date of September 1, 2012, a benefit increase that 
was in effect throughout the 5-year period from September 2, 2007, to 
September 1, 2012, is included in priority category 3. 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.

[[Page 1057]]

    (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 paragraph (b)(3), 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. The form of annuity elected by a retiree 
is considered the normal form of annuity for that participant.
    (ii) Except as provided in paragraph (b)(3), 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.
    (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.

[[Page 1058]]

    (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.
    (c) PPA 2006 bankruptcy termination. In a PPA 2006 bankruptcy 
termination:
    (1) For purposes of this paragraph (c), ``applicable pre-termination 
period'' means the period--
    (i) Beginning on the first day of the 5-year period ending on the 
bankruptcy filing date; and
    (ii) Ending on the termination date. For example, if the bankruptcy 
filing date is January 15, 2008, and the termination date is March 22, 
2009, the applicable pre-termination period is the period beginning on 
January 16, 2003, and ending on March 22, 2009.
    (2) ``Applicable pre-termination period'' is substituted for ``5-
year period ending on the termination date'' each place that ``5-year 
period ending on the termination date'' appears in paragraphs (a) and 
(b) of this section.
    (3) Except as provided in paragraph (a)(2) of this section, 
``bankruptcy filing date'' is substituted for ``termination date'' and 
``date of the plan termination'' each place that ``termination date'' 
and ``date of the plan termination'' appear in paragraphs (a) and (b) of 
this section. In paragraph (b)(5) of this section, ``the bankruptcy 
filing date'' is substituted for ``termination'' in the phrase ``during 
the fourth and fifth years preceding termination.''
    (4) Example: A plan provides for normal retirement at age 65 and has 
only one early retirement benefit: a subsidized early retirement benefit 
for participants who terminate employment on or after age 60 with 20 
years of service. These plan provisions have been unchanged since 1990. 
The contributing sponsor of the plan files a bankruptcy petition in June 
2008, and the plan terminates during the bankruptcy with a termination 
date in September 2010. A participant retired in July 2007, at which 
time he was age 60 and had 20 years of service, and began receiving the 
subsidized early retirement benefit. The participant has no benefit in 
priority category 3, because he was not eligible to retire three or more 
years before the June 2008 bankruptcy filing date.

[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; 76 FR 34605, June 14, 
2011]



Sec. 4044.14  Priority category 4 benefits.

    The benefits assigned to priority category 4 with respect to each 
participant are the participant's guaranteed benefits, 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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]



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.



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

[[Page 1059]]

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 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.
    (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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]

                             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.
    (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.

[[Page 1060]]



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; and
    (d) Adjusting the values to reflect loading expenses in accordance 
with appendix C to this part.

[65 FR 14753, Mar. 17, 2000, as amended at 70 FR 72207, Dec. 2, 2005]



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), (e), (f), and (g) 
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 under paragraph (c) of this section to 
represent the mortality of the death beneficiary.
    (c) Healthy lives. If the individual is not disabled under paragraph 
(f) of this section, the plan administrator will value the benefit 
using--
    (1) For male participants, the rates in Table 1 of appendix A to 
this part projected from 1994 to the calendar year in which the 
valuation date occurs plus 10 years using Scale AA from Table 2 of 
appendix A to this part; and
    (2) For female participants, the rates in Table 3 of appendix A to 
this part projected from 1994 to the calendar year in which the 
valuation date occurs plus 10 years using Scale AA from Table 4 of 
appendix A to this part.
    (d) Social Security disabled lives. If the individual is Social 
Security disabled under paragraph (f)(1) of this section, the plan 
administrator will value the benefit using--
    (1) For male participants, the rates in Table 5 of appendix A to 
this part; and
    (2) For female participants, the rates in Table 6 of appendix A to 
this part.
    (e) Non-Social Security disabled lives. If the individual is non-
Social Security disabled under paragraph (f)(2) of this section, the 
plan administrator will value the benefit at each age using--
    (1) For male participants, the lesser of--
    (i) The rate determined from Table 1 of appendix A to this part 
projected from 1994 to the calendar year in which the valuation date 
occurs plus 10 years using Scale AA from Table 2 of appendix A to this 
part and setting the resulting table forward three years, or
    (ii) The rate in Table 5 of appendix A to this part.
    (2) For female participants, the lesser of--
    (i) The rate determined from Table 3 of appendix A to this part 
projected from 1994 to the calendar year in which the valuation date 
occurs plus 10 years using Scale AA from Table 4 of appendix A to this 
part and setting the resulting table forward three years, or
    (ii) The rate in Table 6 of appendix A to this part.
    (f) Definitions of disability--(1) Social Security disabled. A 
participant is Social Security disabled if, on the valuation date, the 
participant is less than age 65 and has a benefit in pay status that--
    (i) Is being received as a disability benefit under a plan provision 
requiring either receipt of or eligibility for Social Security 
disability benefits, or
    (ii) Was converted under the plan's terms from a disability benefit 
under a plan provision requiring either receipt of or eligibility for 
Social Security disability benefits to an early or normal retirement 
benefit for any reason other

[[Page 1061]]

than a change in the participant's health status.
    (2) Non-Social Security disabled. A participant is non-Social 
Security disabled if, on the valuation date, the participant is less 
than age 65, is not Social Security disabled, and has a benefit in pay 
status that--
    (i) Is being received as a disability benefit under the plan, or
    (ii) Was converted under the plan's terms from a disability benefit 
to an early or normal retirement benefit for any reason other than a 
change in the participant's health status.
    (g) Contingent annuitant mortality during deferral period. If a 
participant's joint and survivor benefit is valued as a deferred 
annuity, the mortality of the contingent annuitant during the deferral 
period will be disregarded.

[70 FR 72207, Dec. 2, 2005]



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.

[[Page 1062]]

    (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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]



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.
    (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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]



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,

[[Page 1063]]

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 (a) of this section when the plan administrator submits the 
benefit valuation data to the PBGC. 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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]



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 irrevocable commitment, 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.

[61 FR 34059, July 1, 1996, as amended at 76 FR 34606, June 14, 2011]



           Sec. Appendix A to Part 4044--Mortality Rate Tables

    The mortality tables in this appendix set forth for each age x the 
probability qX that an individual aged x (in 1994, when using 
Table 1 or Table 3) will not survive to attain age x + 1. The projection 
scales in this appendix set forth for each age x the annual reduction 
AAX in the mortality rate at age x.

         Table 1--Mortality Table for Healthy Male Participants
                             [94 GAM basic]
------------------------------------------------------------------------
                           Age x                                  qX
------------------------------------------------------------------------
15.........................................................     0.000371
16.........................................................     0.000421
17.........................................................     0.000463
18.........................................................     0.000495
19.........................................................     0.000521
20.........................................................     0.000545
21.........................................................     0.000570

[[Page 1064]]

 
22.........................................................     0.000598
23.........................................................     0.000633
24.........................................................     0.000671
25.........................................................     0.000711
26.........................................................     0.000749
27.........................................................     0.000782
28.........................................................     0.000811
29.........................................................     0.000838
30.........................................................     0.000862
31.........................................................     0.000883
32.........................................................     0.000902
33.........................................................     0.000912
34.........................................................     0.000913
35.........................................................     0.000915
36.........................................................     0.000927
37.........................................................     0.000958
38.........................................................     0.001010
39.........................................................     0.001075
40.........................................................     0.001153
41.........................................................     0.001243
42.........................................................     0.001346
43.........................................................     0.001454
44.........................................................     0.001568
45.........................................................     0.001697
46.........................................................     0.001852
47.........................................................     0.002042
48.........................................................     0.002260
49.........................................................     0.002501
50.........................................................     0.002773
51.........................................................     0.003088
52.........................................................     0.003455
53.........................................................     0.003854
54.........................................................     0.004278
55.........................................................     0.004758
56.........................................................     0.005322
57.........................................................     0.006001
58.........................................................     0.006774
59.........................................................     0.007623
60.........................................................     0.008576
61.........................................................     0.009663
62.........................................................     0.010911
63.........................................................     0.012335
64.........................................................     0.013914
65.........................................................     0.015629
66.........................................................     0.017462
67.........................................................     0.019391
68.........................................................     0.021354
69.........................................................     0.023364
70.........................................................     0.025516
71.........................................................     0.027905
72.........................................................     0.030625
73.........................................................     0.033549
74.........................................................     0.036614
75.........................................................     0.040012
76.........................................................     0.043933
77.........................................................     0.048570
78.........................................................     0.053991
79.........................................................     0.060066
80.........................................................     0.066696
81.........................................................     0.073780
82.........................................................     0.081217
83.........................................................     0.088721
84.........................................................     0.096358
85.........................................................     0.104559
86.........................................................     0.113755
87.........................................................     0.124377
88.........................................................     0.136537
89.........................................................     0.149949
90.........................................................     0.164442
91.........................................................     0.179849
92.........................................................     0.196001
93.........................................................     0.213325
94.........................................................     0.231936
95.........................................................     0.251189
96.........................................................     0.270441
97.........................................................     0.289048
98.........................................................     0.306750
99.........................................................     0.323976
100........................................................     0.341116
101........................................................     0.358560
102........................................................     0.376699
103........................................................     0.396884
104........................................................     0.418855
105........................................................     0.440585
106........................................................     0.460043
107........................................................     0.475200
108........................................................     0.485670
109........................................................     0.492807
110........................................................     0.497189
111........................................................     0.499394
112........................................................     0.500000
113........................................................     0.500000
114........................................................     0.500000
115........................................................     0.500000
116........................................................     0.500000
117........................................................     0.500000
118........................................................     0.500000
119........................................................     0.500000
120........................................................     1.000000
------------------------------------------------------------------------


       Table 2--Projection Scale AA for Healthy Male Participants
------------------------------------------------------------------------
                             Age x                                 AAX
------------------------------------------------------------------------
15............................................................     0.019
16............................................................     0.019
17............................................................     0.019
18............................................................     0.019
19............................................................     0.019
20............................................................     0.019
21............................................................     0.018
22............................................................     0.017
23............................................................     0.015
24............................................................     0.013
25............................................................     0.010
26............................................................     0.006
27............................................................     0.005
28............................................................     0.005
29............................................................     0.005
30............................................................     0.005
31............................................................     0.005
32............................................................     0.005
33............................................................     0.005
34............................................................     0.005
35............................................................     0.005
36............................................................     0.005
37............................................................     0.005
38............................................................     0.006
39............................................................     0.007
40............................................................     0.008
41............................................................     0.009
42............................................................     0.010
43............................................................     0.011
44............................................................     0.012
45............................................................     0.013
46............................................................     0.014
47............................................................     0.015

[[Page 1065]]

 
48............................................................     0.016
49............................................................     0.017
50............................................................     0.018
51............................................................     0.019
52............................................................     0.020
53............................................................     0.020
54............................................................     0.020
55............................................................     0.019
56............................................................     0.018
57............................................................     0.017
58............................................................     0.016
59............................................................     0.016
60............................................................     0.016
61............................................................     0.015
62............................................................     0.015
63............................................................     0.014
64............................................................     0.014
65............................................................     0.014
66............................................................     0.013
67............................................................     0.013
68............................................................     0.014
69............................................................     0.014
70............................................................     0.015
71............................................................     0.015
72............................................................     0.015
73............................................................     0.015
74............................................................     0.015
75............................................................     0.014
76............................................................     0.014
77............................................................     0.013
78............................................................     0.012
79............................................................     0.011
80............................................................     0.010
81............................................................     0.009
82............................................................     0.008
83............................................................     0.008
84............................................................     0.007
85............................................................     0.007
86............................................................     0.007
87............................................................     0.006
88............................................................     0.005
89............................................................     0.005
90............................................................     0.004
91............................................................     0.004
92............................................................     0.003
93............................................................     0.003
94............................................................     0.003
95............................................................     0.002
96............................................................     0.002
97............................................................     0.002
98............................................................     0.001
99............................................................     0.001
100...........................................................     0.001
101...........................................................     0.000
102...........................................................     0.000
103...........................................................     0.000
104...........................................................     0.000
105...........................................................     0.000
106...........................................................     0.000
107...........................................................     0.000
108...........................................................     0.000
109...........................................................     0.000
110...........................................................     0.000
111...........................................................     0.000
112...........................................................     0.000
113...........................................................     0.000
114...........................................................     0.000
115...........................................................     0.000
116...........................................................     0.000
117...........................................................     0.000
118...........................................................     0.000
119...........................................................     0.000
120...........................................................     0.000
------------------------------------------------------------------------


        Table 3--Mortality Table for Healthy Female Participants
                             [94 GAM Basic]
------------------------------------------------------------------------
                           Age x                                  qX
------------------------------------------------------------------------
15.........................................................     0.000233
16.........................................................     0.000261
17.........................................................     0.000281
18.........................................................     0.000293
19.........................................................     0.000301
20.........................................................     0.000305
21.........................................................     0.000308
22.........................................................     0.000311
23.........................................................     0.000313
24.........................................................     0.000313
25.........................................................     0.000313
26.........................................................     0.000316
27.........................................................     0.000324
28.........................................................     0.000338
29.........................................................     0.000356
30.........................................................     0.000377
31.........................................................     0.000401
32.........................................................     0.000427
33.........................................................     0.000454
34.........................................................     0.000482
35.........................................................     0.000514
36.........................................................     0.000550
37.........................................................     0.000593
38.........................................................     0.000643
39.........................................................     0.000701
40.........................................................     0.000763
41.........................................................     0.000826
42.........................................................     0.000888
43.........................................................     0.000943
44.........................................................     0.000992
45.........................................................     0.001046
46.........................................................     0.001111
47.........................................................     0.001196
48.........................................................     0.001297
49.........................................................     0.001408
50.........................................................     0.001536
51.........................................................     0.001686
52.........................................................     0.001864
53.........................................................     0.002051
54.........................................................     0.002241
55.........................................................     0.002466
56.........................................................     0.002755
57.........................................................     0.003139
58.........................................................     0.003612
59.........................................................     0.004154
60.........................................................     0.004773
61.........................................................     0.005476
62.........................................................     0.006271
63.........................................................     0.007179
64.........................................................     0.008194
65.........................................................     0.009286
66.........................................................     0.010423
67.........................................................     0.011574
68.........................................................     0.012648
69.........................................................     0.013665
70.........................................................     0.014763
71.........................................................     0.016079
72.........................................................     0.017748
73.........................................................     0.019724
74.........................................................     0.021915

[[Page 1066]]

 
75.........................................................     0.024393
76.........................................................     0.027231
77.........................................................     0.030501
78.........................................................     0.034115
79.........................................................     0.038024
80.........................................................     0.042361
81.........................................................     0.047260
82.........................................................     0.052853
83.........................................................     0.058986
84.........................................................     0.065569
85.........................................................     0.072836
86.........................................................     0.081018
87.........................................................     0.090348
88.........................................................     0.100882
89.........................................................     0.112467
90.........................................................     0.125016
91.........................................................     0.138442
92.........................................................     0.152660
93.........................................................     0.167668
94.........................................................     0.183524
95.........................................................     0.200229
96.........................................................     0.217783
97.........................................................     0.236188
98.........................................................     0.255605
99.........................................................     0.276035
100........................................................     0.297233
101........................................................     0.318956
102........................................................     0.340960
103........................................................     0.364586
104........................................................     0.389996
105........................................................     0.415180
106........................................................     0.438126
107........................................................     0.456824
108........................................................     0.471493
109........................................................     0.483473
110........................................................     0.492436
111........................................................     0.498054
112........................................................     0.500000
113........................................................     0.500000
114........................................................     0.500000
115........................................................     0.500000
116........................................................     0.500000
117........................................................     0.500000
118........................................................     0.500000
119........................................................     0.500000
120........................................................     1.000000
------------------------------------------------------------------------


      Table 4--Projection Scale AA for Healthy Female Participants
------------------------------------------------------------------------
                             Age x                                 AAX
------------------------------------------------------------------------
15............................................................     0.016
16............................................................     0.015
17............................................................     0.014
18............................................................     0.014
19............................................................     0.015
20............................................................     0.016
21............................................................     0.017
22............................................................     0.017
23............................................................     0.016
24............................................................     0.015
25............................................................     0.014
26............................................................     0.012
27............................................................     0.012
28............................................................     0.012
29............................................................     0.012
30............................................................     0.010
31............................................................     0.008
32............................................................     0.008
33............................................................     0.009
34............................................................     0.010
35............................................................     0.011
36............................................................     0.012
37............................................................     0.013
38............................................................     0.014
39............................................................     0.015
40............................................................     0.015
41............................................................     0.015
42............................................................     0.015
43............................................................     0.015
44............................................................     0.015
45............................................................     0.016
46............................................................     0.017
47............................................................     0.018
48............................................................     0.018
49............................................................     0.018
50............................................................     0.017
51............................................................     0.016
52............................................................     0.014
53............................................................     0.012
54............................................................     0.010
55............................................................     0.008
56............................................................     0.006
57............................................................     0.005
58............................................................     0.005
59............................................................     0.005
60............................................................     0.005
61............................................................     0.005
62............................................................     0.005
63............................................................     0.005
64............................................................     0.005
65............................................................     0.005
66............................................................     0.005
67............................................................     0.005
68............................................................     0.005
69............................................................     0.005
70............................................................     0.005
71............................................................     0.006
72............................................................     0.006
73............................................................     0.007
74............................................................     0.007
75............................................................     0.008
76............................................................     0.008
77............................................................     0.007
78............................................................     0.007
79............................................................     0.007
80............................................................     0.007
81............................................................     0.007
82............................................................     0.007
83............................................................     0.007
84............................................................     0.007
85............................................................     0.006
86............................................................     0.005
87............................................................     0.004
88............................................................     0.004
89............................................................     0.003
90............................................................     0.003
91............................................................     0.003
92............................................................     0.003
93............................................................     0.002
94............................................................     0.002
95............................................................     0.002
96............................................................     0.002
97............................................................     0.001
98............................................................     0.001
99............................................................     0.001
100...........................................................     0.001
101...........................................................     0.000

[[Page 1067]]

 
102...........................................................     0.000
103...........................................................     0.000
104...........................................................     0.000
105...........................................................     0.000
106...........................................................     0.000
107...........................................................     0.000
108...........................................................     0.000
109...........................................................     0.000
110...........................................................     0.000
111...........................................................     0.000
112...........................................................     0.000
113...........................................................     0.000
114...........................................................     0.000
115...........................................................     0.000
116...........................................................     0.000
117...........................................................     0.000
118...........................................................     0.000
119...........................................................     0.000
120...........................................................     0.000
------------------------------------------------------------------------


 Table 5--Mortality Table for Social Security Disabled Male Participants
------------------------------------------------------------------------
                           Age x                                  qX
------------------------------------------------------------------------
15.........................................................     0.022010
16.........................................................     0.022502
17.........................................................     0.023001
18.........................................................     0.023519
19.........................................................     0.024045
20.........................................................     0.024583
21.........................................................     0.025133
22.........................................................     0.025697
23.........................................................     0.026269
24.........................................................     0.026857
25.........................................................     0.027457
26.........................................................     0.028071
27.........................................................     0.028704
28.........................................................     0.029345
29.........................................................     0.029999
30.........................................................     0.030661
31.........................................................     0.031331
32.........................................................     0.032006
33.........................................................     0.032689
34.........................................................     0.033405
35.........................................................     0.034184
36.........................................................     0.034981
37.........................................................     0.035796
38.........................................................     0.036634
39.........................................................     0.037493
40.........................................................     0.038373
41.........................................................     0.039272
42.........................................................     0.040189
43.........................................................     0.041122
44.........................................................     0.042071
45.........................................................     0.043033
46.........................................................     0.044007
47.........................................................     0.044993
48.........................................................     0.045989
49.........................................................     0.046993
50.........................................................     0.048004
51.........................................................     0.049021
52.........................................................     0.050042
53.........................................................     0.051067
54.........................................................     0.052093
55.........................................................     0.053120
56.........................................................     0.054144
57.........................................................     0.055089
58.........................................................     0.056068
59.........................................................     0.057080
60.........................................................     0.058118
61.........................................................     0.059172
62.........................................................     0.060232
63.........................................................     0.061303
64.........................................................     0.062429
65.........................................................     0.063669
66.........................................................     0.065082
67.........................................................     0.066724
68.........................................................     0.068642
69.........................................................     0.070834
70.........................................................     0.073284
71.........................................................     0.075979
72.........................................................     0.078903
73.........................................................     0.082070
74.........................................................     0.085606
75.........................................................     0.088918
76.........................................................     0.092208
77.........................................................     0.095625
78.........................................................     0.099216
79.........................................................     0.103030
80.........................................................     0.107113
81.........................................................     0.111515
82.........................................................     0.116283
83.........................................................     0.121464
84.........................................................     0.127108
85.........................................................     0.133262
86.........................................................     0.139974
87.........................................................     0.147292
88.........................................................     0.155265
89.........................................................     0.163939
90.........................................................     0.173363
91.........................................................     0.183585
92.........................................................     0.194653
93.........................................................     0.206615
94.........................................................     0.219519
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 6--Mortality Table for social Security Disabled Female
                              Participants
------------------------------------------------------------------------
                           Age x                                  qX
------------------------------------------------------------------------
15.........................................................     0.007777
16.........................................................     0.008120
17.........................................................     0.008476
18.........................................................     0.008852
19.........................................................     0.009243
20.........................................................     0.009650
21.........................................................     0.010076
22.........................................................     0.010521
23.........................................................     0.010984
24.........................................................     0.011468
25.........................................................     0.011974

[[Page 1068]]

 
26.........................................................     0.012502
27.........................................................     0.013057
28.........................................................     0.013632
29.........................................................     0.014229
30.........................................................     0.014843
31.........................................................     0.015473
32.........................................................     0.016103
33.........................................................     0.016604
34.........................................................     0.017121
35.........................................................     0.017654
36.........................................................     0.018204
37.........................................................     0.018770
38.........................................................     0.019355
39.........................................................     0.019957
40.........................................................     0.020579
41.........................................................     0.021219
42.........................................................     0.021880
43.........................................................     0.022561
44.........................................................     0.023263
45.........................................................     0.023988
46.........................................................     0.024734
47.........................................................     0.025504
48.........................................................     0.026298
49.........................................................     0.027117
50.........................................................     0.027961
51.........................................................     0.028832
52.........................................................     0.029730
53.........................................................     0.030655
54.........................................................     0.031609
55.........................................................     0.032594
56.........................................................     0.033608
57.........................................................     0.034655
58.........................................................     0.035733
59.........................................................     0.036846
60.........................................................     0.037993
61.........................................................     0.039176
62.........................................................     0.040395
63.........................................................     0.041653
64.........................................................     0.042950
65.........................................................     0.044287
66.........................................................     0.045666
67.........................................................     0.046828
68.........................................................     0.048070
69.........................................................     0.049584
70.........................................................     0.051331
71.........................................................     0.053268
72.........................................................     0.055356
73.........................................................     0.057573
74.........................................................     0.059979
75.........................................................     0.062574
76.........................................................     0.065480
77.........................................................     0.068690
78.........................................................     0.072237
79.........................................................     0.076156
80.........................................................     0.080480
81.........................................................     0.085243
82.........................................................     0.090480
83.........................................................     0.096224
84.........................................................     0.102508
85.........................................................     0.109368
86.........................................................     0.116837
87.........................................................     0.124948
88.........................................................     0.133736
89.........................................................     0.143234
90.........................................................     0.153477
91.........................................................     0.164498
92.........................................................     0.176332
93.........................................................     0.189011
94.........................................................     0.202571
95.........................................................     0.217045
96.........................................................     0.232467
97.........................................................     0.248870
98.........................................................     0.266289
99.........................................................     0.284758
100........................................................     0.303433
101........................................................     0.327385
102........................................................     0.359020
103........................................................     0.395842
104........................................................     0.438360
105........................................................     0.487816
106........................................................     0.545886
107........................................................     0.614309
108........................................................     0.694884
109........................................................     0.789474
110........................................................     1.000000
------------------------------------------------------------------------


[70 FR 72208, Dec. 2, 2005; 70 FR 73330, Dec. 9, 2005]



   Sec. 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       >     N/A     N/A
December 1993................................................    .0560     1-25    .0525     >25     N/A     N/A
January 1994.................................................    .0590     1-25    .0525     >25     N/A     N/A
February 1994................................................    .0590     1-25    .0525     >25     N/A     N/A
March 1994...................................................    .0580     1-25    .0525     >25     N/A     N/A
April 1994...................................................    .0620     1-25    .0525     >25     N/A     N/A
May 1994.....................................................    .0650     1-25    .0525     >25     N/A     N/A
June 1994....................................................    .0670     1-25    .0525     >25     N/A     N/A
July 1994....................................................    .0690     1-25    .0525     >25     N/A     N/A
August 1994..................................................    .0700     1-25    .0525     >25     N/A     N/A

[[Page 1069]]

 
September 1994...............................................    .0690     1-25    .0525     >25     N/A     N/A
October 1994.................................................    .0700     1-25    .0525     >25     N/A     N/A
November 1994................................................    .0730     1-25    .0525     >25     N/A     N/A
December 1994................................................    .0750     1-25    .0525     >25     N/A     N/A
January 1995.................................................    .0750     1-20    .0575     >20     N/A     N/A
February 1995................................................    .0730     1-20    .0575     >20     N/A     N/A
March 1995...................................................    .0730     1-20    .0575     >20     N/A     N/A
April 1995...................................................    .0710     1-20    .0575     >20     N/A     N/A
May 1995.....................................................    .0690     1-20    .0575     >20     N/A     N/A
June 1995....................................................    .0680     1-20    .0575     >20     N/A     N/A
July 1995....................................................    .0630     1-20    .0575     >20     N/A     N/A
August 1995..................................................    .0620     1-20    .0575     >20     N/A     N/A
September 1995...............................................    .0640     1-20    .0575     >20     N/A     N/A
October 1995.................................................    .0630     1-20    .0575     >20     N/A     N/A
November 1995................................................    .0620     1-20    .0575     >20     N/A     N/A
December 1995................................................    .0600     1-20    .0575     >20     N/A     N/A
January 1996.................................................    .0560     1-20    .0475     >20     N/A     N/A
February 1996................................................    .0540     1-20    .0475     >20     N/A     N/A
March 1996...................................................    .0550     1-20    .0475     >20     N/A     N/A
April 1996...................................................    .0580     1-20    .0475     >20     N/A     N/A
May 1996.....................................................    .0600     1-20    .0475     >20     N/A     N/A
June 1996....................................................    .0620     1-20    .0475     >20     N/A     N/A
July 2006....................................................    .0630     1-20    .0475     >20     N/A     N/A
August 1996..................................................    .0630     1-20    .0475     >20     N/A     N/A
September 1996...............................................    .0630     1-20    .0475     >20     N/A     N/A
October 1996.................................................    .0630     1-20    .0475     >20     N/A     N/A
November 1996................................................    .0620     1-20    .0475     >20     N/A     N/A
December 1996................................................    .0600     1-20    .0475     >20     N/A     N/A
January 1997.................................................    .0580     1-25    .0500     >25     N/A     N/A
February 1997................................................    .0590     1-25    .0500     >25     N/A     N/A
March 1997...................................................    .0620     1-25    .0500     >25     N/A     N/A
April 1997...................................................    .0610     1-25    .0500     >25     N/A     N/A
May 1997.....................................................    .0630     1-25    .0500     >25     N/A     N/A
June 1997....................................................    .0640     1-25    .0500     >25     N/A     N/A
July 1997....................................................    .0630     1-25    .0500     >25     N/A     N/A
August 1997..................................................    .0610     1-25    .0500     >25     N/A     N/A
September 1997...............................................    .0570     1-25    .0500     >25     N/A     N/A
October 1997.................................................    .0590     1-25    .0500     >25     N/A     N/A
November 1997................................................    .0570     1-25    .0500     >25     N/A     N/A
December 1997................................................    .0560     1-25    .0500     >25     N/A     N/A
January 1998.................................................    .0560     1-25    .0525     >25     N/A     N/A
February 1998................................................    .0550     1-25    .0525     >25     N/A     N/A
March 1998...................................................    .0550     1-25    .0525     >25     N/A     N/A
April 1998...................................................    .0550     1-25    .0525     >25     N/A     N/A
May 1998.....................................................    .0560     1-25    .0525     >25     N/A     N/A
June 1998....................................................    .0560     1-25    .0525     >25     N/A     N/A
July 1998....................................................    .0550     1-25    .0525     >25     N/A     N/A
August 1998..................................................    .0540     1-25    .0525     >25     N/A     N/A
September 1998...............................................    .0540     1-25    .0525     >25     N/A     N/A
October 1998.................................................    .0540     1-25    .0525     >25     N/A     N/A
November 1998................................................    .0530     1-25    .0525     >25     N/A     N/A
December 1998................................................    .0540     1-25    .0525     >25     N/A     N/A
January 1999.................................................    .0530     1-20    .0525     >20     N/A     N/A
February 1999................................................    .0540     1-20    .0525     >20     N/A     N/A
March 1999...................................................    .0530     1-20    .0525     >20     N/A     N/A
April 1999...................................................    .0560     1-20    .0525     >20     N/A     N/A
May 1999.....................................................    .0570     1-20    .0525     >20     N/A     N/A
June 1999....................................................    .0570     1-20    .0525     >20     N/A     N/A
July 1999....................................................    .0600     1-20    .0525     >20     N/A     N/A
August 1999..................................................    .0630     1-20    .0525     >20     N/A     N/A
September 1999...............................................    .0630     1-20    .0525     >20     N/A     N/A
October 1999.................................................    .0630     1-20    .0525     >20     N/A     N/A
November 1999................................................    .0630     1-20    .0525     >20     N/A     N/A
December 1999................................................    .0650     1-20    .0525     >20     N/A     N/A
January 2000.................................................    .0690     1-25    .0625     >25     N/A     N/A
February 2000................................................    .0710     1-25    .0625     >25     N/A     N/A
March 2000...................................................    .0710     1-25    .0625     >25     N/A    N/A.
April 2000...................................................    .0710     1-25    .0625     >25     N/A     N/A
May 2000.....................................................    .0700     1-25    .0625     >25     N/A     N/A
June 2000....................................................    .0710     1-25    .0625     >25     N/A     N/A
July 2000....................................................    .0740     1-25     0625     >25     N/A     N/A
August 2000..................................................    .0710     1-25    .0625     >25     N/A     N/A

[[Page 1070]]

 
September 2000...............................................     .070     1-25    .0625      25     N/A     N/A
October 2000.................................................    .0700     1-25    .0625     >25     N/A     N/A
November 2000................................................    .0710     1-25    .0625     >25     N/A     N/A
December 2000................................................    .0700     1-25    .0625     >25     N/A     N/A
January 2001.................................................    .0670     1-20    .0625     >20     N/A     N/A
February 2001................................................    .0650     1-20    .0625     >20     N/A     N/A
March 2001...................................................    .0640     1-20    .0625     >20     N/A     N/A
April 2001...................................................    .0640     1-20    .0625     >20     N/A     N/A
May 2001.....................................................    .0640     1-20    .0625     >20     N/A     N/A
June 2001                                                        .0660     1-20    .0625     >20     N/A     N/A
July 2001....................................................    .0660     1-20    .0625     >20     N/A     N/A
August 2001..................................................    .0640     1-20    .0625     >20     N/A     N/A
September 2001...............................................    .0630     1-20    .0625     >20     N/A     N/A
October 2001.................................................    .0610     1-20    .0625     >20     N/A     N/A
November 2001................................................    .0650     1-20    .0625     >20     N/A     N/A
December 2001................................................    .0610     1-20    .0625     >20     N/A     N/A
January 2002.................................................    .0580     1-25    .0425     >25     N/A     N/A
February 2002................................................    .0580     1-25    .0425     >25     N/A     N/A
March 2002...................................................    .0560     1-25    .0425     >25     N/A     N/A
April 2002...................................................    .0550     1-25    .0425     >25     N/A     N/A
May 2002.....................................................    .0590     1-25    .0425     >25     N/A     N/A
June 2002....................................................    .0570     1-25    .0425     >25     N/A     N/A
July 2002....................................................    .0570     1-25    .0425     >25     N/A     N/A
August 2002..................................................    .0550     1-25    .0425     >25     N/A     N/A
September 2002...............................................    .0540     1-25    .0425      25     N/A     N/A
October 2002.................................................    .0530     1-25    .0425     >25     N/A     N/A
November 2002................................................    .0500     1-25    .0425     >25     N/A     N/A
December 2002................................................    .0530     1-25    .0425     >25     N/A     N/A
January 2003.................................................    .0530     1-20    .0525     >20     N/A     N/A
February 2003................................................    .0510     1-20    .0525     >20     N/A     N/A
March 2003...................................................    .0510     1-20    .0525     >20     N/A     N/A
April 2003...................................................    .0490     1-20    .0525     >20     N/A     N/A
May 2003.....................................................    .0490     1-20    .0525     >20     N/A     N/A
June 2003....................................................    .0470     1-20    .0525     >20     N/A     N/A
July 2003....................................................    .0430     1-20    .0525     >20     N/A     N/A
August 2003..................................................    .0440     1-20    .0525     >20     N/A     N/A
September 2003...............................................    .0490     1-20    .0525     >20     N/A     N/A
October 2003.................................................    .0490     1-20    .0525     >20     N/A     N/A
November 2003................................................    .0460     1-20    .0525      20     N/A     N/A
December 2003................................................    .0470     1-20    .0525     >20     N/A     N/A
January 2004.................................................    .0420     1-20    .0500     >20     N/A     N/A
February 2004                                                    .0410     1-20    .0500     >20     N/A     N/A
March 2004...................................................    .0410     1-20    .0500     >20     N/A     N/A
April 2004...................................................    .0400     1-20    .0500     >20     N/A     N/A
May 2004.....................................................    .0390     1-20    .0500     >20     N/A     N/A
June 2004....................................................    .0430     1-20    .0500     >20     N/A     N/A
July 2004....................................................    .0450     1-20    .0500     >20     N/A     N/A
August 2004..................................................    .0430     1-20    .0500     >20     N/A     N/A
September 2004...............................................    .0420     1-20    .0500     >20     N/A     N/A
October 2004.................................................    .0400     1-20    .0500     >20     N/A     N/A
November 2004................................................    .0380     1-20    .0500     >20     N/A     N/A
December 2004................................................    .0380     1-20    .0500     >20     N/A     N/A
January 2005.................................................    .0410     1-20    .0475     >20     N/A     N/A
February 2005................................................    .0400     1-20    .0475     >20     N/A     N/A
March 2005...................................................    .0380     1-20    .0475     >20     N/A     N/A
April 2005...................................................    .0380     1-20    .0475     >20     N/A     N/A
May 2005.....................................................    .0390     1-20    .0475     >20     N/A     N/A
June 2005....................................................    .0370     1-20    .0475     >20     N/A     N/A
July 2005....................................................    .0360     1-20    .0475     >20     N/A     N/A
August 2005..................................................    .0340     1-20    .0475     >20     N/A     N/A
September 2005...............................................    .0360     1-20    .0475     >20     N/A     N/A
October 2005.................................................    .0350     1-20    .0475     >20     N/A     N/A
November 2005................................................    .0370     1-20    .0475     >20     N/A     N/A
December 2005................................................    .0400     1-20    .0475     >20     N/A     N/A
January 2006.................................................    .0570     1-20    .0475     >20     N/A     N/A
February 2006................................................    .0560     1-20    .0475     >20     N/A     N/A
March 2006...................................................    .0570     1-20    .0475     >20     N/A     N/A
April 2006...................................................    .0560     1-20    .0475     >20     N/A     N/A
May 2006.....................................................    .0590     1-20    .0475     >20     N/A     N/A
June 2006....................................................    .0620     1-20    .0475     >20     N/A     N/A
July 2006....................................................    .0630     1-20    .0475     >20     N/A     N/A
August 2006..................................................    .0640     1-20    .0475     >20     N/A     N/A

[[Page 1071]]

 
September 2006...............................................    .0620     1-20    .0475     >20     N/A     N/A
October 2006.................................................    .0600     1-20    .0475     >20     N/A     N/A
November 2006................................................    .0570     1-20    .0475     >20     N/A     N/A
December 2006................................................    .0580     1-20    .0475     >20     N/A     N/A
January 2007.................................................    .0488     1-20    .0455     >20     N/A     N/A
February 2007................................................    .0513     1-20    .0480     >20     N/A     N/A
March 2007...................................................    .0522     1-20    .0489     >20     N/A     N/A
April 2007...................................................    .0499     1-20    .0466     >20     N/A     N/A
May 2007.....................................................    .0520     1-20    .0487     >20     N/A     N/A
June 2007....................................................    .0514     1-20    .0481     >20     N/A     N/A
July 2007....................................................    .0533     1-20    .0500     >20     N/A     N/A
August 2007..................................................    .0549     1-20    .0516     >20     N/A     N/A
September 2007...............................................    .0553     1-20    .0520     >20     N/A     N/A
October 2007.................................................    .0551     1-20    .0518     >20     N/A     N/A
November 2007................................................    .0546     1-20    .0513     >20     N/A     N/A
December 2007................................................    .0537     1-20    .0504     >20     N/A     N/A
January 2008.................................................    .0542     1-20    .0449     >20     N/A     N/A
February 2008................................................    .0550     1-20    .0457     >20     N/A     N/A
March 2008...................................................    .0554     1-20    .0461     >20     N/A     N/A
April 2008...................................................    .0564     1-20    .0471     >20     N/A     N/A
May 2008.....................................................    .0581     1-20    .0488     >20     N/A     N/A
June 2008....................................................    .0568     1-20    .0475     >20     N/A     N/A
July 2008....................................................    .0595     1-20    .0502      20     N/A     N/A
August 2008..................................................    .0605     1-20    .0512     >20     N/A     N/A
September 2008...............................................    .0624     1-20    .0531     >20     N/A     N/A
October 2008.................................................    .0618     1-20    .0525     >20     N/A     N/A
November 2008................................................    .0709     1-20    .0616     >20     N/A     N/A
December 2008................................................    .0792     1-20    .0699     >20     N/A     N/A
January 2009.................................................   0.0602     1-20   0.0548     >20     N/A     N/A
February 2009................................................   0.0602     1-20   0.0548     >20     N/A     N/A
March 2009...................................................   0.0602     1-20   0.0548     >20     N/A     N/A
April-June 2009..............................................   0.0550     1-20   0.0502     >20     N/A     N/A
July-September 2009..........................................   0.0531     1-20   0.0504     >20     N/A     N/A
October-December 2009........................................   0.0530     1-20   0.0501     >20     N/A     N/A
January--March 2010..........................................   0.0489     1-20   0.0463     >20     N/A     N/A
April-June 2010..............................................   0.0463     1-20   0.0451     >20     N/A     N/A
July-September 2010..........................................   0.0493     1-20   0.0466     >20     N/A     N/A
October-December 2010........................................   0.0448     1-25   0.0451     >25     N/A     N/A
January-March 2011...........................................   0.0407     1-25   0.0393     >25     N/A     N/A
April-June 2011..............................................   0.0396     1-20   0.0432     >20     N/A     N/A
July-September 2011..........................................   0.0422     1-20   0.0434     >20     N/A     N/A
October-December 2011........................................   0.0409     1-20   0.0430     >20     N/A     N/A
January-March 2012...........................................   0.0374     1-20   0.0370     >20     N/A     N/A
April-June 2012..............................................   0.0311     1-20   0.0336     >20     N/A     N/A
July-September 2012..........................................   0.0295     1-20   0.0366     >20     N/A     N/A
October--December 2012.......................................   0.0307     1-20   0.0300     >20     N/A     N/A
January-March 2013...........................................   0.0267     1-20   0.0301     >20     N/A     N/A
April-June 2013..............................................   0.0250     1-20   0.0320     >20     N/A     N/A
July-September 2013..........................................   0.0260     1-20   0.0343     >20     N/A     N/A
October-December 2013........................................   0.0300     1-20   0.0331     >20     N/A     N/A
January-March 2014...........................................   0.0335     1-20   0.0350     >20     N/A     N/A
April--June 2014.............................................   0.0347     1-20   0.0364     >20     N/A     N/A
July-September 2014..........................................   0.0343     1-20   0.0366     >20     N/A     N/A
October-December 2014........................................   0.0310     1-20   0.0329     >20     N/A     N/A
January-March 2015...........................................   0.0289     1-20   0.0312     >20     N/A     N/A
April-June 2015..............................................   0.0271     1-20   0.0278     >20     N/A     N/A
July-September 2015..........................................   0.0232     1-20   0.0237     >20     N/A     N/A
October-December 2015........................................   0.0246     1-20   0.0298     >20     N/A     N/A
January-March 2016...........................................   0.0282     1-20   0.0295     >20     N/A     N/A
January-March 2017...........................................   0.0187     1-20   0.0237     >20     N/A     N/A
April-June 2016..............................................   0.0277     1-20   0.0286     >20     N/A     N/A
July-September 2016..........................................   0.0250     1-20   0.0285     >20     N/A     N/A
October-December 2016........................................   0.0198     1-20   0.0267     >20     N/A     N/A
January-March 2017...........................................   0.0187     1-20   0.0237     >20     N/A     N/A
April-June 2017..............................................   0.0215     1-20   0.0260     >20     N/A     N/A
July-September 2017..........................................   0.0244     1-20   0.0274     >20     N/A     N/A
----------------------------------------------------------------------------------------------------------------


[61 FR 34059, July 1, 1996]

    Editorial Note: For Federal Register citations affecting part 4044, 
appendix B, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and at www.fdsys.gov.

[[Page 1072]]



            Sec. Appendix C to Part 4044--Loading Assumptions

----------------------------------------------------------------------------------------------------------------
If the total value of the plan's benefit liabilities (as defined in 29 U.S.C.
          Sec. 1301(a)(16)), exclusive of the loading charge, is--
------------------------------------------------------------------------------    The loading charge equals--
                  greater than                     but less than or equal to
----------------------------------------------------------------------------------------------------------------
$0.............................................                      $200,000  5% of the total value of the
                                                                                plan's benefits, plus $200 for
                                                                                each plan participant.
$200,000.......................................  ............................  $10,000, plus a percentage of the
                                                                                excess of the total value over
                                                                                $200,000, plus $200 for each
                                                                                plan participant; the percentage
                                                                                is equal to 1% + [(P%^7.50%)/
                                                                                10], where P% is the initial
                                                                                rate, expressed as a percentage,
                                                                                set forth in appendix B of this
                                                                                part for the valuation of
                                                                                benefits.
----------------------------------------------------------------------------------------------------------------


[61 FR 34059, July 1, 1996, as amended at 65 FR 14753, Mar. 17, 2000]



    Sec. Appendix D to Part 4044--Tables Used To Determine Expected 
                             Retirement Age

                                Table I-17--Selection of Retirement Rate Category
              [For plans with valuation dates after December 31, 2016, and before January 1, 2018]
----------------------------------------------------------------------------------------------------------------
                                                            Participant's Retirement Rate Category is--
                                                 ---------------------------------------------------------------
                                                                   Medium \2\ if monthly benefit    High \3\ if
      If participant reaches URA in year--          Low \1\ if              at URA is--               monthly
                                                      monthly    -------------------------------- benefit at URA
                                                  benefit at URA                                    is greater
                                                  is less than--      From--           To--           than--
----------------------------------------------------------------------------------------------------------------
2018............................................             631             631           2,665           2,665
2019............................................             645             645           2,724           2,724
2020............................................             660             660           2,787           2,787
2021............................................             675             675           2,851           2,851
2022............................................             691             691           2,916           2,916
2023............................................             707             707           2,983           2,983
2024............................................             723             723           3,052           3,052
2025............................................             740             740           3,122           3,122
2026............................................             757             757           3,194           3,194
2027 or later...................................             774             774           3,268           3,268
----------------------------------------------------------------------------------------------------------------
\1\ Table II-A.
\2\ Table II-B.
\3\ Table II-C.


                    Table II-A--Expected Retirement Ages for Individuals in the Low Category
----------------------------------------------------------------------------------------------------------------
                                                               Unreduced retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     53     53     53     54     54     54     54     54     54     54     54
43.................................     53     54     54     54     55     55     55     55     55     55     55
44.................................     54     54     55     55     55     55     55     56     56     56     56
45.................................     54     55     55     56     56     56     56     56     56     56     56
46.................................     55     55     56     56     56     57     57     57     57     57     57
47.................................     56     56     56     57     57     57     57     57     57     57     57
48.................................     56     57     57     57     58     58     58     58     58     58     58
49.................................     56     57     58     58     58     58     59     59     59     59     59
50.................................     57     57     58     58     59     59     59     59     59     59     59
51.................................     57     58     58     59     59     60     60     60     60     60     60
52.................................     58     58     59     59     60     60     60     60     60     60     60
53.................................     58     59     59     60     60     61     61     61     61     61     61
54.................................     58     59     60     60     61     61     61     61     61     61     61
55.................................     59     59     60     61     61     61     62     62     62     62     62
56.................................     59     60     60     61     61     62     62     62     62     62     62
57.................................     59     60     61     61     62     62     62     62     62     62     62
58.................................     59     60     61     61     62     62     63     63     63     63     63
59.................................     59     60     61     62     62     63     63     63     63     63     63
60.................................     60     60     61     62     62     63     63     63     63     63     63
61.................................  .....     61     61     62     63     63     63     63     64     64     64
62.................................  .....  .....     62     62     63     63     63     64     64     64     64
63.................................  .....  .....  .....     63     63     64     64     65     65     65     65
64.................................  .....  .....  .....  .....     64     64     65     65     65     65     65

[[Page 1073]]

 
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------


                   Table II-B--Expected Retirement Ages for Individuals in the Medium Category
----------------------------------------------------------------------------------------------------------------
                                                               Unreduced retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date           60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     49     49     49     49     49     49     49     49     49     49     49
43.................................     50     50     50     50     50     50     50     50     50     50     50
44.................................     50     51     51     51     51     51     51     51     51     51     51
45.................................     51     51     52     52     52     52     52     52     52     52     52
46.................................     52     52     52     53     53     53     53     53     53     53     53
47.................................     53     53     53     53     53     54     54     54     54     54     54
48.................................     54     54     54     54     54     54     54     54     54     54     54
49.................................     54     55     55     55     55     55     55     55     55     55     55
50.................................     55     55     56     56     56     56     56     56     56     56     56
51.................................     56     56     56     57     57     57     57     57     57     57     57
52.................................     56     57     57     57     57     58     58     58     58     58     58
53.................................     57     57     58     58     58     58     58     58     58     58     58
54.................................     57     58     58     59     59     59     59     59     59     59     59
55.................................     58     58     59     59     59     60     60     60     60     60     60
56.................................     58     59     59     60     60     60     60     60     60     60     60
57.................................     59     59     60     60     61     61     61     61     61     61     61
58.................................     59     60     60     61     61     61     61     61     61     61     61
59.................................     59     60     61     61     62     62     62     62     62     62     62
60.................................     60     60     61     62     62     62     62     62     62     62     62
61.................................  .....     61     61     62     62     63     63     63     63     63     63
62.................................  .....  .....     62     62     62     63     63     63     63     63     63
63.................................  .....  .....  .....     63     63     64     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------


                    Table II-C--Expected Retirement Ages for Individuals in the High Category
----------------------------------------------------------------------------------------------------------------
                                                               Unreduced retirement age
 Participant's earliest retirement  ----------------------------------------------------------------------------
       age at valuation date.          60     61     62     63     64     65     66     67     68     69     70
----------------------------------------------------------------------------------------------------------------
42.................................     46     46     46     46     46     47     47     47     47     47     47
43.................................     47     47     47     47     47     47     47     47     47     47     47
44.................................     48     48     48     48     48     48     48     48     48     48     48
45.................................     49     49     49     49     49     49     49     49     49     49     49
46.................................     50     50     50     50     50     50     50     50     50     50     50
47.................................     51     51     51     51     51     51     51     51     51     51     51
48.................................     52     52     52     52     52     52     52     52     52     52     52
49.................................     53     53     53     53     53     53     53     53     53     53     53
50.................................     54     54     54     54     54     54     54     54     54     54     54
51.................................     54     55     55     55     55     55     55     55     55     55     55
52.................................     55     55     56     56     56     56     56     56     56     56     56
53.................................     56     56     56     57     57     57     57     57     57     57     57
54.................................     57     57     57     57     57     58     58     58     58     58     58
55.................................     57     58     58     58     58     58     58     58     58     58     58
56.................................     58     58     59     59     59     59     59     59     59     59     59
57.................................     58     59     59     60     60     60     60     60     60     60     60
58.................................     59     59     60     60     60     60     61     61     61     61     61
59.................................     59     60     60     61     61     61     61     61     61     61     61
60.................................     60     60     61     61     61     62     62     62     62     62     62
61.................................  .....     61     61     62     62     62     62     62     62     62     62

[[Page 1074]]

 
62.................................  .....  .....     62     62     62     62     62     62     62     62     62
63.................................  .....  .....  .....     63     63     63     64     64     64     64     64
64.................................  .....  .....  .....  .....     64     64     64     64     64     64     64
65.................................  .....  .....  .....  .....  .....     65     65     65     65     65     65
66.................................  .....  .....  .....  .....  .....  .....     66     66     66     66     66
67.................................  .....  .....  .....  .....  .....  .....  .....     67     67     67     67
68.................................  .....  .....  .....  .....  .....  .....  .....  .....     68     68     68
69.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....     69     69
70.................................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....     70
----------------------------------------------------------------------------------------------------------------


[61 FR 34059, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 61 
FR 65476, Dec. 13, 1996; 62 FR 65611, Dec. 15, 1997; 63 FR 63180, Nov. 
12, 1998; 64 FR 67165, Dec. 1, 1999; 65 FR 75166, Dec. 1, 2000; 66 FR 
59695, Nov. 30, 2001; 67 FR 71472, Dec. 2, 2002; 68 FR 67034, Dec. 1, 
2003; 69 FR 69822, Dec. 1, 2004; 70 FR 72076, Dec. 1, 2005; 71 FR 69482, 
Dec. 1, 2006; 72 FR 67645, Nov. 30, 2007; 73 FR 72717, Dec. 1, 2008; 74 
FR 62698, Dec. 1, 2009; 75 FR 74622, Dec. 1, 2010; 80 FR 74987, Dec. 1, 
2015; 81 FR 83138, Nov. 21, 2016]



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.



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

[[Page 1075]]

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 may 
not be used.

[61 FR 34073, July 1, 1996, as amended at 79 FR 13562, Mar. 11, 2014]



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 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.

[[Page 1076]]

    (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).
    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 mortality rates that are a fixed blend of 50 percent of 
the healthy male mortality rates in Sec. 4044.53(c)(1) of this chapter 
and 50 percent of the

[[Page 1077]]

healthy female mortality rates in Sec. 4044.53(c)(2) of this chapter;
    (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(d) 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; 71 FR 75117, Dec. 
14, 2006]



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 (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

[[Page 1078]]

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.
    (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 FR 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

[[Page 1079]]

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--(1) Method and date of filing. The PBGC 
applies the rules in subpart A of part 4000 of this chapter to determine 
permissible methods of filing with the PBGC under this part. The PBGC 
applies the rules in subpart C of part 4000 of this chapter to determine 
the date that a submission under this part was filed with the PBGC.
    (2) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (3) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing under 
this part. However, for purposes of determining the amount of an 
interest charge under Sec. 4050.6(b) or Sec. 4050.12(c)(2)(iii), the 
rule in Sec. 4000.43(a) of this chapter governing periods ending on 
weekends or Federal holidays does not apply.

[62 FR 60440, Nov. 7, 1997, as amended at 68 FR 61354, Oct. 28, 2003]



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 1080]]

    (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 1081]]

    (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 1082]]

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 1083]]

(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 1084]]



      Sec. 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]



 Sec. 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 1085]]

    (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 1086]]



                         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  Liability pursuant to section 4062(e).
4062.9  Arrangements for satisfying liability.
4062.10  Method and date of filing; where to file.
4062.11  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. This part also 
sets forth rules for determining the amount of liability incurred under 
section 4063 of ERISA pursuant to the occurrence of a cessation of 
operations as described by section 4062(e) 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.

[61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006]



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

[[Page 1087]]

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 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. 4062.9(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. 4062.9(b).

[61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006]



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,

[[Page 1088]]

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.



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

[[Page 1089]]

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.
    (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. 4062.9, 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.

[61 FR 34079, July 1, 1996, as amended at 71 FR 34822, June 16, 2006]



Sec. 4062.8  Liability pursuant to section 4062(e).

    (a) Liability amount. If, pursuant to section 4062(e) of ERISA, an 
employer ceases operations at a facility in any location and, as a 
result of such cessation of operations, more than 20% of the total 
number of the employer's employees who are participants under a plan 
established and maintained by the employer are separated from 
employment, the PBGC will determine the amount of liability under 
section 4063(b) of ERISA to be the amount described in section 4062 of 
ERISA for the entire plan, as if the plan had been terminated by the 
PBGC immediately after the date of the cessation of operations, 
multiplied by a fraction--
    (1) The numerator of which is the number of the employer's employees 
who are participants under the plan and are separated from employment as 
a result of the cessation of operations; and
    (2) The denominator of which is the total number of the employer's 
current employees, as determined immediately before the cessation of 
operations, who are participants under the plan.
    (b) Example. Company X sponsors a pension plan with 50,000 
participants of which 20,000 are current employees and

[[Page 1090]]

30,000 are retirees or deferred vested participants. On a PBGC 
termination basis, the plan is underfunded by $80 million. Company X 
ceases operations at a facility resulting in the separation from 
employment of 5,000 employees, all of whom are participants in the 
pension plan. A section 4062(e) event has occurred, and the PBGC will 
determine the amount of employer liability under section 4063(b) of 
ERISA. The numerator described in paragraph (a)(1) of this section is 
5,000 and the denominator described in paragraph (a)(2) of this section 
is 20,000. Therefore, the amount of liability under section 4063(b) of 
ERISA pursuant to section 4062(e) is $20 million (5,000/20,000  x  $80 
million).

[71 FR 34822, June 16, 2006]



Sec. 4062.9  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;
    (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

[[Page 1091]]

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.

[61 FR 34079, July 1, 1996. Redesignated at 71 FR 34822, June 16, 2006]



Sec. 4062.10  Method and date of filing; where to file.

    (a) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part. Payment of liability must be clearly 
designated as such and include the name of the plan.
    (b) Filing date. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.
    (c) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.

[68 FR 61354, Oct. 28, 2003. Redesignated at 71 FR 34822, June 16, 2006]



Sec. 4062.11  Computation of time.

    The PBGC applies the rules in subpart D of part 4000 of this chapter 
to compute any time period under this part. However, for purposes of 
determining the amount of an interest charge under Sec. 4062.7, the rule 
in Sec. 4000.43(a) of this chapter governing periods ending on weekends 
or Federal holidays does not apply.

[68 FR 61354, Oct. 28, 2003. Redesignated at 71 FR 34822, June 16, 2006]



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 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. Part 4062 also 
sets forth rules for determining the amount of liability incurred under 
section 4063 of ERISA pursuant to the occurrence of a cessation of 
operations as described by section 4062(e) 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.

[61 FR 34082, July 1, 1996, as amended at 71 FR 34822, June 16, 2006]



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 1092]]



               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 1093]]



                   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 1094]]

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. 701, Pub. L. 114-
74, 129 Stat. 599-601; 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 $2,097.

[62 FR 36994, July 10, 1997, as amended at 81 FR 29766, May 13, 2016; 82 
FR 8814, Jan. 31, 2017]

[[Page 1095]]



        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--(1) In general. 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.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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

[[Page 1096]]

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.
    (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.

[61 FR 34083, July 1, 1996, as amended at 68 FR 61354, Oct. 28, 2003]



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).

[[Page 1097]]


    Source: 61 FR 34084, July 1, 1996, unless otherwise noted.



                            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 submitted 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

[[Page 1098]]

place, the words ``the year preceding the date of 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.
    (e) Method and date of issuance. The PBGC applies the rules in 
subpart B of part 4000 of this chapter to determine permissible methods 
of issuance under this subpart. The PBGC applies the rules in subpart C 
of part 4000 of this chapter to determine the date that an issuance 
under this subpart was provided.

(Approved by the Office of Management and Budget under control number 
1212-0021)

[61 FR 34084, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



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 431(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.

[61 FR 34084, July 1, 1996, as amended at 80 FR 55009, Sept. 11, 2015]



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

[[Page 1099]]

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 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) Filing of request--(1) In 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.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this subpart.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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

[[Page 1100]]

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)

[61 FR 34084, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



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

[[Page 1101]]

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.



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.

[[Page 1102]]



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 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 431(b)(5) 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.

[61 FR 34086, July 1, 1996, as amended at 80 FR 55009, Sept. 11, 2015]



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.

[[Page 1103]]

    (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 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.
4207.11  Method of filing; method and date of issuance.

    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:

[[Page 1104]]

    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.



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;

[[Page 1105]]

    (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 
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

[[Page 1106]]

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.



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

[[Page 1107]]

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.
    (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

[[Page 1108]]

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 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

[[Page 1109]]

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 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

[[Page 1110]]

    (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) 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.

[[Page 1111]]

    (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 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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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

[[Page 1112]]

    (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--
    (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)

[61 FR 34088, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



Sec. 4207.11  Method of filing; method and date of issuance.

    (a) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (b) Method of issuance. The PBGC applies the rules in subpart B of 
part 4000 of this chapter to determine permissible methods of issuance 
under this part.
    (c) Date of issuance. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.

[68 FR 61355, Oct. 28, 2003]



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.
4208.10  Method of filing; method and date of issuance.

    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.

[[Page 1113]]

    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, 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

[[Page 1114]]

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 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

[[Page 1115]]

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 (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

[[Page 1116]]

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 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

[[Page 1117]]

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 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

[[Page 1118]]

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 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

[[Page 1119]]

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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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 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)

[61 FR 34093, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



Sec. 4208.10  Method of filing; method and date of issuance.

    (a) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (b) Method of issuance. The PBGC applies the rules in subpart B of 
part 4000 of this chapter to determine permissible methods of issuance 
under this part.
    (c) Date of issuance. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.

[68 FR 61355, Oct. 28, 2003]



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.
4211.4  Contributions for purposes of the numerator and denominator of 
          the allocation fractions.

[[Page 1120]]

             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 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, 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.

[[Page 1121]]

    Merger means the combining of two or more multiemployer plans into 
one multiemployer plan.
    Nonforfeitable benefit means a benefit described in Sec. 4001.2 of 
this chapter plus, for purposes of this part, any adjustable benefit 
that has been reduced by the plan sponsor pursuant to section 305(e)(8) 
of ERISA or section 432(e)(8) of the Code that would otherwise have been 
includable as a nonforfeitable benefit for purposes of determining an 
employer's allocable share of unfunded vested benefits.
    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 as defined for purposes of this 
section, 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.

[61 FR 34097, July 1, 1996, as amended at 73 FR 79635, Dec. 30, 2008]



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.



Sec. 4211.4  Contributions for purposes of the numerator and
denominator of the allocation fractions.

    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.
    (a) The numerator of the allocation fraction, with respect to a 
withdrawing employer, is based on the ``sum of the contributions 
required to be made'' or the ``total amount required to be contributed'' 
by the employer for the specified period. For purposes of these methods, 
this means the amount that is required to be contributed under one or 
more collective bargaining agreements or other agreements pursuant to 
which the employer contributes under the plan, other than withdrawal 
liability payments or amounts that an employer is obligated to pay to 
the plan pursuant to section 305(e)(7) of ERISA or section 432(e)(7) of 
the Code (automatic employer surcharge). Employee contributions, if any, 
shall be excluded from the totals.
    (b) The denominator of the allocation fraction is based on 
contributions that certain employers have made to the plan for a 
specified period. For purposes of these methods, and except as provided 
in Sec. 4211.12, ``the sum of all contributions made'' or ``total amount 
contributed'' by employers for a plan year means the amounts considered 
contributed to the plan for purposes of section 412(b)(3)(A) or section 
431(b)(3)(A) of the Code, other than withdrawal liability payments or 
amounts that an employer is obligated to pay to the plan pursuant to 
section 305(e)(7) of ERISA or section 432(e)(7) of the Code (automatic 
employer surcharge). 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 the 
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.

[73 FR 79635, Dec. 30, 2008]

[[Page 1122]]



             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) 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 (a)(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) or section 
431(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) or section 431(c)(8) 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) 
or section 431(c)(8) 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 
Sec. 4211.4(b), or the amount described in paragraph (a)(1), (a)(2) or 
(a)(3) of this section.
    (b) 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 (b)(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

[[Page 1123]]

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 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 (b), ``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 (b)(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.
    (c) ``Fresh start'' rules under presumptive method. (1) The plan 
sponsor of a plan using the presumptive method (including a plan that 
primarily covers employees in the building and construction industry) 
may amend the plan to provide--
    (i) A designated plan year ending after September 26, 1980, will 
substitute for the plan year ending before September 26, 1980, in 
applying section 4211(b)(1)(B), section 4211(b)(2)(B)(ii)(I), section 
4211(b)(2)(D), section 4211(b)(3), and section 4211(b)(3)(B) of ERISA, 
and
    (ii) Plan years ending after the end of the designated plan year in 
paragraph (c)(1)(i) will substitute for plan years ending after 
September 25, 1980, in applying section 4211(b)(1)(A), section 
4211(b)(2)(A), and section 4211(b)(2)(B)(ii)(II) of ERISA.
    (2) A plan amendment made pursuant to paragraph (c)(1) of this 
section must provide that the plan's unfunded vested benefits for plan 
years ending after the designated plan year are reduced by the value of 
all outstanding claims for withdrawal liability that can reasonably be 
expected to be collected from employers that had withdrawn from the plan 
as of the end of the designated plan year.
    (3) In the case of a plan that primarily covers employees in the 
building and construction industry, the plan year designated by a plan 
amendment pursuant to paragraph (c)(1) of this section must be a plan 
year for which the plan has no unfunded vested benefits.
    (d) ``Fresh start'' rules under modified presumptive method. (1) The 
plan sponsor of a plan using the modified presumptive method may amend 
the plan to provide--
    (i) A designated plan year ending after September 26, 1980, will 
substitute for the plan year ending before September 26, 1980, in 
applying section 4211(c)(2)(B)(i) and section 4211(c)(2)(B)(ii)(I) and 
(II) of ERISA, and
    (ii) Plan years ending after the end of the designated plan year 
will substitute for plan years ending after September 25, 1980, in 
applying section 4211(c)(2)(B)(ii)(II) and section 4211(c)(2)(C)(i)(II) 
of ERISA.
    (2) A plan amendment made pursuant to paragraph (d)(1) of this 
section must provide that the plan's unfunded vested benefits for plan 
years ending after the designated plan year are reduced by the value of 
all outstanding claims for withdrawal liability that can reasonably be 
expected to be collected from employers that had withdrawn from the plan 
as of the end of the designated plan year.

[61 FR 34097, July 1, 1996, as amended at 73 FR 79636, Dec. 30, 2008]



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

[[Page 1124]]

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 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

[[Page 1125]]

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) Filing of request--(1) In 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.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this subpart.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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)

[61 FR 34097, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



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.

[[Page 1126]]

    (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 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;

[[Page 1127]]

    (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 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

[[Page 1128]]

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 
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

[[Page 1129]]

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).
    (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

[[Page 1130]]

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 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  Method and date of issuance; computation of time.
4219.20  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.

[[Page 1131]]

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 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 on or after 
September 26, 1980, except employers with respect to whom section 
4221(f) or section 4221(g) of ERISA applies (provided that such 
employers are in compliance with the provisions of those sections, as 
applicable).

[61 FR 34102, July 1, 1996, as amended at 73 FR 79636, Dec. 30, 2008]

[[Page 1132]]



Sec. 4219.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, mass withdrawal, multiemployer plan, 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. 
Nonforfeitable benefit means a benefit described in Sec. 4001.2 of this 
chapter plus, for purposes of this part, any adjustable benefit that has 
been reduced by the plan sponsor pursuant to section 305(e)(8) of ERISA 
and section 432(e)(8) of the Code that would otherwise have been 
includable as a nonforfeitable benefit.
    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 nonforfeitable benefits (as defined for purposes of 
this section) 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.

[61 FR 34102, July 1, 1996, as amended at 73 FR 79636, Dec. 30, 2008]



 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 
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,

[[Page 1133]]

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.
    (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.

[[Page 1134]]



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 yearly average of the employer's 
contribution base units during the three plan years preceding the 
employer's withdrawal; and
    (ii) The denominator of which is the sum of the yearly averages 
calculated under paragraph (c)(1)(i) of this section for each employer 
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 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) Contribution base unit. For purposes of paragraph (c)(1) of this 
section, a contribution base unit means a unit with respect to which an 
employer has an obligation to contribute, such as an hour worked or 
shift worked or a unit of production, under the applicable collective 
bargaining agreement (or other agreement pursuant to which the employer 
contributes) or with respect to

[[Page 1135]]

which the employer would have an obligation to contribute if the 
contribution requirement with respect to the plan were greater than 
zero.
    (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.

[61 FR 34102, July 1, 1996, as amended at 73 FR 79636, Dec. 30, 2008]



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
    (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

[[Page 1136]]

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 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

[[Page 1137]]

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--(1) In general. 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.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this subpart.
    (3) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period under this subpart 
for filing with the PBGC.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (e) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
subpart was filed with the PBGC.
    (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.
    (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

[[Page 1138]]

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.

[61 FR 34102, July 1, 1996, as amended at 68 FR 61355, Oct. 28, 2003]



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 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

[[Page 1139]]

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  Method and date of issuance; computation of time.

    The PBGC applies the rules in subpart B of part 4000 of this chapter 
to determine permissible methods of issuance under this subpart. The 
PBGC applies the rules in subpart C of part 4000 of this chapter to 
determine the date that an issuance under this subpart was provided. The 
PBGC applies the rules in subpart D of part 4000 of this chapter to 
compute any time period for issuances to third parties under this 
subpart.

[68 FR 61356, Oct. 28, 2003]



Sec. 4219.20  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.

[61 FR 34102, July 1, 1996. Redesignated at 68 FR 61356, Oct. 28, 2003]



     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 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

[[Page 1140]]

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 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.

[[Page 1141]]

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--(1) In general. 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 treated as filed on the 
date on which a request containing all information required by paragraph 
(d) of this section is received by the PBGC. Subpart C of part 4000 of 
this chapter provides rules for determining when the PBGC receives a 
submission.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (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 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

[[Page 1142]]

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.
    (f) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period under this part.

(Approved by the Office of Management and Budget under control number 
1212-0031)

[61 FR 34108, July 1, 1996, as amended at 68 FR 61356, Oct. 28, 2003]



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 and issuance rules.
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 
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

[[Page 1143]]

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 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

[[Page 1144]]

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 (or by any other method that includes 
verification or acknowledgment of receipt and meets (if applicable) the 
requirements of Sec. 4000.14 of this chapter) 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.

[61 FR 34109, July 1, 1996, as amended at 68 FR 61356, Oct. 28, 2003]



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.
    (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.

[[Page 1145]]

    (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, by certified or registered mail, or by any other 
method that includes verification or acknowledgment of receipt and meets 
(if applicable) the requirements of Sec. 4000.14 of this chapter.
    (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 1146]]

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.

[61 FR 34109, July 1, 1996, as amended at 68 FR 61356, Oct. 28, 2003]



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

[[Page 1147]]

modification or reconsideration suspends the 30-day period under section 
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.

    The PBGC applies the rules in subpart D of part 4000 of this chapter 
to compute any time period under this part.

[68 FR 61356, Oct. 28, 2003]



Sec. 4221.13  Filing and issuance rules.

    (a) Method and date of filing. The PBGC applies the rules in subpart 
A of part 4000 of this chapter to determine permissible methods of 
filing with the PBGC under this part. The PBGC applies the rules in 
subpart C of part 4000 of this chapter to determine the date that a 
submission under this part was filed with the PBGC.
    (b) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (c) Method and date of issuance. The PBGC applies the rules in 
subpart B of part 4000 of this chapter to determine permissible methods 
of issuance under this part. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.

[68 FR 61356, Oct. 28, 2003]



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 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

[[Page 1148]]

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 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.

[61 FR 34109, July 1, 1996, as amended at 68 FR 61356, Oct. 28, 2003]

[[Page 1149]]



 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 304 of ERISA and section 431 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 304 of ERISA and section 431 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 1150]]

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).

[63 FR 24421, May 4, 1998, as amended at 80 FR 55010, Sept. 11, 2015]



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.

[[Page 1151]]

    (b) Significantly affected plans. For a 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, 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 431(b)(5) 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 
431 of the Code (which requires that each such assumption be 
reasonable). If the plan uses an aggregate funding method, normal costs 
must be determined under the entry age normal method.

[[Page 1152]]

    (3) Expected benefit payments must be determined by assuming that 
current benefits remain in effect and that 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 431 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.

[63 FR 24421, May 4, 1998, as amended at 80 FR 55010, Sept. 11, 2015]



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) Filing of request--(1) 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, or not less than 45 days in the 
case of a merger for which a compliance determination under Sec. 4231.9 
is not requested, before the effective date of the transaction. For 
purposes of this part, the effective date of a merger or transfer is the 
earlier of--

[[Page 1153]]

    (i) The date on which one plan assumes liability for benefits 
accrued under another plan involved in the transaction; or
    (ii) The date on which one plan transfers assets to another plan 
involved in the transaction.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (3) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing under 
this part.
    (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. See Sec. 4000.4 of this chapter for information 
on where to file.
    (d) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC. 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.
    (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

[[Page 1154]]

date of the transaction (determined in accordance with 
Sec. 4231.6(c)(1)).
    (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 the applicable notice 
period set forth in paragraph (a) of this section 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.

[63 FR 24421, May 4, 1998, as amended at 68 FR 61356, Oct. 28, 2003; 79 
FR 30463, May 28, 2014]



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

[[Page 1155]]

to provide updated calculations and representations based on the actual 
effective date of the transaction.



PART 4233_PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS--Table of Contents



Sec.
4233.1  Purpose and scope.
4233.2  Definitions.
4233.3  Application filing requirements.
4233.4  Information to be filed.
4233.5  Plan information.
4233.6  Partition information.
4233.7  Actuarial and financial information.
4233.8  Participant census data.
4233.9  Financial assistance information.
4233.10  Initial review.
4233.11  Notice of application for partition.
4233.12  PBGC action on application for partition.
4233.13  Coordinated application process for partition and benefit 
          suspension.
4233.14  Partition order.
4233.15  Nature and operation of successor plan.
4233.16  Coordination of benefits under original plan and successor 
          plan.
4233.17  Continuing jurisdiction.

Appendix A to Part 4233--Model Notices

    Authority: 29 U.S.C. 1302(b)(3), 1413.

    Source: 80 FR 35229, June 19, 2015, unless otherwise noted.



Sec. 4233.1  Purpose and scope.

    The purpose of this part is to prescribe rules governing 
applications for partition under section 4233 of ERISA, and related 
notice requirements.



Sec. 4233.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor. In 
addition, the following terms are defined for purposes of this part:
    Advocate means the Participant and Plan Sponsor Advocate under 
section 4004 of ERISA.
    Application for partition means a plan sponsor's application for 
partition under section 4233 of ERISA and this part.
    Application for a suspension of benefits means a plan sponsor's 
application for a suspension of benefits to the Secretary of the 
Treasury (Treasury) under section 305(e)(9)(G) of ERISA.
    Completed application means an application for partition for which 
PBGC has made a determination under Sec. 4233.10 that the application 
contains all required information and satisfies the requirements 
described in Secs. 4233.4 through 4233.9.
    Effective date of partition means the date upon which a partition is 
effective and which is set forth in a partition order.
    Financial assistance means financial assistance from PBGC under 
section 4261 of ERISA.
    Insolvent has the same meaning as insolvent under section 4245(b) of 
ERISA.
    Interested 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 employer that has an obligation to contribute under the 
plan; and
    (5) Each employee organization that currently has a collective 
bargaining agreement pursuant to which the plan is maintained.
    Original plan means an eligible multiemployer plan under 4233(b) of 
ERISA that is partitioned upon the issuance of a partition order under 
section 4233(c) of ERISA.
    Partition order means a formal PBGC order of partition under section 
4233 of ERISA and Sec. 4233.14.
    Proposed partition means a proposed partition as structured and 
described by the plan sponsor in an application for partition.
    Remain solvent has the same meaning as ``avoid insolvency'' in 
section 305(e)(9)(D)(iv) of ERISA and the regulations thereunder, with 
respect to the determinations made by PBGC under sections 4233(b)(3) and 
4233(c) of ERISA.
    Residual benefit means, with respect to a participant or beneficiary 
whose benefit was partially transferred to a successor plan pursuant to 
a partition order, the portion of the benefit payable under the original 
plan, the amount of which is equal to the difference between the benefit 
defined in section 4233(e)(1)(A) of ERISA, and the successor plan 
benefit. The residual benefit as of the effective date of the partition 
is not subject to a separate

[[Page 1156]]

guarantee under section 4022A of ERISA.
    Successor plan means the plan created by a partition order under 
section 4233(c) of ERISA.
    Successor plan benefit means, with respect to a participant or 
beneficiary whose benefit was wholly or partially transferred from an 
original plan to a successor plan, the portion of the accrued 
nonforfeitable monthly benefit which would be guaranteed under section 
4022A as of the effective date of the partition, calculated under the 
terms of the original plan without reflecting any changes relating to a 
benefit suspension under section 305(e)(9) of ERISA. The payment of a 
successor plan benefit is subject to the limitations and conditions 
contained in sections 4022A(a)-(f) of ERISA.



Sec. 4233.3  Application filing requirements.

    (a) Method of filing. PBGC applies the rules in part 4000, subpart A 
of this chapter to determine permissible methods of filing with PBGC 
under this part, and the rules in part 4000, subpart D of this chapter 
to determine the computation of time.
    (b) Who may file. An application for partition under section 4233 of 
ERISA must be submitted by the plan sponsor. The application must be 
signed and dated by an authorized trustee who is a current member of the 
board of trustees, and must include the following statement under 
penalties of perjury: ``Under penalties of perjury, I declare that I 
have examined this application, including accompanying documents, and, 
to the best of my knowledge and belief, the application contains all the 
relevant facts relating to the application, and such facts are true, 
correct, and complete.'' A stamped signature or faxed signature is not 
permitted.
    (c) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.



Sec. 4233.4  Information to be filed.

    (a) General. An application for partition must include the 
information specified in Sec. 4233.5 (plan information), Sec. 4233.6 
(partition information), Sec. 4233.7 (actuarial and financial 
information), Sec. 4233.8 (participant census data), and Sec. 4233.9 
(financial assistance information). If any of the information is not 
included, the application may not be considered complete.
    (b) Additional information. (1) PBGC may require a plan sponsor to 
submit additional information necessary to make a determination on an 
application under this part and any information PBGC may need to 
calculate or verify the amount of financial assistance necessary for a 
partition. Any additional information must be submitted by the date 
specified in PBGC's request.
    (2) PBGC may suspend the running of the 270-day review period 
(described in Sec. 4233.10) pending the submission of any additional 
information requested by PBGC, or upon the issuance of a conditional 
determination under Sec. 4233.12(c).
    (c) Duty to amend and supplement application. During any time in 
which an application is pending final action by PBGC, the plan sponsor 
must promptly notify PBGC in writing of any material fact or 
representation contained in or relating to the application, or in any 
supporting documents, that is no longer accurate, or any material fact 
or representation omitted from the application or supporting documents, 
that the plan sponsor discovers.

[80 FR 35229, June 19, 2015, as amended at 80 FR 79694, Dec. 23, 2015]



Sec. 4233.5  Plan information.

    An application for partition must include the following information 
with respect to the plan:
    (a) The name of the plan, Employer Identification Number (EIN), and 
three-digit Plan Number (PN).
    (b) The name, address, and telephone number of the plan sponsor and 
the plan sponsor's duly authorized representative, if any.
    (c) The most recent trust agreement, including all amendments 
adopted since the last restatement.
    (d) The most recent plan document, including all amendments adopted 
since the last restatement.
    (e) The most recent summary plan description (SPD), and all 
summaries of material modification (SMM) issued since the effective date 
of the most recent SPD.

[[Page 1157]]

    (f) The most recent rehabilitation plan (or funding improvement 
plan, if applicable), including all subsequent amendments and updates, 
and the percentage of total contributions received under each schedule 
of the rehabilitation plan for the most recent plan year available.
    (g) A copy of the plan's most recent IRS determination letter.
    (h) A copy of the plan's most recent Form 5500 (Annual Report Form) 
and all schedules and attachments (including the audited financial 
statement).
    (i) A current listing of employers who have an obligation to 
contribute to the plan, and the approximate number of participants for 
whom each employer is currently making contributions.
    (j) A schedule of withdrawal liability payments collected in each of 
the most recent five plan years.



Sec. 4233.6  Partition information.

    An application for partition must include the following information 
with respect to the proposed partition:
    (a) A detailed description of the proposed partition, including the 
proposed structure, proposed effective date, and any larger integrated 
transaction of which the proposed partition is a part (including, but 
not limited to, an application for suspension of benefits under section 
305(e)(9)(G), or a merger under section 4231 of ERISA). With respect to 
coordinated applications for partition and suspension of benefits, 
proposed effective dates for both transactions must satisfy the 
requirements of section 305(e)(9)(D)(v) of ERISA.
    (b) A narrative description of the events that led to the plan 
sponsor's decision to submit an application for partition (and, if 
applicable, application for suspension of benefits).
    (c) A narrative description of significant risks and assumptions 
relating to the proposed partition and the projections provided in 
support of the application.
    (d) If applicable, a copy of the plan sponsor's application for 
suspension of benefits (including all attachments and exhibits). If the 
plan sponsor intends to apply for a suspension of benefits with 
Treasury, but has not yet submitted an application to Treasury, a draft 
of the application may be filed, which must be supplemented by filing a 
copy of the completed application within the timeframe established in 
Sec. 4233.10(d).
    (e) A detailed description of all measures the plan sponsor has 
taken (or is taking) to avoid insolvency, and any measures the plan 
sponsor considered taking but did not take, including the factor(s) the 
plan sponsor considered in making these determinations. Include all 
relevant documentation relating to the plan sponsor's determination that 
it has taken (or is taking) measures to avoid insolvency.
    (f) A detailed description of the estimated benefit amounts the plan 
sponsor has determined are necessary to be partitioned for the plan to 
remain solvent, including the following information:
    (1) The estimated number of participants and beneficiaries whose 
benefits (or any portion thereof) would be transferred, including the 
number of retirees receiving payments (if any), terminated vested 
participants (if any), and active participants (if any).
    (2) Supporting data, calculations, assumptions, and a description of 
the methodology used to determine the estimated benefit amounts.
    (3) If applicable, a description of any classifications or specific 
group(s) of participants and beneficiaries whose benefits (or any 
portion thereof) the plan sponsor proposes to transfer, and the plan 
sponsor's rationale or basis for selecting those classifications or 
groups.
    (g) A copy of the draft notice of application for partition 
described in Sec. 4233.11.

[80 FR 35229, June 19, 2015, as amended at 80 FR 79694, Dec. 23, 2015]



Sec. 4233.7  Actuarial and financial information.

    (a) Required information. An application for partition must include 
the following plan actuarial and financial information:
    (1) A copy of the plan's most recent actuarial report and copies of 
the actuarial reports for the two preceding plan years.
    (2) A copy of the plan actuary's most recent certification of 
critical and declining status, including a detailed description of the 
assumptions used in

[[Page 1158]]

the certification, the basis for the projection of future contributions, 
withdrawal liability payments, investment return assumptions, and any 
other assumption that may have a material effect on projections.
    (3) A detailed statement of the basis for the conclusion that the 
plan will not remain solvent without a partition and, if applicable, 
suspension of benefits, including supporting data, calculations, 
assumptions, and a description of the methodology. Include as an exhibit 
annual cash flow projections for the plan without partition (or 
suspension, if applicable) through the projected date of insolvency. 
Annual cash flow projections must reflect the following information:
    (i) Market value of assets as of the beginning of the year.
    (ii) Contributions and withdrawal liability payments.
    (iii) Benefit payments organized by participant status (e.g., 
active, retiree, terminated vested, beneficiary).
    (iv) Administrative expenses.
    (v) Market value of assets at year end.
    (4) A long-term projection reflecting reduced benefit disbursements 
at the PBGC-guarantee level after insolvency, and a statement of the 
present value of all future financial assistance without a partition 
(using the interest and mortality assumptions applicable to the 
valuation of plans terminated by mass withdrawal as specified in 
Sec. 4281.13 of this chapter and other reasonable actuarial assumptions, 
including retirement age, form of benefit payment, and administrative 
expenses, certified by an enrolled actuary).
    (5) A detailed statement of the basis for the conclusion that the 
original plan will remain solvent if the application for partition, and, 
if applicable, the application for suspension of benefits, is granted, 
including supporting data, calculations, assumptions, and a description 
of the methodology, which must be consistent with section 
305(e)(9)(D)(iv) and the regulations thereunder (including any 
adjustment to the cash flows in the initial year to incorporate recent 
actual fund activity required to be included under that section). Annual 
cash flow projections for the original plan with partition (and 
suspension, if applicable) must be included as an exhibit and must 
reflect the following information:
    (i) Market value of assets as of the beginning of the year.
    (ii) Contributions and withdrawal liability payments.
    (iii) Benefit payments organized by participant status (e.g., 
active, retiree, terminated vested, beneficiary).
    (iv) Administrative expenses.
    (v) Market value of assets at year end.
    (6) If applicable, a copy of the plan actuary's certification under 
section 305(e)(9)(C)(i) of ERISA.
    (7) The plan's projected insolvency date with benefit suspension 
alone (if applicable), including supporting data.
    (8) A long-term projection reflecting benefit disbursements from the 
successor plan (organized by participant status (e.g., active, retiree, 
terminated vested, beneficiary)), and a statement of the present value 
of all future financial assistance to be paid as a result of a partition 
(using the interest and mortality assumptions applicable to the 
valuation of plans terminated by mass withdrawal as specified in 
Sec. 4281.13 of this chapter and other reasonable actuarial assumptions, 
including retirement age, form of benefit payment, and administrative 
expenses, certified by an enrolled actuary).
    (9) A long-term projection of pre-partition benefit disbursements 
from the original plan reflecting reduced benefit disbursements at the 
PBGC-guarantee level beginning on the proposed effective date of the 
partition (using a closed group valuation and no accruals after the 
proposed effective date of partition, and organized separately by 
participant status groupings (e.g., active, retiree, terminated vested, 
beneficiary)).
    (10) A long-erm projection of pre-partition benefit disbursements 
from the original plan reflecting the maximum benefit suspensions 
permissible under section 305(e)(9) of ERISA beginning on the proposed 
effective date of the partition (using an open group valuation and 
organized separately by participant status groupings (e.g., active, 
retiree, terminated vested, beneficiary)).

[[Page 1159]]

    (b) Additional projections. PBGC may ask the plan for additional 
projections based on assumptions that it specifies.
    (c) Actuarial calculations and assumptions. (1) General. All 
calculations required by this part must be performed by an enrolled 
actuary.
    (2) Assumptions. All calculations required by this part must be 
consistent with calculations used for purposes of an application for 
suspension of benefits under section 305(e)(9) of ERISA, and based on 
methods and assumptions each of which is reasonable (taking into account 
the experience of the plan and reasonable expectations), and which, in 
combination, offer the actuary's best estimate of anticipated experience 
under the plan. Any change(s) in assumptions from the most recent 
actuarial valuation, and critical and declining status certification, 
must be disclosed and must be accompanied by a statement explaining the 
reason(s) for any change(s) in assumptions.
    (3) Updates. PBGC may, in its discretion, require updated 
calculations and representations based on the actual effective date of a 
partition, revised actuarial assumptions, or for other good cause.

[80 FR 35229, June 19, 2015, as amended at 80 FR 79694, Dec. 23, 2015]



Sec. 4233.8  Participant census data.

    An application for partition must include a copy of the census data 
used for the projections described in Sec. 4233.7(a)(3) and (5), 
including:
    (a) Participant type (retiree, beneficiary, disabled, terminated 
vested, active, alternate payee).
    (b) Date of birth.
    (c) Gender.
    (d) Credited service for guarantee calculation (i.e., number of 
years of participation).
    (e) Vested accrued monthly benefit before benefit suspension under 
section 305(e)(9) of ERISA.
    (f) Vested accrued monthly benefit after benefit suspension under 
section 305(e)(9) of ERISA.
    (g) Monthly benefit guaranteed by PBGC (determined under the terms 
of the original plan without respect to benefit suspensions).
    (h) Benefit commencement date (for participants in pay status and 
others for which the reported benefit is not payable at Normal 
Retirement Date).
    (i) For each participant in pay status--
    (1) Form of payment, and
    (2) Data relevant to the form of payment, including:
    (i) For a joint and survivor benefit, the beneficiary's benefit 
amount (before and after suspension) and the beneficiary's date of 
birth;
    (ii) For a Social Security level income benefit, the date of any 
change in the benefit amount, and the benefit amount after such change;
    (iii) For a 5-year certain or 10-year certain benefit (or similar 
benefit), the relevant defined period.
    (iv) For a form of payment not otherwise described in this section, 
the data necessary for the valuation of the form of payment, including 
the benefit amount before and after suspension.
    (j) If an actuarial increase for postponed retirement applies or if 
the form of annuity is a Social Security level income option, the 
monthly vested benefit payable at normal retirement age in normal form 
of annuity.

[80 FR 79694, Dec. 23, 2015]



Sec. 4233.9  Financial assistance information.

    (a) Required information. An application for partition must include 
the estimated amount of annual financial assistance requested from PBGC 
for the first year the plan receives financial assistance if partition 
is approved.
    (b) Additional information. PBGC may ask the plan for additional 
information in accordance with Sec. 4233.4(b)(1).



Sec. 4233.10  Initial review.

    (a) Determination on completed application. PBGC will make a 
determination on an application not later than 270 days after the date 
such application is deemed completed.
    (b) Incomplete application. If the application is incomplete, PBGC 
will issue a written notice to the plan sponsor describing the 
information missing from the application no later than 14 calendar days 
after the submission of such application.
    (c) Complete application. Upon making a determination that an 
application is complete (i.e., the application includes

[[Page 1160]]

all the information specified in Secs. 4233.5 through 4233.9), PBGC will 
issue a written notice to the plan sponsor no later than 14 calendar 
days after the submission of such application. The date of the written 
notice will mark the beginning of PBGC's 270-day review period under 
section 4233(a)(1) of ERISA, and the plan sponsor's 30-day notice period 
under 4233(a)(2) of ERISA.
    (d) Special rule for coordinated applications for partition and 
benefit suspension. For a plan requiring both partition and benefit 
suspensions to remain solvent, PBGC's initial determination that a 
partition application is complete will be conditioned on the plan 
sponsor's filing of an application for benefit suspensions with Treasury 
within 30 days after receiving written notice from PBGC under paragraph 
(c) of this section. Such a plan is permitted, but not required, to 
issue a combined notice under Sec. 4233.13(b).
    (e) Informal consultation. Nothing in this subsection precludes a 
plan sponsor from contacting PBGC on an informal basis to discuss a 
potential partition application.

[80 FR 35229, June 19, 2015, as amended at 80 FR 79694, Dec. 23, 2015]



Sec. 4233.11  Notice of application for partition.

    (a) When to file. Not later than 30 days after receipt of the 
written notice described in Sec. 4233.10(c) that an application for 
partition is complete, the plan sponsor must provide notice of such 
application to each interested party and PBGC, in accordance with the 
rules in part 4000, subpart B of this chapter.
    (b) Form of notice. The notice must be readable and written in a 
matter calculated to be understood by the average plan participant. The 
Model Notices in appendix A to this part (when properly completed) are 
examples of notices meeting the requirements of this section.
    (c) Information required. A notice of completed application for 
partition must include the following information:
    (1) Identifying information. The name of the plan, the name, 
address, and phone number of the plan sponsor, the Employer 
Identification Number (EIN), and three-digit Plan Number (PN).
    (2) Relevant partition application dates. A brief statement that the 
plan sponsor has submitted an application for partition to PBGC, the 
date of the completed application under Sec. 4233.10(c), and a statement 
that PBGC must issue its decision not later than 270 days after the date 
on which PBGC notified the plan sponsor that the application was 
complete.
    (3) Application for suspension of benefits. If applicable, a 
statement of whether the plan sponsor has submitted an application for 
suspension of benefits under section 305(e)(9)(G) of ERISA, and, if so, 
information on how to obtain a copy of the application and notice 
required by section 305(e)(9)(F) of ERISA.
    (4) Description of statutory partition provisions. A brief 
description of the requirements under section 4233 of ERISA, and other 
related statutory requirements, including:
    (i) The interrelationship between the partition rules under section 
4233 of ERISA and suspensions of benefits under section 305(e)(9) of 
ERISA (if applicable).
    (ii) The multiemployer guarantee under section 4022A of ERISA.
    (iii) The eligibility requirements for a partition under section 
4233(b) of ERISA, including the Advocate consultation requirement.
    (5) Impact of partition on interested parties. A brief description 
of how the proposed partition may impact affected participants, 
beneficiaries, and alternate payees including:
    (i) A statement describing the benefit payment obligations of the 
original plan and the successor plan.
    (ii) A statement explaining that the Board of Trustees of the 
original plan will also administer the successor plan, but the successor 
plan will be funded solely by PBGC financial assistance payments.
    (6) Partition application contents summary. A brief summary of the 
content of the plan sponsor's application for partition, including the 
following information:
    (i) The plan's critical and declining status and projected 
insolvency date.

[[Page 1161]]

    (ii) A statement that the plan sponsor has taken (or is taking) all 
reasonable measures to avoid insolvency, including the maximum benefit 
suspensions under section 305(e)(9), if applicable.
    (iii) If known, a brief statement on the proposed total estimated 
amount and percentage of liabilities to be partitioned.
    (iv) If known, a brief statement summarizing the proposed class or 
classes of participants whose benefits would be partially or wholly 
transferred if the application for partition is granted, including a 
summary of the factors considered by the plan sponsor in preparing its 
application.
    (7) Contact information for plan sponsor. The name, address, and 
telephone number of the plan sponsor or other person designated by the 
plan sponsor to answer inquiries concerning the application for 
partition.
    (8) Contact information for PBGC. Multiemployer Program Division, 
PBGC, 1200 K Street, NW., Washington, DC 20005-4026, 
[email protected].
    (9) Contact information for Participant and Plan Sponsor Advocate. 
PBGC Participant and Plan Sponsor Advocate, 1200 K Street NW., 
Washington, DC 20005-4026, [email protected].
    (d) Model notice. The appendix to this section contains two model 
notices--one for plan sponsors that submit coordinated applications for 
partition with PBGC and for benefit suspensions with Treasury, and one 
for plans sponsors who apply for partition only. The model notices are 
intended to assist plan sponsors in discharging their notice obligations 
under section 4233(a)(2) of ERISA and this part. Use of the model 
notices is not mandatory, but will be deemed to satisfy the requirements 
of section 4233(a)(2) of ERISA and this part.
    (e) Foreign languages. The plan sponsor of a plan that 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 interested parties--
    (1) Include a prominent legend in that common non-English language 
advising them how to obtain assistance in understanding the notice; or
    (2) Provide the notice in that common non-English language to those 
interested parties literate only in that language.



Sec. 4233.12  PBGC action on application for partition.

    (a) Review period. Except as provided in paragraph (c) of this 
section, PBGC will approve or deny an application for partition 
submitted to it under this part within 270 days after the date PBGC 
issued a notice to the plan sponsor of the completed application under 
Sec. 4233.10(c).
    (b) Determination on application. PBGC may approve or deny an 
application at its discretion. PBGC will notify the plan sponsor in 
writing of PBGC's decision on an application. If PBGC denies the 
application, PBGC's written decision will state the reason(s) for the 
denial. If PBGC approves the application, PBGC will issue a partition 
order under section 4233(c) of ERISA and Sec. 4233.14.
    (c) Conditional determination on application. At the request of a 
plan sponsor, PBGC may, in its discretion, issue an approval of an 
application conditioned on Treasury issuing a final authorization to 
suspend under section 305(e)(9)(H)(vi) of ERISA and any other terms and 
conditions set forth in the conditional approval. The conditional 
approval will include a written statement of preliminary findings, 
conclusions, and conditions. The conditional approval is not a final 
agency action. The proposed partition will only become effective upon 
satisfaction of the required conditions, and the issuance of an order of 
partition under section 4233(c) of ERISA.
    (d) Final agency action. Except as provided in paragraph (c) of this 
section, PBGC's decision on an application for partition under this 
section is a final agency action for purposes of judicial review under 
the Administrative Procedure Act (5 U.S.C. 701 et seq.).

[80 FR 35229, June 19, 2015, as amended at 80 FR 79695, Dec. 23, 2015]

[[Page 1162]]



Sec. 4233.13  Coordinated application process for partition and 
benefit suspension.

    (a) Interagency coordination. For a plan sponsor that has requested 
a conditional approval of a partition pursuant to Sec. 4233.12(c), PBGC 
may render either a conditional approval or a final denial of the 
application on an expedited basis, provided that the plan sponsor has 
submitted a completed application to PBGC as prescribed by Sec. 4233.10. 
PBGC will consult with Treasury and the Department of Labor in the 
course of reviewing an application for partition.
    (1) If PBGC denies the application for partition, it will notify the 
plan sponsor in writing of PBGC's decision in accordance with 
Sec. 4233.12(b), and will notify Treasury to allow it to take 
appropriate action on the benefit suspension application.
    (2) If PBGC grants a conditional approval of partition, it will 
notify the plan sponsor in writing of PBGC's decision in accordance with 
Sec. 4233.12(c), and will provide Treasury with a copy of PBGC's 
decision along with PBGC's record of the decision.
    (3) If Treasury does not issue the final authorization to suspend, 
PBGC's conditional approval under Sec. 4233.12(c) will be null and void.
    (4) If Treasury issues a final authorization to suspend, PBGC will 
issue a final partition order under Sec. 4233.14 and section 4233(c) of 
ERISA. The effective date of a final partition order must satisfy the 
requirements of section 305(e)(9)(D)(v) of ERISA.
    (b) Combined notice. A plan sponsor submitting an application for 
benefit suspensions under section 305(e)(9) of ERISA with Treasury, and 
a partition under section 4233 of ERISA with PBGC, may combine the PBGC 
model notice for coordinated applications provided at Appendix A with 
the Treasury model notice in Appendix A of Rev. Proc. 2015-34 in 
satisfaction of the notice requirement of this part.

[80 FR 35229, June 19, 2015, as amended at 80 FR 79695, Dec. 23, 2015]



Sec. 4233.14  Partition order.

    (a) General Provisions. The partition order will describe the 
liabilities to be transferred to the successor plan under section 
4233(c) of ERISA, and the manner in which financial assistance will be 
provided by PBGC under section 4261 of ERISA. The partition order will 
also set forth PBGC's findings and conclusions on an application for 
partition, the effective date of partition, the obligations and 
responsibilities of the plan sponsor to the original plan and successor 
plan, and such other information as PBGC may deem appropriate.
    (b) Terms and conditions. The partition order will set forth the 
terms and conditions of the partition and will incorporate by reference 
the applicable requirements under sections 4233(d) and 4233(e) of ERISA.
    (1) The plan sponsors of the original plan and the successor plan 
must amend the original plan and successor plan, respectively, to 
reflect the benefits payable to participants and beneficiaries as a 
result of the partition order.
    (2) The plan sponsors of the original plan and successor plan must 
maintain a written record of the respective plans' compliance with the 
terms of the partition order, section 4233 of ERISA, and this part.



Sec. 4233.15  Nature and operation of successor plan.

    (a) Nature of plan. The plan created by the partition order is a 
successor plan to which section 4022A applies, and an insolvent plan 
under section 4245 of ERISA.
    (b) Treatment of plan. The successor plan will be treated as a 
terminated multiemployer plan to which section 4041A(d) of ERISA applies 
because there are no contributing employers with an obligation to 
contribute within the meaning of section 4212 of ERISA as of the 
effective date of the partition. The treatment of the successor plan as 
a terminated plan under this paragraph will not be taken into account 
for purposes of determining the withdrawal liability of contributing 
employers to the original plan under sections 4201 and 4233(d)(3) of 
ERISA.
    (c) Administration of plan. The plan sponsor of the original plan 
and the administrator of such plan will be the plan sponsor and the 
administrator, respectively, of the successor plan. PBGC

[[Page 1163]]

will retain the right to remove and replace the plan sponsor of the 
successor plan pursuant to section 4042(b)(2) of ERISA.



Sec. 4233.16  Coordination of benefits under original plan and
successor plan.

    (a) Successor plan benefits. Subject to the limitations contained in 
section 4022A of ERISA, the only benefit amounts payable under a 
successor plan are successor plan benefits as defined in Sec. 4233.2.
    (b) Guarantee of successor plan benefit. When a participant's or 
beneficiary's benefit is partially or wholly transferred to a successor 
plan, the PBGC guarantee applicable to such benefit becomes payable 
under the successor plan. The benefit remaining in the original plan as 
of the effective date of the partition, if any, is not subject to a new 
guarantee, and any increase in the PBGC guarantee amount payable under 
the original plan will arise solely, if at all, due to an increase in 
the accrued benefit under a plan amendment following the effective date 
of the partition, or an additional accrual attributable to service after 
the effective date of the partition.
    (c) PBGC financial assistance. Subject to the conditions contained 
in section 4261 of ERISA, PBGC will provide financial assistance to the 
successor plan in an amount sufficient to enable the successor plan to 
pay only the PBGC-guaranteed amount transferred to the successor plan 
pursuant to the partition order, and reasonable and necessary 
administrative expenses if approved by PBGC. The receipt of benefits 
payable under a successor plan receiving financial assistance from PBGC 
will be treated as the receipt of guaranteed benefits under section 
4022A.
    (d) Payment of monthly benefits. The plan sponsors of an original 
plan and a successor plan may, but are not required to, pay monthly 
benefits payable under the original plan and successor plan, 
respectively, in a single monthly payment pursuant to a written cost-
sharing or expense allocation agreement between the plans.



Sec. 4233.17  Continuing jurisdiction.

    (a) PBGC will continue to have jurisdiction over the original plan 
and the successor plan to carry out the purposes, terms, and conditions 
of the partition order, section 4233 of ERISA, and this part.
    (b) PBGC may, upon providing notice to the plan sponsor, make 
changes to the partition order in response to changed circumstances 
consistent with section 4233 of ERISA and this part.



               Sec. Appendix A to Part 4233--Model Notices

       NOTICE OF APPLICATION FOR PARTITION FOR [INSERT PLAN NAME]

          [For plans filing an application for partition only]

[Insert Date]

    This notice is to inform you that, on [insert Date], [insert Plan 
Sponsor's Name] (``Board of Trustees'') filed a complete application 
with the Pension Benefit Guaranty Corporation (``PBGC'') requesting 
approval for a partition of the [insert Pension Fund name, Employer 
Identification Number, and three-digit Plan Number] (the ``Plan'').

                           What is partition?

    A multiemployer plan that is in critical and declining status may 
apply to PBGC for an order that separates (i.e., partitions) and 
transfers the PBGC-guaranteed portion of certain participants' and 
beneficiaries' benefits to a newly-created successor plan. The total 
amount transferred from the original plan to the successor plan is the 
minimum amount needed to keep the original plan solvent. While the Board 
of Trustees will administer the successor plan, PBGC will provide 
financial assistance to the successor plan to pay the transferred 
benefits.
    PBGC guarantees benefits up to a legal limit. However, if the PBGC-
guaranteed amount payable by the successor plan is less than the benefit 
payable under the original plan, Federal law requires the original plan 
to pay the difference. Therefore, partition will not change the total 
amount payable to any participant or beneficiary.

                    What are the rules for partition?

    Federal law permits, but does not require, PBGC to approve an 
application for partition. PBGC generally will make a decision on the 
application for partition within 270 days. A plan is eligible for 
partition if certain requirements are met, including:
    1. The pension plan is in critical and declining status. A plan is 
in critical and declining status if it is in critical status (which

[[Page 1164]]

generally means the plan's funded percentage is less than 65%) and is 
projected to run out of money within 15 years (or 20 years if there are 
twice as many inactive as active participants, or if the plan's funded 
percentage is less than 80%).
    2. PBGC determines, after consulting with the PBGC Participant and 
Plan Sponsor Advocate, that the Board of Trustees has taken (or is 
taking) all reasonable measures to avoid insolvency. Reasonable measures 
may include contribution increases or reductions in the rate of benefit 
accruals.
    3. PBGC determines that: (1) Providing financial assistance in a 
partition will be significantly less than providing financial assistance 
in the event the plan becomes insolvent; and (2) partition is necessary 
for the plan to remain solvent.
    4. PBGC certifies to Congress that its ability to meet existing 
financial assistance obligations to other multiemployer plans (including 
plans that are insolvent or projected to become insolvent within 10 
years) will not be impaired by the partition.
    5. The cost of the partition is paid exclusively from PBGC's 
multiemployer insurance fund.

                        Why is partition needed?

    The Plan is in critical and declining status, is [insert funded 
percentage] funded, and is projected to become insolvent by [insert 
expected insolvency date]. The Board of Trustees asserts that it has 
taken reasonable measures to avoid insolvency, but has determined that 
these measures are insufficient and that the proposed partition is 
necessary for the Plan to avoid insolvency.
    [Insert brief statement of the amount of liabilities the Board of 
Trustees proposes to partition and indicate whether it is the minimum 
amount needed for the Plan to remain solvent.] [If applicable, insert 
brief statement summarizing the proposed classes of participants and 
beneficiaries whose benefits will be partially or wholly transferred if 
the application is granted, and a summary of the factors considered.] If 
instead the Plan is allowed to become insolvent, the benefits of all 
participants and beneficiaries whose benefits exceed the PBGC-guaranteed 
amount would be reduced to the PBGC-guaranteed amount.

              What is PBGC's multiemployer plan guarantee?

    Federal law sets the maximum that PBGC may guarantee. For 
multiemployer plan benefits, PBGC guarantees a monthly benefit payment 
equal to 100 percent of the first $11 of the Plan's monthly benefit 
accrual rate, plus 75 percent of the next $33 of the accrual rate, times 
each year of credited service. The PBGC's maximum guarantee, therefore, 
is $35.75 per month times a participant's years of credited service.
    PBGC guarantees vested pension benefits payable at normal retirement 
age, early retirement benefits, and certain survivor benefits, if the 
participant met the eligibility requirements for a benefit before plan 
termination or insolvency. A benefit or benefit increase that has been 
in effect for less than 60 months is not eligible for PBGC's guarantee. 
PBGC also does not guarantee benefits above the normal retirement 
benefit, disability benefits not in pay status, or non-pension benefits, 
such as health insurance, life insurance, death benefits, vacation pay, 
or severance pay.

  How will I know when PBGC has made a decision on the application for 
                               partition?

    If PBGC approves the Board of Trustees' application for partition, 
PBGC will issue a notice to affected participants and beneficiaries 
whose benefits will be transferred to the successor plan no later than 
14 days after it issues the order of partition. You may also visit 
www.pbgc.gov/MPRA for a list of applications for partition received by 
PBGC and the status of those applications.

   Your Rights To Receive Information About Your Plan and its Benefits

    Your plan's Summary Plan Description (``SPD'') will include 
information on the procedures for claiming benefits, which will apply to 
both the original and successor plans until the Plan provides you a new 
SPD. You also have the legal right to request documents from the 
original plan to help you understand the partition and your rights such 
as:
     The plan document, trust agreement, and other documents 
governing the Plan (e.g., collective bargaining agreements);
     The latest SPD and summaries of material modification;
     The Plan's Form 5500 annual reports, including audited 
financial statements, filed with the U.S. Department of Labor during the 
last six years;
     The Plan's annual funding notices for the last six years;
     Actuarial reports (including reports submitted in support 
of the application for partition) furnished to the Plan within the last 
six years;
     The Plan's current rehabilitation plan, including 
contribution schedules; and
     Any quarterly, semi-annual or annual financial reports 
prepared for the Plan by an investment manager, fiduciary or other 
advisor and furnished to the Plan within the last six years.
    If your benefits are transferred to the successor plan, you will be 
furnished a successor plan SPD within 120 days of the partition; and the 
plan document, trust agreement, and other documents governing the 
successor

[[Page 1165]]

plan will be available for review following the partition.
    The plan administrator must respond to your request for these 
documents within 30 days, and may charge you the cost per page for the 
least expensive means of reproducing documents, but cannot charge more 
than 25 cents per page. The Plan's Form 5500 annual reports are also 
available free of charge at http://www.dol.gov/ebsa/5500main.html. Some 
of the documents also may be available for examination, without charge, 
at the plan administrator's office, your worksite, or union hall.

                        Plan Contact Information

    For more information about this Notice, you may contact:

[Insert Name of Plan Administrator, address, email address, and phone 
number]

                        PBGC Contact Information

Multiemployer Program Division, PBGC, 1200 K Street NW., Washington, DC 
20005-4026
Email: [email protected]
Phone: (202) 326-4000 x6535

     PBGC Participant and Plan Sponsor Advocate Contact Information

Constance Donovan, PBGC, 1200 K Street NW., Washington, DC 20005-4026
Email: [email protected].
Phone: (202) 326-4488

       NOTICE OF APPLICATION FOR PARTITION FOR [INSERT PLAN NAME]

[For plans filing coordinated applications for partition and suspension 
                              of benefits]

[Insert Date]

    This notice is to inform you that, on [insert Date], [insert Plan 
Sponsor's Name] (``Board of Trustees'') filed a complete application 
with the Pension Benefit Guaranty Corporation (``PBGC'') requesting 
approval for a partition of the [insert Pension Fund name, Employer 
Identification Number, and three-digit Plan Number] (the ``Plan''). 
[Insert statement that the plan sponsor has submitted an application for 
suspension of benefits under section 305(e)(9)(G) of ERISA, and identify 
how to obtain a copy of the application and notice required by section 
305(e)(9)(F) of ERISA.]

                           What is partition?

    A multiemployer plan that is in critical and declining status may 
apply to PBGC for an order that separates (i.e., partitions) and 
transfers the PBGC-guaranteed portion of certain participants' and 
beneficiaries' benefits to a newly-created successor plan. The total 
amount transferred from the original plan to the successor plan is the 
minimum amount needed to keep the original plan solvent. While the Board 
of Trustees will administer the successor plan, PBGC will provide 
financial assistance to the successor plan to pay the transferred 
benefits.
    PBGC guarantees benefits up to a legal limit. However, if the PBGC-
guaranteed amount payable by the successor plan is less than the benefit 
payable under the original plan after taking into account benefit 
reductions or any plan amendments after the effective date of the 
partition, Federal law requires the original plan to pay the difference. 
Therefore, partition will not further change the total amount payable to 
any participant or beneficiary.

                    What are the rules for partition?

    Federal law permits, but does not require, PBGC to approve an 
application for partition. PBGC generally will make a decision on the 
application for partition within 270 days. A plan is eligible for 
partition if certain requirements are met, including:
    1. The pension plan is in critical and declining status. A plan is 
in critical and declining status if it is in critical status (which 
generally means the plan's funded percentage is less than 65%) and is 
projected to run out of money within 15 years (or 20 years if there are 
at least twice as many inactive as active participants, or if the plan's 
funded percentage is less than 80%).
    2. PBGC determines, after consulting with the PBGC Participant and 
Plan Sponsor Advocate, that the Board of Trustees has taken (or is 
taking) all reasonable measures to avoid insolvency, including reducing 
benefits to the maximum allowed under the law.
    3. PBGC determines that: (1) Providing financial assistance in a 
partition will be significantly less than providing financial assistance 
in the event the plan becomes insolvent; and (2) partition is necessary 
for the plan to remain solvent.
    4. PBGC certifies to Congress that its ability to meet existing 
financial assistance obligations to other multiemployer plans (including 
plans that are insolvent or projected to become insolvent within 10 
years) will not be impaired by the partition.
    5. The cost of the partition is paid exclusively from PBGC's 
multiemployer insurance fund.

            Why are partition and benefit reductions needed?

    The Plan is in critical and declining status, is [insert funded 
percentage] funded, and is projected to become insolvent by [insert 
expected insolvency date]. The Board of Trustees has taken reasonable 
measures to avoid insolvency, but has determined that these measures are 
insufficient and that the proposed partition and reduction of benefits 
combined are necessary for the Plan to avoid insolvency.

[[Page 1166]]

    [Insert brief statement of the amount of liabilities the Board of 
Trustees proposes to partition and indicate whether it is the minimum 
amount needed for the Plan to remain solvent.] [If applicable, insert 
brief statement summarizing the proposed classes of participants and 
beneficiaries whose benefits will be partially or wholly transferred if 
the application is granted, and a summary of the factors considered.] If 
instead the Plan is allowed to become insolvent, the benefits of all 
participants and beneficiaries whose benefits exceed the PBGC-guaranteed 
amount would be reduced to the PBGC-guaranteed amount.

              What is PBGC's multiemployer plan guarantee?

    Federal law sets the maximum that PBGC may guarantee. For 
multiemployer plan benefits, PBGC guarantees a monthly benefit payment 
equal to 100 percent of the first $11 of the Plan's monthly benefit 
accrual rate, plus 75 percent of the next $33 of the accrual rate, times 
each year of credited service. PBGC's maximum guarantee, therefore, is 
$35.75 per month times a participant's years of credited service.
    PBGC guarantees vested pension benefits payable at normal retirement 
age, early retirement benefits, and certain survivor benefits, if the 
participant met the eligibility requirements for a benefit before plan 
termination or insolvency. A benefit or benefit increase that has been 
in effect for less than 60 months is not eligible for PBGC's guarantee. 
PBGC also does not guarantee benefits above the normal retirement 
benefit, disability benefits not in pay status, or non-pension benefits, 
such as health insurance, life insurance, death benefits, vacation pay, 
or severance pay.

  How will I know when PBGC has made a decision on the application for 
                               partition?

    If PBGC approves the Board of Trustees' application for partition, 
PBGC will issue a notice to affected participants and beneficiaries 
whose benefits will be transferred to the successor plan no later than 
14 days after it issues the order of partition. You may also visit 
www.pbgc.gov/MPRA for a list of applications for partition received by 
PBGC and the status of those applications.

 How do I obtain information on the application for approval to reduce 
                                benefits?

    The application for approval of the proposed reduction of benefits 
will be publicly available within 30 days after the Treasury Department 
receives the application. See www.treasury.gov for a copy of the 
application, instructions on how to send comments on the application, 
and how to contact the Treasury Department for further information and 
assistance.

   Your Rights To Receive Information About Your Plan and its Benefits

    Your Plan's Summary Plan Description (``SPD'') will include 
information on the procedures for claiming benefits, which will apply to 
both the original and successor plans until the Plan provides you a new 
SPD. You also have the legal right to request documents from the 
original plan to help you understand the partition and your rights such 
as:
     The plan document, trust agreement, and other documents 
governing the Plan (e.g., collective bargaining agreements);
     The latest SPD and summaries of material modification;
     The Plan's Form 5500 annual reports, including audited 
financial statements, filed with the U.S. Department of Labor during the 
last six years;
     The Plan's annual funding notices for the last six years;
     Actuarial reports (including reports submitted in support 
of the application for partition) furnished to the Plan within the last 
six years;
     The Plan's current rehabilitation plan, including 
contribution schedules; and
     Any quarterly, semi-annual or annual financial reports 
prepared for the Plan by an investment manager, fiduciary or other 
advisor and furnished to the Plan within the last six years.
    If your benefits are transferred to the successor plan, you will be 
furnished a successor plan SPD within 120 days of the partition; and the 
plan document, trust agreement, and other documents governing the 
successor plan will be available for review following the partition.
    The plan administrator must respond to your request for these 
documents within 30 days, and may charge you the cost per page for the 
least expensive means of reproducing documents, but cannot charge more 
than 25 cents per page. The Plan's Form 5500 annual reports are also 
available free of charge at http://www.dol.gov/ebsa/5500main.html. Some 
of the documents also may be available for examination, without charge, 
at the plan administrator's office, your worksite, or union hall.

                        Plan Contact Information

    For more information about this Notice, you may contact:

[Insert Name of Plan Administrator, address, email address, and phone 
number]

                        PBGC Contact Information

Multiemployer Program Division, PBGC, 1200 K Street NW., Washington, DC 
20005-4026
Email: [email protected]
Phone: (202) 326-4000 x6535

[[Page 1167]]

     PBGC Participant and Plan Sponsor Advocate Contact Information

Constance Donovan, PBGC, 1200 K Street NW., Washington, DC 20005-4026
Email: [email protected]
Phone: (202) 326-4488



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.
4245.8  Computation of time.

    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 (e) 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.

[[Page 1168]]

    (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 days after the determination of insolvency.
    (c) Delivery to PBGC--(1) Method of filing. The PBGC applies the 
rules in subpart A of part 4000 of this chapter to determine permissible 
methods of filing the notice of insolvency with the PBGC under this 
part.
    (2) Filing date. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a notice of insolvency 
under this part was filed with the PBGC.
    (d) Delivery to interested parties--(1) Method of issuance. The PBGC 
applies the rules in subpart B of part 4000 of this chapter to determine 
permissible methods of issuance of the notice of insolvency to 
interested parties. In addition to the methods permitted under subpart B 
of part 4000, the plan sponsor may notify interested parties, other than 
participants and beneficiaries who are in pay status when the notice is 
required to be delivered, by posting the notice at participants' work 
sites 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.
    (2) Issuance date. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that the notice of insolvency 
was issued.
    (e) 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.

[61 FR 34115, July 1, 1996, as amended at 68 FR 61357, Oct. 28, 2003]



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

[[Page 1169]]

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 interested parties, as defined in 
Sec. 4245.3(e), 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.
    (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.

[61 FR 34115, July 1, 1996, as amended at 68 FR 61357, Oct. 28, 2003]



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(e), 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) Delivery to PBGC--(1) Method of filing. The PBGC applies the 
rules in subpart A of part 4000 of this chapter to determine permissible 
methods of filing a notice of insolvency benefit level with the PBGC 
under this part.
    (2) Filing date. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a

[[Page 1170]]

notice of insolvency benefit level under this part was filed with the 
PBGC.
    (e) Delivery to interested parties--(1) Method of issuance. The PBGC 
applies the rules in subpart B of part 4000 of this chapter to determine 
permissible methods of issuance of the notice of insolvency benefit 
levels to interested parties. In addition to the methods permitted under 
subpart B of part 4000, the plan sponsor may notify interested parties, 
other than participants and beneficiaries who are in pay status or 
reasonably expected to enter pay status during the insolvency year for 
which the notice is given, by posting the notice at participants' work 
sites 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.
    (2) Issuance date. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that the notice of insolvency 
benefit levels was issued.

[61 FR 34115, July 1, 1996, as amended at 68 FR 61357, Oct. 28, 2003]



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 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(e), 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.

[[Page 1171]]

    (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.

[61 FR 34115, July 1, 1996, as amended at 68 FR 61357, Oct. 28, 2003]



Sec. 4245.7  PBGC address.

    See Sec. 4000.4 of this chapter for information on where to file.

[68 FR 61357, Oct. 28, 2003]



Sec. 4245.8  Computation of time.

    The PBGC applies the rules in subpart D of part 4000 of this chapter 
to compute any time period for filing or issuance under this part.

[68 FR 61357, Oct. 28, 2003]



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  Filing and issuance rules.
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.
4281.44  Contents of notices of insolvency.
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.

[[Page 1172]]



                      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 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

[[Page 1173]]

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  Filing and issuance rules.

    (a) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (b) Method of issuance. For rules on method of issuance to 
interested parties, see Sec. 4281.32(c) for notices of benefit 
reductions, Sec. 4281.43(c) for notices of insolvency, and 
Sec. 4281.45(c) for notices of insolvency benefit level.
    (c) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.
    (d) Date of issuance. The PBGC applies the rules in subpart C of 
part 4000 of this chapter to determine the date that an issuance under 
this part was provided.
    (e) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file.
    (f) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing or 
issuance under this part.

[68 FR 61357, Oct. 28, 2003, as amended at 80 FR 55745, Sept. 17, 2015; 
80 FR 57717, Sept. 25, 2015]



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

[[Page 1174]]

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), (e), and (f) 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 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 projected from 1994 to the calendar year in 
which the valuation date occurs plus 10 years using Scale AA from Table 
2 of appendix A to part 4044 of this chapter; and
    (2) For female participants, the rates in Table 3 of appendix A to 
part 4044 of this chapter projected from 1994 to the calendar year in 
which the valuation date occurs plus 10 years using Scale AA from Table 
4 of appendix A to part 4044 of this chapter.
    (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 lesser of--
    (i) The rate determined from Table 1 of appendix A to part 4044 of 
this chapter projected from 1994 to the calendar year in which the 
valuation date occurs plus 10 years using Scale AA from

[[Page 1175]]

Table 2 of appendix A to part 4044 of this chapter and setting the 
resulting table forward three years, or
    (ii) The rate in Table 5 of appendix A to part 4044 of this chapter.
    (2) For female participants, the lesser of--
    (i) The rate determined from Table 3 of appendix A to part 4044 of 
this chapter projected from 1994 to the calendar year in which the 
valuation date occurs plus 10 years using Scale AA from Table 4 of 
appendix A to part 4044 of this chapter and setting the resulting table 
forward three years, or
    (ii) The rate in Table 6 of appendix A to part 4044 of this chapter.
    (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--
    (1) For male participants, the rates in Table 5 of appendix A to 
part 4044 of this chapter; and
    (2) For female participants, the rates in Table 6 of appendix A to 
part 4044 of this chapter.
    (f) Contingent annuitant mortality during deferral period. If a 
participant's joint and survivor benefit is valued as a deferred 
annuity, the mortality of the contingent annuitant during the deferral 
period will be disregarded.

[71 FR 75117, Dec. 14, 2006]



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.



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

[[Page 1176]]

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 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 issuance to interested parties. The PBGC applies the 
rules in subpart B of part 4000 of this chapter to determine permissible 
methods of issuance of the notice of benefit reduction to interested 
parties. In addition to the methods permitted under subpart B of part 
4000, the plan sponsor may notify interested parties, other than 
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

[[Page 1177]]

the plan year in which the amendment is adopted, by posting the notice 
at participants' work sites 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) 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.

[61 FR 34118, July 1, 1996, as amended at 68 FR 61457, Oct. 28, 2003]



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 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

[[Page 1178]]

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.

    (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 file with the PBGC and issue to plan participants and 
beneficiaries notices of insolvency. Once notices of insolvency have 
been filed with the PBGC and issued 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) 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.
    (c) Notices of insolvency--method of issuance to interested parties. 
The PBGC applies the rules in subpart B of part 4000 of this chapter to 
determine permissible methods of issuance of the notice of insolvency. 
In addition to the methods permitted under subpart B of part 4000, the 
plan sponsor may notify interested parties, other than participants and 
beneficiaries who are in pay status when the notice is required to be 
delivered, by posting the notice at participants' work sites 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.

[61 FR 34118, July 1, 1996, as amended at 68 FR 61458, Oct. 28, 2003; 79 
FR 30463, May 28, 2014; 80 FR 55745, Sept. 17, 2015]



Sec. 4281.44  Contents of notices of insolvency.

    (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 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.
    (5) The plan year for which the plan sponsor has determined that the 
plan is or may be insolvent.
    (6) 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.
    (7) 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

[[Page 1179]]

notice shall state the date on which the document was filed and that the 
information is still accurate and complete.
    (8) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (9) The estimated amount of the plan's available resources for the 
insolvency year.
    (10) The estimated amount of the annual benefits guaranteed by the 
PBGC for the insolvency year.
    (11) A statement indicating whether the notice of insolvency is the 
result of an insolvency determination under Sec. 4041A.25 (a) or (b).
    (12) 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.
    (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.

[61 FR 34118, July 1, 1996, as amended at 79 FR 30463, May 28, 2014]



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 issuance. The notices of insolvency benefit level 
shall be delivered to the PBGC and to plan participants and 
beneficiaries in pay status or reasonably expected to enter pay status 
during the insolvency year. The PBGC applies the rules in subpart B of 
part 4000 of this chapter to determine permissible methods of issuance 
of the notice of insolvency benefit levels to interested parties.

[61 FR 34118, July 1, 1996, as amended at 68 FR 61458, Oct. 28, 2003]



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 (4) and (a)(6) 
through (10) 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.)
    (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.

[[Page 1180]]

    (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.

[61 FR 34118, July 1, 1996, as amended at 79 FR 30463, May 28, 2014]



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, how, and where 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. Application to the PBGC for financial 
assistance shall be made in accordance with the rules in subpart A of 
part 4000 of this chapter. See Sec. 4000.4 of this chapter for 
information on where to apply.
    (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)(4) 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) 
through (a)(5), the month for which financial assistance is requested, 
and the plan's available resources and guaranteed benefits payable in 
that month.

[[Page 1181]]

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.

[61 FR 34118, July 1, 1996, as amended at 79 FR 30463, May 28, 2014; 80 
FR 55745, Sept. 17, 2015]

[[Page 1182]]



            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. 701, Pub. L. 114-
74, 129 Stat. 599-601; 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 $279.

[62 FR 36995, July 10, 1997, as amended at 81 FR 29767, May 13, 2016; 82 
FR 8814, Jan. 31, 2017]

[[Page 1183]]



      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  Electronic reading room.
4901.4  Information maintained in electronic reading room.
4901.5  Disclosure of other information.
4901.6  Filing rules; computation of time.

                 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, 3 CFR, 1987 Comp., p. 235.

    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.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Working day means any weekday excepting Federal holidays.

[61 FR 34123, July 1, 1996, as amended at 74 FR 27081, June 8, 2009]



Sec. 4901.3  Electronic reading room.

    The PBGC will maintain an electronic reading room on its Web site, 
www.pbgc.gov, where persons may inspect in an electronic format all 
records made available for such purposes under this part.

[82 FR 26991, June 13, 2017]



Sec. 4901.4  Information maintained in electronic reading room.

    The PBGC shall make available for public inspection in an electronic 
format 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;

[[Page 1184]]

    (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;
    (3) Staff manuals and instructions. Administrative staff manuals and 
instructions to staff issued by the PBGC that affect any member of the 
public;
    (4) Frequently requested records. Records that have been released 
under 5 U.S.C. 552(a)(3) and have been the subject of three or more 
requests; and
    (5) Other records. Records that have been released under 5 U.S.C. 
552(a)(3) and that PBGC determines, because of the nature of the 
records' subject matter, have become or are likely to become the subject 
of subsequent requests for substantially the same records; 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.

[61 FR 34123, July 1, 1996, as amended at 82 FR 26991, June 13, 2017]



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 PBGC reasonably foresees that disclosure would harm an 
interest protected by an exemption under the provisions of subsection 
(b) of FOIA and subpart C of this part or disclosure is otherwise 
prohibited by law. The subpart B procedures must be used for records 
that are not made available in the PBGC's electronic reading room under 
Sec. 4901.4 and may be used for records that are available in the 
electronic reading 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.

[61 FR 34123, July 1, 1996, as amended at 82 FR 26992, June 13, 2017]



Sec. 4901.6  Filing rules; computation of time.

    (a) Filing rules--(1) Where to file. See Sec. 4000.4 of this chapter 
for information

[[Page 1185]]

on where to file a submission under this part with the PBGC.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (3) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.
    (b) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period under this part.

[68 FR 61358, Oct. 28, 2003]



                 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 to the Disclosure Officer, Pension Benefit Guaranty 
Corporation. Such a request may be sent to the Disclosure Officer or 
made in person between the hours of 9 a.m. and 4 p.m. on any working day 
in the Office of the General Counsel, PBGC, 1200 K Street, NW., Suite 
11101, Washington, DC 20005-4026. To expedite processing, the request 
should be prominently identified as a ``FOIA request.''

[68 FR 61358, Oct. 28, 2003, as amended at 74 FR 27081, June 8, 2009]



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

[[Page 1186]]

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. When responding to a 
request under paragraph (b), (c), or (d) of this section, the disclosure 
officer will notify the requester of the requester's right to seek 
assistance from the PBGC's FOIA Public Liaison and will provide 
information about how to contact the FOIA Public Liaison.
    (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, outline the appeal procedure 
available, and notify the requester of the right to seek dispute 
resolution services from the PBGC's FOIA Public Liaison or the Office of 
Government Information Services.
    (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 and notice of the requester's right to 
seek dispute resolution services from the PBGC's FOIA Public Liaison or 
the Office of Government Information Services. 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 search or examination will be continued and that the 
denial may be withdrawn, modified, or confirmed when processing of the 
request is completed.

[61 FR 34123, July 1, 1996, as amended at 82 FR 26992, June 13, 2017]



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 90 days from the date of the denial or, if later (in the 
case of a partial denial), 90 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. See 
Sec. 4000.4 of this chapter for information on where to file. To 
expedite processing, the words ``FOIA appeal'' should appear prominently 
on the request.
    (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

[[Page 1187]]

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).

[61 FR 34123, July 1, 1996, as amended at 68 FR 61358, Oct. 28, 2003; 82 
FR 26992, June 13, 2017]



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 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.

[[Page 1188]]



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.
    (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

[[Page 1189]]

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. Except as provided in paragraph (e) of this section, no charge 
for searching (or in the case of a requester described under 5 U.S.C. 
552(a)(4)(A)(ii)(II), for duplication) will be assessed if PBGC has 
failed to comply with any time limit under 5 U.S.C. 552(a)(6).
    (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 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

[[Page 1190]]

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. ``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

[[Page 1191]]

charge are set forth in Sec. 4901.34 of this part.
    (e) Unusual or exceptional circumstances. Notwithstanding paragraph 
(a) of this section, if PBGC fails to comply with a time limit under 5 
U.S.C. 552(a)(6), PBGC may nevertheless assess a charge for searching 
(or in the case of a requester described under 5 U.S.C. 
552(a)(4)(A)(ii)(II), for duplication) if either paragraph (e)(1) or (2) 
of this section applies:
    (1) PBGC has determined that unusual circumstances apply and that 
more than 5,000 pages are necessary to respond to the request, provided 
that:
    (i) PBGC has provided timely written notice of this determination to 
the requester; and
    (ii) PBGC has discussed with the requester--or made three or more 
good-faith attempts to do so--via written mail, electronic mail, or 
telephone how the requester could effectively limit the scope of the 
request.
    (2) A court has determined that exceptional circumstances exist (as 
defined in 5 U.S.C. 552(a)(6)(C)) and has issued an order excusing 
PBGC's failure to comply with the time limit.

[61 FR 34123, July 1, 1996, as amended at 82 FR 26992, June 13, 2017]



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.
    (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

[[Page 1192]]

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 sent 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 
sent.

[61 FR 34123, July 1, 1996, as amended at 68 FR 61358, Oct. 28, 2003]



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.
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  Privacy Act provisions for which PBGC claims an exemption.
4902.10  Specific exemption: Personnel security investigation records.
4902.11  Specific exemptions: Office of Inspector General investigative 
          file system.
4902.12  Filing rules; computation of time.

    Authority: 5 U.S.C. 552a.

    Source: 61 FR 34128, July 1, 1996, unless otherwise noted.

[[Page 1193]]



Sec. 4902.1  Purpose and Scope.

    (a) Procedures. Sections 4902.3 through 4902.7 establish procedures 
under which--
    (1) An individual may--
    (i) Determine whether PBGC maintains any system of records that 
contains a record pertaining to the individual;
    (ii) Obtain access to the individual's record upon request;
    (iii) Make a request to amend the individual's record; and
    (iv) Appeal a denial of a request to amend the individual's record; 
and
    (2) PBGC will make an initial determination of a request to amend an 
individual's record.
    (b) Fees. Section 4902.8 prescribes the fees for making copies of an 
individual's record.
    (c) Privacy Act provisions. Section 4902.9 summarizes the Privacy 
Act (5 U.S.C. 552a) provisions for which PBGC claims an exemption for 
certain systems of records.
    (d) Exemptions. Sections 4902.10 through 4902.11 set forth those 
systems of records that are exempted from certain disclosure and other 
provisions of the Privacy Act, and the reasons for the exemptions.

[74 FR 27081, June 8, 2009]



Sec. 4902.2  Definitions.

    In addition to terminology in part 4001 of this chapter, as used in 
this part:
    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.

[61 FR 34128, July 1, 1996, as amended at 74 FR 27081, June 8, 2009]



Sec. 4902.3  Procedures for determining existence of and requesting
access to records.

    (a) Any individual may submit a request to the Disclosure Officer, 
Pension Benefit Guaranty Corporation, for the purpose of learning 
whether a system of records maintained by the PBGC contains any record 
pertaining to the requestor or obtaining access to such a record. Such a 
request may be sent to the Disclosure Officer or made in person between 
the hours of 9 a.m. and 4 p.m. on any working day. Current information 
on how to make a request, including the Disclosure Officer's mailing 
address and location, can be obtained on PBGC's Web site, http://
www.pbgc.gov.
    (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 prominently state the words, ``Privacy Act Request.'' If this 
information is insufficient to enable the PBGC to identify the record in 
question, or to determine the identity of the requester (to ensure the 
privacy of the subject of the record), the disclosure officer shall 
request such further identifying data as the disclosure officer deems 
necessary to locate the record or to determine the identity of the 
requester.
    (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

[[Page 1194]]

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 
shall state when the record will be made available.

[61 FR 34128, July 1, 1996, as amended at 68 FR 61358, Oct. 28, 2003; 74 
FR 27081, June 8, 2009]



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 PBGC, 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. Current information on where the 
records may be inspected and copied can be obtained on PBGC's Web site, 
http://www.pbgc.gov.
    (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.

[61 FR 34128, July 1, 1996, as amended at 74 FR 27082, June 8, 2009]



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. The Deputy General Counsel shall respond to such 
request as promptly as possible.

[61 FR 34128, July 1, 1996, as amended at 68 FR 61358, Oct. 28, 2003]



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 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 to the Deputy General 
Counsel, Pension Benefit Guaranty Corporation. The Deputy General 
Counsel shall respond to the request as promptly as possible, but in no 
event more than 30 days after receipt.

[61 FR 34128, July 1, 1996, as amended at 68 FR 61359, Oct. 28, 2003; 74 
FR 27082, June 8, 2009]



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

[[Page 1195]]

General Counsel, Pension Benefit Guaranty Corporation, 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 Director or 
Director's designee, Pension Benefit Guaranty Corporation. The appeal 
shall state in detail the basis on which it is made and shall clearly 
state ``Privacy Act Request'' on the first page. In addition, the 
submission shall clearly state ``Privacy Act Request'' on the envelope 
(for mail, hand delivery, or commercial delivery), in the subject line 
(for e-mail), or on the cover sheet (for fax).
    (b) Within 30 working days after the receipt of the appeal, unless 
for good cause shown the Director of the PBGC extends such 30-day 
period, the General Counsel or, where appropriate, the Director or 
Director's designee, 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 Director or 
Director's designee, 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.

[61 FR 34128, July 1, 1996, as amended at 68 FR 61359, Oct. 28, 2003; 74 
FR 27082, June 8, 2009; 74 FR 30212, June 25, 2009]



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  Privacy Act provisions for which PBGC claims an exemption.

    Subsections 552a(j) and (k) of title 5, U.S.C., authorize PBGC to 
exempt systems of records meeting certain criteria from various other 
subsections of section 552a. This section contains a summary of the 
Privacy Act provisions for which PBGC claims an exemption for the 
systems of records discussed in this part pursuant to, and to the extent 
permitted by, subsections 552a(j) and (k):
    (a) Subsection (c)(3) of 5 U.S.C. 552a requires an agency to make 
available to the individual named in the records an accounting of each 
disclosure of records.

[[Page 1196]]

    (b) Subsection (c)(4) of 5 U.S.C. 552a requires an agency to inform 
any person or other agency to which a record has been disclosed of any 
correction or notation of dispute the agency has made to the record in 
accordance with subsection (d) of the Privacy Act.
    (c) Subsections (d)(1) through (4) of 5 U.S.C. 552a require an 
agency to permit an individual to gain access to records about the 
individual, to request amendment of such records, to request a review of 
an agency decision not to amend such records, and to provide a statement 
of disagreement about a disputed record to be filed and disclosed with 
the disputed record.
    (d) Subsection (e)(1) of 5 U.S.C. 552a requires an agency to 
maintain in its records only such information about an individual that 
is relevant and necessary to accomplish a purpose required by statute or 
executive order of the President.
    (e) Subsection (e)(2) of 5 U.S.C. 552a requires an agency to collect 
information to the greatest extent practicable directly from the subject 
individual when the information may result in adverse determinations 
about an individual's rights, benefits, and privileges under federal 
programs.
    (f) Subsection (e)(3) of 5 U.S.C. 552a requires an agency to inform 
each person whom it asks to supply information of the authority under 
which the information is sought, whether disclosure is mandatory or 
voluntary, the principal purpose(s) for which the information will be 
used, the routine uses that may be made of the information, and the 
effects of not providing the information.
    (g) Subsection (e)(4)(G) and (H) of 5 U.S.C. 552a requires an agency 
to publish a Federal Register notice of its procedures whereby an 
individual can be notified upon request whether the system of records 
contains information about the individual, how to gain access to any 
record about the individual contained in the system, and how to contest 
its content.
    (h) Subsection (e)(5) of 5 U.S.C. 552a requires an agency to 
maintain its records with such accuracy, relevance, timeliness, and 
completeness as is reasonably necessary to ensure fairness to the 
individual in making any determination about the individual.
    (i) Subsection (e)(8) of 5 U.S.C. 552a requires an agency to make 
reasonable efforts to serve notice on an individual when any record on 
such individual is made available to any person under compulsory legal 
process when such process becomes a matter of public record.
    (j) Subsection (f) of 5 U.S.C. 552a requires an agency to establish 
procedures whereby an individual can be notified upon request if any 
system of records named by the individual contains a record pertaining 
to the individual, obtain access to the record, and request amendment.
    (k) Subsection (g) of 5 U.S.C. 552a provides for civil remedies if 
an agency fails to comply with the access and amendment provisions of 
subsections (d)(1) and (d)(3), and with other provisions of the Privacy 
Act, or any rule promulgated thereunder, in such a way as to have an 
adverse effect on an individual.

[74 FR 27082, June 8, 2009]



Sec. 4902.10  Specific exemption: Personnel Security Investigation 
Records.

    (a) Exemption. Under the authority granted by 5 U.S.C. 552a(k)(5), 
PBGC hereby exempts the system of records entitled ``PBGC-12, 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) Reasons for Exemption. 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 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

[[Page 1197]]

to avoid revealing the identities of persons who furnish information to 
PBGC in confidence.

[74 FR 27082, June 8, 2009]



Sec. 4902.11  Specific exemptions: Office of Inspector General 
Investigative File System.

    (a) Criminal Law Enforcement--(1) Exemption. Under the authority 
granted by 5 U.S.C. 552a(j)(2), PBGC hereby exempts the system of 
records entitled ``PBGC-17, Office of Inspector General Investigative 
File System--PBGC'' from the provisions of 5 U.S.C. 552a (c)(3), (c)(4), 
(d)(1) through (4), (e)(1) through (3), (e)(4)(G) and (H), (e)(5), 
(e)(8), (f), and (g) because the system contains information pertaining 
to the enforcement of criminal laws.
    (2) Reasons for exemption. The reasons for asserting this exemption 
are:
    (i) Disclosure to the individual named in the record pursuant to 
subsections (c)(3), (c)(4), or (d)(1) through (4) could seriously impede 
or compromise the investigation by alerting the target(s), subjecting a 
potential witness or witnesses to intimidation or improper influence, 
and leading to destruction of evidence.
    (ii) Application of subsection (e)(1) is impractical because the 
relevance of specific information might be established only after 
considerable analysis and as the investigation progresses. Effective law 
enforcement requires the Office of Inspector General to keep information 
that may not be relevant to a specific Office of Inspector General 
investigation, but which may provide leads for appropriate law 
enforcement and to establish patterns of activity that might relate to 
the jurisdiction of the Office of Inspector General and/or other 
agencies.
    (iii) Application of subsection (e)(2) would be counterproductive to 
performance of a criminal investigation because it would alert the 
individual to the existence of an investigation.
    (iv) Application of subsection (e)(3) could discourage the free flow 
of information in a criminal law enforcement inquiry.
    (v) The requirements of subsections (e)(4)(G) and (H), and (f) do 
not apply because this system is exempt from the provisions of 
subsection (d). Nevertheless, PBGC has published notice of its 
notification, access, and contest procedures because access is 
appropriate in some cases.
    (vi) Although the Office of Inspector General endeavors to maintain 
accurate records, application of subsection (e)(5) is impractical 
because maintaining only those records that are accurate, relevant, 
timely, and complete and that assure fairness in determination is 
contrary to established investigative techniques. Information that may 
initially appear inaccurate, irrelevant, untimely, or incomplete may, 
when collated and analyzed with other available information, become more 
pertinent as an investigation progresses.
    (vii) Application of subsection (e)(8) could prematurely reveal an 
ongoing criminal investigation to the subject of the investigation.
    (viii) The provisions of subsection (g) do not apply to this system 
if an exemption otherwise applies.
    (b) Other Law Enforcement--(1) Exemption. Under the authority 
granted by 5 U.S.C. 552a(k)(2), PBGC hereby exempts the system of 
records entitled ``PBGC-17, Office of Inspector General Investigative 
File System--PBGC'' from the provisions of 5 U.S.C. 552a(c)(3), (d)(1) 
through (4), (e)(1), (e)(4)(G) and (H), and (f) for the same reasons as 
stated in paragraph (a)(2) of this section, that is, because the system 
contains investigatory material compiled for law enforcement purposes 
other than material within the scope of subsection 552a(j)(2).
    (2) Reasons for exemption. The reasons for asserting this exemption 
are because the disclosure and other requirements of the Privacy Act 
could substantially compromise the efficacy and integrity of the Office 
of Inspector General operations. Disclosure could invade the privacy of 
other individuals and disclose their identity when they were expressly 
promised confidentiality. Disclosure could interfere with the integrity 
of information which would otherwise be subject to privileges (see, 
e.g., 5 U.S.C. 552(b)(5)), and which could interfere with other 
important law enforcement concerns (see, e.g., 5 U.S.C. 552(b)(7)).

[[Page 1198]]

    (c) Federal Civilian or Contract Employment--(1) Exemption. Under 
the authority granted by 5 U.S.C. 552a(k)(5), PBGC hereby exempts the 
system of records entitled ``PBGC-17, Office of Inspector General 
Investigative File System--PBGC'' from the provisions of 5 U.S.C. 
552a(c)(3), (d)(1) through (4), (e)(1), (e)(4)(G) and (H), and (f) 
because the system contains investigatory material compiled for the 
purpose of determining eligibility or qualifications for federal 
civilian or contract employment.
    (2) Reason for exemption. The reason for asserting this exemption is 
to protect from disclosure the identity of a confidential source when an 
express promise of confidentiality has been given to obtain information 
from sources who would otherwise be unwilling to provide necessary 
information.

[74 FR 27082, June 8, 2009]



Sec. 4902.12  Filing rules; computation of time.

    (a) Filing rules--(1) Where to file. See Sec. 4000.4 of this chapter 
for information on where to file a submission under this part with the 
PBGC.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (3) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.
    (b) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period for filing under 
this part.

[68 FR 61359, Oct. 28, 2003. Redesignated at 74 FR 27082, June 8, 2009]



PART 4903_DEBT COLLECTION--Table of Contents



                      Subpart A_General Provisions

Sec.
4903.1  What definitions apply to this part?
4903.2  What do these regulations cover?
4903.3  Do these regulations adopt the Federal Claims Collection 
          Standards (FCCS)?
4903.4  What rules apply for purposes of filing with PBGC, determining 
          dates of filings, and computation of time?

           Subpart B_Procedures to Collect Debts Owed to PBGC

4903.5  What notice will PBGC send to a debtor when collecting a debt 
          owed to PBGC?
4903.6  How will PBGC add interest, penalty charges, and administrative 
          costs to a debt owed to PBGC?
4903.7  When will PBGC allow a debtor to pay a debt owed to PBGC in 
          installments instead of a lump sum?
4903.8  When will PBGC compromise a debt owed to PBGC?
4903.9  When will PBGC suspend or terminate debt collection on a debt 
          owed to PBGC?
4903.10  When will PBGC transfer a debt owed to PBGC to the Treasury 
          Department's Financial Management Service for collection?
4903.11  How will PBGC use administrative offset (offset of non-tax 
          Federal payments) to collect a debt owed to PBGC?
4903.12  How will PBGC use tax refund offset to collect a debt owed to 
          PBGC?
4903.13  How will PBGC offset a Federal employee's salary to collect a 
          debt owed to PBGC?
4903.14  How will PBGC use administrative wage garnishment to collect a 
          debt owed to PBGC from a debtor's wages?
4903.15  How will PBGC report debts owed to credit bureaus to PBGC?
4903.16  How will PBGC refer debts owed to private collection agencies 
          to PBGC?
4903.17  When will PBGC refer debts owed to the Department of Justice to 
          PBGC?
4903.18  Will a debtor who owes a debt to PBGC or another Federal 
          agency, and persons controlled by or controlling such debtors, 
          be ineligible for Federal loan assistance, grants, cooperative 
          agreements, or other sources of Federal funds?
4903.19  How does a debtor request a special review based on a change in 
          circumstances such as a catastrophic illness, divorce, death, 
          or disability?
4903.20  Will PBGC issue a refund if money is erroneously collected on a 
          debt?

 Subpart C_Procedures for Offset of PBGC Payments to Collect Debts Owed 
                        to Other Federal Agencies

4903.21  How do other Federal agencies use the offset process to collect 
          debts from payments issued by PBGC?
4903.22  What does PBGC do upon receipt of a request to offset the 
          salary of a PBGC employee to collect a debt owed by the 
          employee to another Federal agency?

    Authority: 5 U.S.C. 5514; 29 U.S.C. 1302(b); 31 U.S.C. 3701-3719, 
3720A; 5 CFR part 550, subpart K; 31 CFR part 285; 31 CFR parts 900-904.

[[Page 1199]]


    Source: 75 FR 68205, Nov. 5, 2010, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 4903.1  What definitions apply to this part?

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, PBGC, and Person. In addition, for purposes of this part:
    Administrative offset or offset means withholding funds payable by 
the United States (including funds payable by the United States on 
behalf of a state government) to, or held by the United States for, a 
person to satisfy a debt owed by the person. The term ``administrative 
offset'' can include, but is not limited to, the offset of Federal 
salary, vendor, retirement, and Social Security benefit payments. The 
terms ``centralized administrative offset'' and ``centralized offset'' 
refer to the process by which the Treasury Department's Financial 
Management Service offsets Federal payments through the Treasury Offset 
Program.
    Administrative wage garnishment means the process by which a Federal 
agency orders a non-Federal employer to withhold amounts from a debtor's 
wages to satisfy a debt, as authorized by 31 U.S.C. 3720D, 31 CFR 
285.11, and this part.
    Agency or Federal agency means an executive department or agency; a 
military department; the United States Postal Service; the Postal 
Regulatory Commission; any nonappropriated fund instrumentality 
described in 5 U.S.C. 2105(c); the United States Senate; the United 
States House of Representatives; any court, court administrative office, 
or instrumentality in the judicial or legislative branches of the 
Government; or a Government corporation.
    Creditor agency means any Federal agency that is owed a debt.
    Debt means any amount of money, funds or property that has been 
determined by an appropriate official of the Federal Government to be 
owed to the United States government, including government-owned 
corporations, by a person. As used in this part, the term ``debt'' can 
include a debt owed to PBGC, but does not include debts arising under 
the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.).
    Debtor means a person who owes a debt to the United States.
    Delinquent debt means a debt that has not been paid by the date 
specified in the agency's initial written demand for payment or 
applicable agreement or instrument (including a post-delinquency payment 
agreement) unless other satisfactory payment arrangements have been 
made.
    Disposable pay has the same meaning as that term is defined in 5 CFR 
550.1103.
    Employee or Federal employee means a current employee of PBGC or 
other Federal agency, including a current member of the uniformed 
services, including the Army, Navy, Air Force, Marine Corps, Coast 
Guard, Commissioned Corps of the National Oceanic and Atmospheric 
Administration, Commissioned Corps of the Public Health Service, the 
National Guard, and the reserve forces of the uniformed services.
    FCCS means the Federal Claims Collection Standards, 31 CFR parts 
900-904.
    Financial Management Service (FMS) means the Treasury Department 
bureau that is responsible for the centralized collection of delinquent 
debts through the offset of Federal payments and other means.
    Payment agency or Federal payment agency means any Federal agency 
that transmits payment requests in the form of certified payment 
vouchers, or other similar forms, to a disbursing official for 
disbursement. The payment agency may be the agency that employs the 
debtor. In some cases, PBGC may be both the creditor agency and payment 
agency.
    Salary offset means a type of administrative offset to collect a 
debt under Section 5514 of Title 5 of the United States Code and 5 CFR 
part 550, subpart K by deduction(s) at one or more officially 
established pay intervals from the current pay account of an employee 
with or without his or her consent.
    Tax debt means a debt arising under the Code.
    Tax refund offset means the reduction by the IRS of a tax 
overpayment payable to a taxpayer by the amount of

[[Page 1200]]

past-due, legally enforceable debt owed by that taxpayer to a Federal 
agency pursuant to Treasury regulations.



Sec. 4903.2  What do these regulations cover?

    (a) Scope. This part provides procedures for the collection of debts 
owed to PBGC, other than those subject to recoupment (29 CFR 4022, 
subpart E). This part also provides procedures for collection of other 
debts owed to the United States when a request for offset of a payment, 
for which PBGC is the payment agency, is received by PBGC from another 
agency (for example, when a PBGC employee owes a student loan debt to 
the United States Department of Education).
    (b) Applicability.
    (1) This part applies to PBGC when collecting a debt owed to PBGC; 
to persons who owe debts to PBGC; to persons controlled by or 
controlling persons who owe debts to a Federal agency, and to Federal 
agencies requesting offset of a payment issued by PBGC as a payment 
agency (including salary payments to PBGC employees).
    (2) This part does not apply to debts owed to PBGC being collected 
through recoupment under subpart E of part 4022 of this chapter. 
Benefits paid by PBGC generally will not be offset, subject to limited 
exceptions (e.g., in certain fiduciary breach situations).
    (3) This part does not apply to tax debts, to any debt based in 
whole or in part on conduct in violation of the antitrust laws, nor to 
any debt for which there is an indication of fraud or misrepresentation, 
as described in Sec. 900.3 of the FCCS, unless the debt is returned by 
the Department of Justice to PBGC for handling.
    (4) Nothing in this part precludes the use of other statutory or 
regulatory authority to collect or dispose of any debt. See, for 
example, 5 U.S.C. 5705, Advancements and Deductions, which authorizes 
PBGC to recover travel advances by offset of up to 100 percent of a 
Federal employee's accrued pay. See, also, 5 U.S.C. 4108, governing the 
collection of training expenses.
    (5) To the extent that provisions of laws, other regulations, and 
PBGC enforcement policies differ from the provisions of this part, those 
provisions of law, other regulations, and PBGC enforcement policies 
apply to the remission or mitigation of fines, penalties, and 
forfeitures, and to debts arising under ERISA, rather than the 
provisions of this part.
    (c) Additional policies and procedures. PBGC may, but is not 
required to, promulgate additional policies and procedures consistent 
with this part, the FCCS, and other applicable law, policies, and 
procedures.
    (1) PBGC does not intend this regulation to prohibit PBGC from 
demanding the return of specific property or the payment of its value.
    (2) The failure of PBGC to comply with any provision in this 
regulation will not serve as a defense to the existence of the debt.
    (d) Duplication not required. Nothing in this part requires PBGC to 
duplicate notices or administrative proceedings required by contract, 
this part, or other laws or regulations.
    (e) Use of multiple collection remedies allowed. PBGC and other 
Federal agencies may simultaneously use multiple collection remedies to 
collect a debt, except as prohibited by law. This part is intended to 
promote aggressive debt collection, using for each debt all available 
and appropriate collection remedies. To provide PBGC with flexibility in 
determining which remedies will be most efficient in collecting the 
particular debt, these remedies are not listed in any prescribed order.



Sec. 4903.3  Do these regulations adopt the Federal Claims Collection
Standards (FCCS)?

    This part adopts and incorporates all provisions of FCCS. This part 
also supplements the FCCS by prescribing procedures consistent with 
FCCS, as necessary and appropriate for PBGC operations.



Sec. 4903.4  What rules apply for purposes of filing with PBGC, 
determining dates of filings, and computation of time?

    (a) How and where to file. PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with PBGC under this part. See Sec. 4000.4 of this chapter for 
information on where to file.

[[Page 1201]]

    (b) Date of filing. PBGC applies the rules in subpart C of part 4000 
of this chapter to determine the date that a submission under this part 
was filed with PBGC.
    (c) Computation of time. PBGC applies the rules of subpart D of part 
4000 of this chapter to compute any time period under this part.



           Subpart B_Procedures To Collect Debts Owed to PBGC



Sec. 4903.5  What notice will PBGC send to a debtor when collecting 
a debt owed to PBGC?

    (a) Notice requirements. PBGC will collect debts owed to PBGC. PBGC 
will promptly send at least one written notice to a debtor informing the 
debtor of the consequences of failing to pay or otherwise resolve a debt 
owed to PBGC. The notice(s) will be sent to the debtor at the most 
current address of the debtor in PBGC's records. Generally, before 
starting the collection actions described in Secs. 4903.6 and 4903.10 
through 4903.18 of this part, PBGC will send no more than two written 
notices to the debtor. The notice will explain why the debt is owed to 
PBGC, the amount of the debt, how a debtor may pay the debt or make 
alternate repayment arrangements, how a debtor may review non-privileged 
documents related to the debt, how a debtor may dispute the debt, the 
collection remedies available to PBGC if the debtor refuses or otherwise 
fails to pay the debt, and other consequences to the debtor if the debt 
is not paid. Except as otherwise provided in paragraph (b) of this 
section, the written notice(s) will explain to the debtor:
    (1) The nature and amount of the debt, and the facts giving rise to 
the debt;
    (2) How interest, penalties, and administrative costs are added to 
the debt, the date by which payment must be made to avoid such charges, 
and that such assessments must be made unless excused in accordance with 
31 CFR 901.9 (see Sec. 4903.6 of this part);
    (3) The date by which payment should be made to avoid the enforced 
collection actions described in paragraph (a)(6) of this section;
    (4) PBGC's willingness to discuss alternative payment arrangements 
and how the debtor may enter into a written agreement to repay the debt 
under terms acceptable to PBGC (see Sec. 4903.7 of this part);
    (5) The name, address, and telephone number of a contact person or 
office within PBGC;
    (6) PBGC's intention to enforce collection by taking one or more of 
the following actions if the debtor fails to pay or otherwise resolve 
the debt:
    (i) Offset. Offset the debtor's receipt of Federal payments, 
including income tax refunds, salary, certain benefit payments (such as 
Social Security), Federal retirement (i.e., CSRS or FERS), vendor, 
travel reimbursements and advances, and other Federal payments (see 
Secs. 4903.11 through 4903.13 of this part);
    (ii) Private collection agency. Refer the debt to a private 
collection agency (see Sec. 4903.16 of this part);
    (iii) Credit bureau reporting. Report the debt to a credit bureau 
(see Sec. 4903.15 of this part);
    (iv) Administrative wage garnishment. Garnish the debtor's wages 
through administrative wage garnishment (see Sec. 4903.14 of this part);
    (v) Litigation. Whether PBGC will initiate litigation under 29 
U.S.C. 1302 to collect the debt or refer the debt to the Department of 
Justice to initiate litigation to collect the debt (see Sec. 4903.17 of 
this part);
    (vi) Treasury Department's Financial Management Service. Refer the 
debt to the Financial Management Service for collection (see 
Sec. 4903.10 of this part);
    (7) That debts over 180 days delinquent must be referred to the 
Financial Management Service for the collection actions described in 
paragraph (a)(6) of this section (see Sec. 4903.10 of this part);
    (8) How the debtor may inspect and copy non-privileged records 
related to the debt;
    (9) How the debtor may request a review of PBGC's determination that 
the debtor owes a debt to PBGC and present evidence that the debt is not 
delinquent or legally enforceable (see Secs. 4903.11(c) and 4903.12(c) 
of this part);
    (10) How a debtor who is an individual may request a hearing if PBGC 
intends to garnish the debtor's private

[[Page 1202]]

sector (i.e., non-Federal) wages (see Sec. 4903.14(a) of this part), 
including:
    (i) The method and time period for requesting a hearing;
    (ii) That a request for a hearing, timely filed on or before the 
15th business day following the date of the mailing of the notice, will 
stay the commencement of administrative wage garnishment, but not other 
collection procedures; and
    (iii) The name and address of the office to which the request for a 
hearing should be sent.
    (11) How a debtor who is an individual and a Federal employee 
subject to Federal salary offset may request a hearing (see 
Sec. 4903.13(e) of this part), including:
    (i) The method and time period for requesting a hearing;
    (ii) That a request for a hearing, timely filed on or before the 
15th day following receipt of the notice, will stay the commencement of 
salary offset, but not other collection procedures;
    (iii) The name and address of the office to which the request for a 
hearing should be sent;
    (iv) That PBGC will refer the debt to the debtor's employing agency 
or to the Financial Management Service to implement salary offset, 
unless the employee files a timely request for a hearing;
    (v) That a final decision on the hearing, if requested, will be 
issued at the earliest practicable date, but not later than 60 days 
after the filing of the request for a hearing, unless the employee 
requests and the hearing official grants a delay in the proceedings;
    (vi) That any knowingly false or frivolous statements, 
representations, or evidence may subject the Federal employee to 
penalties under the False Claims Act (31 U.S.C. 3729-3731) or other 
applicable statutory authority, and criminal penalties under 18 U.S.C. 
286, 287, 1001, and 1002, or other applicable statutory authority;
    (vii) That unless prohibited by contract or statute, amounts paid on 
or deducted for the debt which are later waived or found not owed to the 
United States will be promptly refunded to the employee; and
    (viii) That proceedings with respect to such debt are governed by 5 
U.S.C. 5514 and 31 U.S.C. 3716.
    (12) How the debtor may request a waiver of the debt, if applicable. 
See, for example, Secs. 4903.6 and 4903.13(f) of this part.
    (13) How the debtor's spouse may claim his or her share of a joint 
income tax refund by filing Form 8379 with the Internal Revenue Service 
(see http://www.irs.gov);
    (14) How the debtor may exercise other rights and remedies, if any, 
available to the debtor under statutory or regulatory authority under 
which the debt arose.
    (15) That certain debtors and, if applicable, persons controlled by 
or controlling such debtors, may be ineligible for Federal Government 
loans, guaranties and insurance, grants, cooperative agreements or other 
Federal funds (see 28 U.S.C. 3201(e); 31 U.S.C. 3720B, 31 CFR 285.13, 
and Sec. 4903.18(a) of this part); and
    (16) That the debtor should advise PBGC of a bankruptcy proceeding 
of the debtor or another person liable for the debt being collected.
    (b) Exceptions to notice requirements. PBGC may omit from a notice 
to a debtor one or more of the provisions contained in paragraphs (a)(6) 
through (a)(16) of this section if PBGC, in consultation with its legal 
counsel, determines that any provision is not legally required given the 
collection remedies to be applied to a particular debt.
    (c) Respond to debtors; comply with FCCS. PBGC should respond 
promptly to communications from debtors and comply with other FCCS 
provisions applicable to the administrative collection of debts. See 31 
CFR part 901.



Sec. 4903.6  How will PBGC add interest, penalty charges, 
and administrative costs to a debt owed to PBGC?

    (a) Assessment and notice. PBGC will assess interest, penalties and 
administrative costs on PBGC debts in accordance with the provisions of 
31 U.S.C. 3717, 31 CFR 901.9 and other applicable requirements. 
Administrative costs, including the costs of processing and handling a 
delinquent debt, will be determined by PBGC. PBGC will explain

[[Page 1203]]

in the notice to the debtor how interest, penalties, costs, and other 
charges are assessed, unless the requirements are included in a contract 
or other legally binding agreement.
    (b) Waiver of interest, penalties, and administrative costs. Unless 
otherwise required by law, regulation, or contract, PBGC will not charge 
interest if the amount due on the debt is paid within 30 days of the 
date from which the interest accrues. See 31 U.S.C. 3717(d). To the 
extent permitted by law, PBGC may waive interest, penalties, and 
administrative costs, or any portion thereof, in appropriate 
circumstances consistent with the FCCS.
    (c) Accrual during suspension of debt collection. In most cases, 
interest, penalties and administrative costs will continue to accrue 
during any period when collection has been suspended for any reason (for 
example, when the debtor has requested a hearing). PBGC may suspend 
accrual of any or all of these charges in appropriate circumstances 
consistent with the FCCS.



Sec. 4903.7  When will PBGC allow a debtor to pay a debt owed to PBGC
in installments instead of a lump sum?

    If a debtor is financially unable to pay the debt in a lump sum, 
PBGC may accept payment of a debt in regular installments, in accordance 
with the provisions of 31 CFR 901.8.



Sec. 4903.8  When will PBGC compromise a debt owed to PBGC?

    If PBGC cannot collect the full amount of a debt owed to PBGC, PBGC 
may compromise the debt in accordance with the provisions of 31 CFR part 
902.



Sec. 4903.9  When will PBGC suspend or terminate debt collection
on a debt owed to PBGC?

    If, after pursuing all appropriate means of collection, PBGC 
determines that a debt owed to PBGC is uncollectible, PBGC may suspend 
or terminate debt collection activity in accordance with the provisions 
of 31 CFR part 903. Termination of debt collection activity by PBGC does 
not discharge the indebtedness.



Sec. 4903.10  When will PBGC transfer a debt owed to PBGC to the 
Treasury Department's Financial Management Service for collection?

    (a) PBGC will transfer a debt owed to PBGC that is more than 180 
days delinquent to the Financial Management Service for debt collection 
services, a process known as ``cross-servicing.'' See 31 U.S.C. 3711(g) 
and 31 CFR 285.12. PBGC may transfer debts owed to PBGC that are 
delinquent 180 days or less to the Financial Management Service in 
accordance with the procedures described in 31 CFR 285.12. The Financial 
Management Service takes appropriate action to collect or compromise the 
transferred PBGC debt, or to suspend or terminate collection action 
thereon, in accordance with the statutory and regulatory requirements 
and authorities applicable to the debt owed to PBGC and the collection 
action to be taken. See 31 CFR 285.12(b) and 285.12(c)(2). Appropriate 
action can include, but is not limited to, contact with the debtor, 
referral of the debt owed to PBGC to the Treasury Offset Program, 
private collection agencies, or the Department of Justice; reporting of 
the debt to credit bureaus, and/or administrative wage garnishment.
    (b) At least 60 days prior to transferring a debt owed to PBGC to 
the Financial Management Service, PBGC will send notice to the debtor as 
required by Sec. 4903.5 of this part. PBGC will certify to the Financial 
Management Service that the debt is valid, delinquent, legally 
enforceable, and that there are no legal bars to collection. In 
addition, PBGC will certify its compliance with all applicable due 
process and other requirements as described in this part and other 
Federal laws. See 31 CFR 285.12(i) regarding the certification 
requirement.
    (c) As part of its debt collection process, the Financial Management 
Service uses the Treasury Offset Program to collect debts owed to PBGC 
by administrative and tax refund offset. See 31 CFR 285.12(g). Under the 
Treasury Offset Program, before a Federal payment is disbursed, the 
Financial Management Service compares the name and taxpayer 
identification number (TIN) of the payee with the names and TINs of 
debtors that have been submitted by

[[Page 1204]]

Federal agencies and states to the Treasury Offset Program database. If 
there is a match, the Financial Management Service (or, in some cases, 
another Federal disbursing agency) offsets all or a portion of the 
Federal payment, disburses any remaining payment to the payee, and pays 
the offset amount to the creditor agency. Federal payments eligible for 
offset include, but are not limited to, income tax refunds, salary, 
travel advances and reimbursements, retirement and vendor payments, and 
Social Security and other benefit payments.



Sec. 4903.11  How will PBGC use administrative offset (offset of non
-tax Federal payments) to collect a debt owed to PBGC?

    (a) Centralized administrative offset through the Treasury Offset 
Program. (1) In most cases, the Financial Management Service uses the 
Treasury Offset Program to collect debts owed to PBGC by the offset of 
Federal payments. See Sec. 4903.10(c) of this part. If not already 
transferred to the Financial Management Service under Sec. 4903.10 of 
this part, PBGC will refer debt over 180 days delinquent to the Treasury 
Offset Program for collection by centralized administrative offset. See 
31 U.S.C. 3716(c)(6); 31 CFR part 285, subpart A; and 31 CFR 901.3(b). 
PBGC may refer to the Treasury Offset Program for offset any debt owed 
to PBGC that has been delinquent for 180 days or less.
    (2) At least 60 days prior to referring a debt owed to PBGC to the 
Treasury Offset Program, in accordance with paragraph (a)(1) of this 
section, PBGC will send notice to the debtor in accordance with the 
requirements of Sec. 4903.5 of this part. PBGC will certify to the 
Financial Management Service, that the debt is valid, delinquent, and 
legally enforceable, and that there are no legal bars to collection by 
offset. In addition, PBGC will certify its compliance with the 
requirements in this part.
    (b) Non-centralized administrative offset for debts owed to PBGC. 
(1) When centralized administrative offset through the Treasury Offset 
Program is not available or appropriate, PBGC may collect past-due, 
legally enforceable debts owed to PBGC through non-centralized 
administrative offset. See 31 CFR 901.3(c). In these cases, PBGC may 
offset a payment internally or make an offset request directly to a 
Federal payment agency.
    (2) At least 30 days prior to offsetting a payment internally or 
requesting a Federal payment agency to offset a payment, PBGC will send 
notice to the debtor in accordance with the requirements of Sec. 4903.5 
of this part. When referring a debt owed to PBGC for offset under this 
paragraph (b), PBGC will certify that the debt is valid, delinquent, and 
legally enforceable, and that there are no legal bars to collection by 
offset. In addition, PBGC will certify its compliance with these 
regulations concerning administrative offset. See 31 CFR 
901.3(c)(2)(ii).
    (c) Administrative review. The notice described in Sec. 4903.5 of 
this part will explain to the debtor how to request an administrative 
review of PBGC's determination that the debtor owes a debt to PBGC and 
how to present evidence that the debt is not delinquent or legally 
enforceable. In addition to challenging the existence and amount of the 
debt owed to PBGC, the debtor may seek a review of the terms of 
repayment. In most cases, PBGC will provide administrative review based 
upon the written record, including documentation provided by the debtor. 
PBGC may provide the debtor with a reasonable opportunity for an oral 
hearing when the debtor requests reconsideration of the debt owed to 
PBGC, and PBGC determines that the question of the indebtedness cannot 
be resolved by review of the documentary evidence. Unless otherwise 
required by law, an oral hearing under this section is not required to 
be a formal evidentiary hearing. PBGC will carefully document all 
significant matters discussed at the hearing. PBGC may suspend 
collection through administrative offset and/or other collection actions 
pending the resolution of a debtor's dispute.
    (d) Procedures for expedited offset. Under the circumstances 
described in 31 CFR 901.3(b)(4)(iii), PBGC may offset against a payment 
to be made to the debtor prior to sending a notice to the debtor, as 
described in Sec. 4903.5 of this part, or completing the procedures 
described in paragraph (b)(2) and (c) of

[[Page 1205]]

this section. PBGC will give the debtor notice and an opportunity for 
review as soon as practicable and promptly refund any money ultimately 
found not to have been owed to the Government.



Sec. 4903.12  How will PBGC use tax refund offset to collect a debt
owed to PBGC?

    (a) Tax refund offset. In most cases, the Financial Management 
Service uses the Treasury Offset Program to collect debts owed to PBGC 
by the offset of tax refunds and other Federal payments. See 
Sec. 4903.10(c) of this part. If not already transferred to the 
Financial Management Service under Sec. 4903.10 of this part, PBGC will 
refer to the Treasury Offset Program any past-due, legally enforceable 
debt for collection by tax refund offset. See 26 U.S.C. 6402(d), 31 
U.S.C. 3720A and 31 CFR 285.2.
    (b) Notice. At least 60 days prior to referring a debt owed to the 
Treasury Offset Program, PBGC will send notice to the debtor in 
accordance with the requirements of Sec. 4903.5 of this part. PBGC will 
certify to the Financial Management Service's Treasury Offset Program 
that the debt is past due and legally enforceable in the amount 
submitted, and that the PBGC has made reasonable efforts to obtain 
payment of the debt as described in 31 CFR 285.2(d). In addition, PBGC 
will certify its compliance with all applicable due process and other 
requirements described in this part and other Federal laws. See 31 
U.S.C. 3720A(b) and 31 CFR 285.2.
    (c) Administrative review. The notice described in Sec. 4903.5 of 
this part will provide the debtor with at least 60 days prior to the 
initiation of tax refund offset to request an administrative review as 
described in Sec. 4903.11(c) of this part. PBGC may suspend collection 
through tax refund offset and/or other collection actions pending the 
resolution of the debtor's dispute.



Sec. 4903.13  How will PBGC offset a Federal employee's salary to
collect a debt owed to PBGC?

    (a) Federal salary offset. (1) Salary offset is used to collect 
debts owed to the United States or PBGC by Federal employees. If a 
Federal employee owes PBGC a debt, PBGC may offset the employee's 
Federal salary to collect the debt in the manner described in this 
section. For information on how a Federal agency other than PBGC may 
collect debt from the salary of a PBGC employee, see Secs. 4903.21 and 
4903.22, subpart C, of this part.
    (2) Nothing in this part requires PBGC to collect a debt in 
accordance with the provisions of this section if Federal law allows 
other means to collect. See, for example, 5 U.S.C. 5705 (travel advances 
not used for allowable travel expenses are recoverable from the employee 
or his estate by setoff against accrued pay and other means) and 5 
U.S.C. 4108 (recovery of training expenses).
    (3) PBGC may use the administrative wage garnishment procedure 
described in Sec. 4903.14 of this part to collect from an individual's 
non-Federal wages a debt owed to PBGC.
    (b) Centralized salary offset through the Treasury Offset Program. 
As described in Sec. 4903.10(a) of this part, PBGC will refer debts owed 
to PBGC to the Financial Management Service for collection by 
administrative offset, including salary offset, through the Treasury 
Offset Program. When possible, PBGC will attempt salary offset through 
the Treasury Offset Program before applying the procedures in paragraph 
(c) of this section. See 5 CFR 550.1108 and 550.1109.
    (c) Non-centralized salary offset for debts owed to PBGC. When 
centralized salary offset through the Treasury Offset Program is not 
available or appropriate, PBGC may collect delinquent debts owed to PBGC 
through non-centralized salary offset. See 5 CFR 550.1109. In these 
cases, PBGC may offset a payment internally or make a request directly 
to a Federal payment agency to offset a salary payment to collect a 
delinquent debt owed to PBGC by a Federal employee. Thirty (30) days 
prior to offsetting internally or requesting a Federal agency to offset 
a salary payment, PBGC will send notice to the debtor in accordance with 
the requirements of Sec. 4903.5 of this part. When referring a debt owed 
to PBGC for offset, PBGC will certify to the payment agency that the 
debt is valid, delinquent and legally enforceable in the amount stated, 
and there are no legal bars to collection by salary offset. In

[[Page 1206]]

addition, PBGC will certify that all due process and other prerequisites 
to salary offset have been met. See 5 U.S.C. 5514, 31 U.S.C. 3716(a), 
and this section for a description of the due process and other 
prerequisites for salary offset.
    (d) When prior notice not required. PBGC is not required to provide 
prior notice to an employee when the following adjustments are made by 
PBGC to a PBGC employee's pay:
    (1) Any adjustment to pay arising out of any employee's election of 
coverage or a change in coverage under a Federal benefits program 
requiring periodic deductions from pay if the amount to be recovered was 
accumulated over 4 pay periods or less;
    (2) A routine intra-agency adjustment of pay that is made to correct 
an overpayment of pay attributable to clerical or administrative errors 
or delays in processing pay documents, if the overpayment occurred 
within the 4 pay periods preceding the adjustment, and, at the time of 
such adjustment, or as soon thereafter as practicable, the individual is 
provided written notice of the nature and the amount of the adjustment 
and the point of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amounting to $50 or less, if, 
at the time of such adjustment, or as soon thereafter as practicable, 
the individual is provided written notice of the nature and the amount 
of the adjustment and a point of contact for contesting such adjustment.
    (e) Administrative review-- (1) Request for administrative review. A 
Federal employee who has received a notice that his or her debt will be 
collected by means of salary offset may request administrative review 
concerning the existence or amount of the debt owed to PBGC. The Federal 
employee also may request administrative review concerning the amount 
proposed to be deducted from the employee's pay each pay period. The 
employee must send any request for administrative review in writing to 
the office designated in the notice described in Sec. 4903.5. See 
Sec. 4903.5(a)(11). The request must be received by the designated 
office on or before the 15th day following the employee's receipt of the 
notice. The employee must sign the request and specify whether an oral 
hearing is requested. If an oral hearing is requested, the employee must 
explain why the matter cannot be resolved by review of the documentary 
evidence alone. All travel expenses incurred by the Federal employee in 
connection with an in-person hearing will be borne by the employee. See 
31 CFR 901.3(a)(7).
    (2) Failure to submit timely request for administrative review. If 
the employee fails to submit a request for administrative review within 
the time period described in paragraph (e)(1) of this section, salary 
offset may be initiated. However, PBGC may accept a late request for 
administrative review if the employee can show that the late request was 
the result of circumstances beyond the employee's control or because of 
a failure to receive actual notice of the filing deadline.
    (3) Reviewing official. PBGC must obtain the services of a reviewing 
official who is not under the supervision or control of the Director of 
the PBGC. PBGC may enter into interagency support agreements with other 
agencies to provide reviewing officials.
    (4) Notice of administrative review. After the employee requests 
administrative review, the designated reviewing official will inform the 
employee of the form of the review to be provided. For oral hearings, 
the notice will set forth the date, time and location of the hearing. 
For determinations based on review of written records, the notice will 
notify the employee of the date by which he or she should submit written 
arguments to the designated reviewing official. The reviewing official 
will give the employee reasonable time to submit documentation in 
support of the employee's position. The reviewing official will schedule 
a new hearing date if requested by both parties. The reviewing official 
will give both parties reasonable notice of the time and place of a 
rescheduled hearing.
    (5) Oral hearing. The reviewing official will conduct an oral 
hearing if the official determines that the matter cannot be resolved by 
review of documentary evidence alone. The hearing need not take the form 
of an evidentiary hearing, but may be conducted in a manner determined 
by the

[[Page 1207]]

reviewing official, including but not limited to:
    (i) Informal conferences (in person or electronically) with the 
reviewing official, in which the employee and agency representative will 
be given a reasonable opportunity to present evidence, witnesses and 
argument;
    (ii) Informal meetings with an interview of the employee by the 
reviewing official; or
    (iii) Formal written submissions, with an opportunity for oral 
presentation.
    (6) Determination based on review of written record. If the 
reviewing official determines that an oral hearing is not necessary, the 
official will make the determination based upon a review of the 
available written record, including any documentation submitted by the 
employee in support of his or her position. See 31 CFR 901.3(a)(7).
    (7) Failure to appear or submit documentary evidence. In the absence 
of good cause shown (for example, excused illness), if the employee 
fails to appear at an oral hearing or fails to submit documentary 
evidence as required for administrative review, the employee will have 
waived the right to administrative review, and salary offset may be 
initiated. Further, the employee will have been deemed to admit the 
existence and amount of the debt owed to PBGC as described in the notice 
of intent to offset. If PBGC's representative fails to appear at an oral 
hearing, the reviewing official will proceed with the hearing as 
scheduled, and make his or her determination based upon the oral 
testimony presented and the documentary evidence submitted by both 
parties.
    (8) Burden of proof. PBGC will have the initial burden to prove the 
existence and amount of the debt owed to PBGC. Thereafter, if the 
employee disputes the existence or amount of the debt, the employee must 
prove by a preponderance of the evidence that no such debt exists or 
that the amount of the debt is incorrect. In addition, the employee may 
present evidence that the proposed terms of the repayment schedule are 
unlawful, would cause a financial hardship to the employee, or that 
collection of the debt may not be pursued due to operation of law.
    (9) Record. The reviewing official will maintain a summary record of 
any hearing provided by this part. Witnesses will testify under oath or 
affirmation in oral hearings. See 31 CFR 901.3(a)(7).
    (10) Date of decision. The reviewing official will issue a written 
opinion stating the official's decision, based upon documentary evidence 
and information developed during the administrative review, as soon as 
practicable after the review, but not later than 60 days after the date 
on which the request for review was received by PBGC. If the employee 
(or the parties jointly) requests a delay in the proceedings, the 
deadline for the decision may be postponed by the number of days by 
which the review was postponed. When a decision is not timely rendered, 
PBGC will waive interest and penalties applied to the debt owed to PBGC 
for the period beginning with the date the decision is due and ending on 
the date the decision is issued.
    (11) Content of decision. The written decision will include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the debt owed to PBGC;
    (ii) The reviewing official's findings, analysis, and conclusions; 
and
    (iii) The terms of any repayment schedules, if applicable.
    (12) Final agency action. The reviewing official's decision will be 
final.
    (f) Waiver not precluded. Nothing in this part precludes an employee 
from requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 
32 U.S.C. 716, or other statutory authority. PBGC may grant such waivers 
when it would be against equity and good conscience or not in the United 
States' best interest to collect such debts, in accordance with those 
authorities, 5 CFR 550.1102(b)(2).
    (g) Salary offset process-- (1) Determination of disposable pay. 
PBGC will implement salary offset when requested to do so by PBGC, as 
described in paragraph (c) of this section, or another agency, as 
described in Sec. 4903.21 of this part. If the debtor is not employed by 
PBGC, the agency employing the debtor will determine the amount of the 
employee's disposable pay and will implement salary offset upon request.

[[Page 1208]]

    (2) When salary offset begins. Deductions will begin within three 
official pay periods following receipt of the creditor agency's request 
for offset or after a decision has been issued following a request for a 
hearing.
    (3) Amount of salary offset. The amount to be offset from each 
salary payment will be up to 15 percent of a debtor's disposable pay, 
subject to the requirements of 15 U.S.C. 1673, as follows:
    (i) If the amount of the debt is equal to or less than 15 percent of 
the disposable pay, such debt generally will be collected in a lump sum 
payment;
    (ii) Installment deductions will be made over a period of no greater 
than the anticipated period of employment. An installment deduction will 
not exceed 15 percent of the disposable pay from which the deduction is 
made unless the employee has agreed in writing to the deduction of a 
greater amount, or the creditor agency has determined that smaller 
deductions are appropriate based on the employee's ability to pay.
    (4) Final salary payment. After the employee has separated either 
voluntarily or involuntarily from the payment agency, the payment agency 
may make a lump sum deduction exceeding 15 percent of disposable pay 
from any final salary or other payments pursuant to 31 U.S.C. 3716 in 
order to satisfy a debt owed to PBGC.
    (h) Payment agency's responsibilities.
    (1) As required by 5 CFR 550.1109, if the employee separates from 
the payment agency from which PBGC has requested salary offset, the 
payment agency must certify the total amount of its collection and 
notify PBGC and the employee of the amounts collected. If the payment 
agency knows that the employee is entitled to payments from the Civil 
Service Retirement Fund and Disability Fund, the Federal Employee 
Retirement System, or other similar payments, it must provide written 
notification to the agency responsible for making such payments that the 
debtor owes a debt to PBGC, the amount of the debt, and that PBGC has 
complied with the provisions of this section. PBGC must submit a 
properly certified claim to the agency responsible for making such 
payments before the collection can be made.
    (2) If the employee is already separated from employment and all 
payments due from his or her former payment agency have been made, PBGC 
may request that money due and payable to the employee from the Civil 
Service Retirement Fund and Disability Fund, the Federal Employee 
Retirement System, or other similar funds, be administratively offset to 
collect the debt. Generally, PBGC will collect such monies through the 
Treasury Offset Program as described in Sec. 4903.10(c) of this part.
    (3) When an employee transfers to another agency, PBGC should resume 
collection with the employee's new payment agency in order to continue 
salary offset.



Sec. 4903.14  How will PBGC use administrative wage garnishment to
collect a debt owed to PBGC from a debtor's wages?

    (a) PBGC is authorized to collect debts owed to PBGC from an 
individual debtor's wages by means of administrative wage garnishment in 
accordance with the requirements of 31 U.S.C. 3720D and 31 CFR 285.11. 
This part adopts and incorporates all of the provisions of 31 CFR 285.11 
concerning administrative wage garnishment, including the hearing 
procedures described in 31 CFR 285.11(f). PBGC may use administrative 
wage garnishment to collect a delinquent debt unless the debtor is 
making timely payments under an agreement to pay the debt in 
installments (see Sec. 4903.7 of this part). Thirty (30) days prior to 
initiating an administrative wage garnishment, PBGC will send notice to 
the debtor in accordance with the requirements of Sec. 4903.5 of this 
part, including the requirements of Sec. 4903.5(a)(10) of this part. For 
debts referred to the Financial Management Service under Sec. 4903.10 of 
this part, PBGC may authorize the Financial Management Service to send a 
notice informing the debtor that administrative wage garnishment will be 
initiated and how the debtor may request a hearing as described in 
Sec. 4903.5(a)(10) of this part. If a debtor makes a timely request for 
a hearing, administrative wage garnishment will

[[Page 1209]]

not begin until a hearing is held and a decision is sent to the debtor. 
PBGC will determine whether the matter requires an oral hearing or if a 
determination based upon review of the written record is sufficient. 
PBGC will provide the debtor with a reasonable opportunity for an oral 
hearing when it determines that the issues in dispute cannot be resolved 
by a review of the documentary evidence. See 31 CFR 285.11(f)(1)-(4). 
Even if a debtor's hearing request is not timely, PBGC may suspend 
collection by administrative wage garnishment in accordance with the 
provisions of 31 CFR 285.11(f)(5). All travel expenses incurred by the 
debtor in connection with an in-person hearing will be borne by the 
debtor.
    (b) This section does not apply to Federal salary offset, the 
process by which PBGC collects debts owed to PBGC from the salaries of 
Federal employees (see Sec. 4903.13 of this part).



Sec. 4903.15  How will PBGC report debts owed to PBGC to credit 
bureaus?

    PBGC will report delinquent debts owed to PBGC to credit bureaus in 
accordance with the provisions of 31 U.S.C. 3711(e), 31 CFR 901.4, and 
the Office of Management and Budget Circular A-129, ``Policies for 
Federal Credit Programs and Non-tax Receivables.'' At least 60 days 
prior to reporting a delinquent debt to a consumer reporting agency, 
PBGC will send notice to the debtor in accordance with the requirements 
of Sec. 4903.5 of this part. PBGC may authorize the Financial Management 
Service to report to credit bureaus those delinquent debts owed to the 
PBGC that have been transferred to the Financial Management Service 
under Sec. 4903.10 of this part.



Sec. 4903.16  How will PBGC refer debts owed to PBGC to private
collection agencies?

    PBGC will transfer delinquent debts owed to PBGC to the Financial 
Management Service to obtain debt collection services provided by 
private collection agencies. See Sec. 4903.10 of this part.



Sec. 4903.17  When will PBGC refer debts owed to PBGC to the 
Department of Justice?

    PBGC may initiate litigation pursuant to 29 U.S.C. 1302 with 
delinquent debts on which aggressive collection activity has been taken 
in accordance with this part and that should not be compromised, and on 
which collection activity should not be suspended or terminated. 
Alternatively, PBGC may refer debts owed to PBGC having a principal 
balance over $100,000, or such higher amount as authorized by the 
Attorney General, to the Department of Justice for approval of any 
compromise of a debt or suspension or termination of collection 
activity. See Secs. 4903.8 and 4903.9 of this part; 31 CFR 902.1, 903.1, 
and part 904. PBGC may authorize the Financial Management Service to 
refer to the Department of Justice for litigation those delinquent debts 
that have been transferred to the Financial Management Service under 
Sec. 4903.10 of this part.



Sec. 4903.18  Will a debtor who owes a debt to PBGC or another Federal
agency, and persons controlled by or controlling such debtors, be
ineligible for Federal loan assistance, grants, cooperative agreements,
or other sources of Federal funds?

    (a) Delinquent debtors are ineligible for and barred from obtaining 
Federal loans or loan insurance or guaranties. As required by 31 U.S.C. 
3720B and 31 CFR 901.6, PBGC will not extend financial assistance in the 
form of a loan, loan guarantee, or loan insurance to any person 
delinquent on a debt owed to a Federal agency. PBGC may issue standards 
under which it may determine that persons controlled by or controlling 
such delinquent debtors are similarly ineligible in accordance with 31 
CFR 285.13(c)(2). This prohibition does not apply to disaster loans. 
PBGC may extend credit after the delinquency has been resolved. See 31 
CFR 285.13.
    (b) This section does not apply to loans provided to multi-employer 
pension plans pursuant to 29 U.S.C. 1431, 29 CFR 4261.1 and 4281.47.
    (c) A debtor who has a judgment lien against the debtor's property 
for a debt to the United States is not eligible to receive grants, loans 
or funds directly

[[Page 1210]]

or indirectly from the United States until the judgment is paid in full 
or otherwise satisfied. This prohibition does not apply to funds to 
which the debtor is entitled as beneficiary. PBGC may promulgate 
regulations to allow for waivers of this ineligibility. See 28 U.S.C. 
3201(e).



Sec. 4903.19  How does a debtor request a special review based on a 
change in circumstances such as catastrophic illness, divorce, death,
or disability?

    (a) Material change in circumstances. A debtor who owes a debt to 
PBGC may, at any time, request a special review by PBGC of the amount of 
any offset, administrative wage garnishment, or voluntary payment, based 
on materially changed circumstances beyond the control of the debtor 
such as, but not limited to, catastrophic illness, divorce, death, or 
disability.
    (b) Inability to pay. For purposes of this section, in determining 
whether an involuntary or voluntary payment would prevent the debtor 
from meeting essential subsistence expenses (e.g., costs incurred for 
food, housing, clothing, transportation, and medical care), the debtor 
must submit a detailed statement and supporting documents for the 
debtor, his or her spouse, and dependents, indicating:
    (1) Income from all sources;
    (2) Assets;
    (3) Liabilities;
    (4) Number of dependents;
    (5) Expenses for food, housing, clothing, and transportation;
    (6) Medical expenses;
    (7) Exceptional expenses, if any; and
    (8) Any additional materials and information that PBGC may request 
relating to ability or inability to pay the amount(s) currently 
required.
    (c) Alternative payment arrangement. If the debtor requests a 
special review under this section, the debtor must submit an alternative 
proposed payment schedule and a statement to PBGC, with supporting 
documents, showing why the current offset, garnishment or repayment 
schedule imposes an extreme financial hardship on the debtor. PBGC will 
evaluate the statement and documentation and determine whether the 
current offset, garnishment, or repayment schedule imposes extreme 
financial hardship on the debtor. PBGC will notify the debtor in writing 
of such determination, including, if appropriate, a revised offset, 
garnishment, or payment schedule. If the special review results in a 
revised offset, garnishment, or repayment schedule, PBGC will notify the 
appropriate Federal agency or other persons about the new terms.



Sec. 4903.20  Will PBGC issue a refund if money is erroneously 
collected on a debt?

    PBGC will promptly refund to a debtor any amount collected on a debt 
owed to PBGC when the debt is waived or otherwise found not to be owed 
to the United States, or as otherwise required by law.



 Subpart C_Procedures for Offset of PBGC Payments To Collect Debts Owed 
                        to Other Federal Agencies



Sec. 4903.21  How do other Federal agencies use the offset process
to collect debts from payments issued by PBGC?

    (a) Offset of PBGC payments to collect debts owed to other Federal 
agencies. (1) In most cases, Federal agencies submit debts to the 
Treasury Offset Program to collect delinquent debts from payments issued 
by PBGC and other Federal agencies, a process known as ``centralized 
offset.'' When centralized offset is not available or appropriate, any 
Federal agency may ask PBGC (when acting as a ``payment agency'') to 
collect a debt owed to such agency by offsetting funds payable to a 
debtor by PBGC, including salary payments issued to PBGC employees. This 
section and Sec. 4903.21 of this subpart C apply when a Federal agency 
asks PBGC to offset a payment issued by PBGC to a person who owes a debt 
to the United States.
    (2) This subpart C does not apply to debts owed to PBGC. See 
Secs. 4903.11 through 4903.13 of this part for offset procedures 
applicable to debts owed to PBGC.
    (3) This subpart C does not apply to the collection of non-PBGC 
debts through tax refund offset. See 31 CFR 285.2 for tax refund offset 
procedures.

[[Page 1211]]

    (4) Benefits paid by PBGC generally will not be offset, subject to 
limited exceptions (e.g., in certain fiduciary breach situations).
    (b) Administrative offset (including salary offset); certification. 
PBGC will initiate a requested offset only upon receipt of written 
certification from the creditor agency that the debtor owes the past-
due, legally enforceable debt in the amount stated, and that the 
creditor agency has fully complied with all applicable due process and 
other requirements contained in 31 U.S.C. 3716, 5 U.S.C. 5514, and the 
creditor agency's regulations, as applicable. Offsets will continue 
until the debt is paid in full or otherwise resolved to the satisfaction 
of the creditor agency.
    (c) Where a creditor agency makes requests for offset. Requests for 
offset under this section must be sent to PBGC, ATTN: Chief Financial 
Officer, 1200 K Street, NW., Washington, DC 20005.
    (d) Incomplete certification. PBGC will return an incomplete debt 
certification to the creditor agency with notice that the creditor 
agency must comply with paragraph (b) of this section before action will 
be taken to collect a debt from a payment issued by PBGC.
    (e) Review. PBGC is not authorized to review the merits of the 
creditor agency's determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (f) When PBGC will not comply with offset request. PBGC will comply 
with the offset request of another agency unless PBGC determines, in 
consultation with that agency, that the offset would not be in the best 
interests of the United States, or would otherwise be contrary to law.
    (g) Multiple debts. When two or more creditor agencies are seeking 
offsets from payments made to the same person, or when two or more debts 
are owed to a single creditor agency, PBGC may determine the order in 
which the debts will be collected or whether one or more debts should be 
collected by offset simultaneously.
    (h) Priority of debts owed to PBGC. For purposes of this section, 
debts owed to PBGC generally take precedence over debts owed to other 
agencies. PBGC may determine whether to pay debts owed to other agencies 
before paying a debt owed to PBGC. PBGC will determine the order in 
which the debts will be collected based on the best interests of the 
United States.



Sec. 4903.22  What does PBGC do upon receipt of a request to offset
the salary of a PBGC employee to collect a debt owed by the employee
to another Federal agency?

    (a) Notice to a PBGC employee. When PBGC receives proper 
certification of a debt owed by one of its employees, PBGC will send a 
written notice to the employee indicating that a certified debt claim 
has been received from the creditor agency, the amount of the debt 
claimed to be owed by the creditor agency, the date deductions from 
salary will begin, and the amount of such deductions. PBGC will begin 
deductions from the employee's pay at the next officially established 
pay interval.
    (b) Amount of deductions from a PBGC employee's salary. The amount 
deducted under Sec. 4903.21(b) of this part will be the lesser of the 
amount of the debt certified by the creditor agency or an amount up to 
15 percent of the debtor's disposable pay so long as that amount does 
not exceed limitations imposed by 15 U.S.C. 1673. Deductions will 
continue until PBGC knows that the debt is paid in full or until 
otherwise instructed by the creditor agency. Alternatively, the amount 
offset may be an amount agreed upon, in writing, by the debtor and the 
creditor agency. See Sec. 4903.13(g) (salary offset process).
    (c) When the debtor is no longer employed by PBGC--(1) Offset of 
final and subsequent payments. If a PBGC employee retires or resigns or 
if his or her employment ends before collection of the debt is complete, 
PBGC will continue to offset, under 31 U.S.C. 3716, up to 100 percent of 
an employee's subsequent payments until the debt is paid or otherwise 
resolved. Such payments include a debtor's final salary payment, lump-
sum leave payment, and other payments payable to the debtor by PBGC. See 
31 U.S.C. 3716 and 5 CFR 550.1104(l) and 550.1104(m).
    (2) Notice to the creditor agency. If the employee is separated from 
PBGC before the debt is paid in full, PBGC will certify to the creditor 
agency the total amount of its collection. If PBGC

[[Page 1212]]

knows that the employee is entitled to payments from the Civil Service 
Retirement and Disability Fund, Federal Employee Retirement System, or 
other similar payments, PBGC will provide written notice to the agency 
making such payments that the debtor owes a debt (including the amount) 
and that the provisions of 5 CFR 550.1109 have been fully complied with. 
The creditor agency is responsible for submitting a certified claim to 
the agency responsible for making such payments before collection may 
begin. Generally, creditor agencies will collect such monies through the 
Treasury Offset Program as described in Sec. 4903.10(c) of this part.
    (3) Notice to the debtor. PBGC will provide to the debtor a copy of 
any notices sent to the creditor agency under paragraph (c)(2) of this 
section.
    (d) When the debtor transfers to another Federal agency--(1) Notice 
to the creditor agency. If the debtor transfers to another Federal 
agency before the debt is paid in full, PBGC will notify the creditor 
agency and will certify the total amount of its collection on the debt. 
PBGC will provide a copy of the certification to the creditor agency. 
The creditor agency is responsible for submitting a certified claim to 
the debtor's new employing agency before collection may begin.
    (2) Notice to the debtor. PBGC will provide to the debtor a copy of 
any notices and certifications sent to the creditor agency under 
paragraph (d)(1) of this section.
    (e) Request for hearing official. PBGC will provide a hearing 
official upon the creditor agency's request with respect to a PBGC 
employee. See 5 CFR 550.1107(a).



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;

[[Page 1213]]

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 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]

[[Page 1214]]



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 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

[[Page 1215]]

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 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:

[[Page 1216]]

    (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.
    (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

[[Page 1217]]

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 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

[[Page 1218]]

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.
    (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

[[Page 1219]]

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 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.
    (1) Where to file. See Sec. 4000.4 of this chapter for information 
on where to file complaints under this part.
    (2) Method of filing. The PBGC applies the rules in subpart A of 
part 4000 of this chapter to determine permissible methods of filing 
with the PBGC under this part.
    (3) Date of filing. The PBGC applies the rules in subpart C of part 
4000 of this chapter to determine the date that a submission under this 
part was filed with the PBGC.
    (4) Computation of time. The PBGC applies the rules in subpart D of 
part 4000 of this chapter to compute any time period under this part.
    (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

[[Page 1220]]

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.

[61 FR 34134, July 1, 1996, as amended at 68 FR 61359, Oct. 28, 2003]



Secs. 4907.171-4907.999  [Reserved]

                       PARTS 4908	4999 [RESERVED]

[[Page 1221]]



                              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.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 1223]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2017)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--500)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Housing and Urban Development (Parts 2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)
     XXVII  Small Business Administration (Parts 2700--2799)

[[Page 1224]]

    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   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)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         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 (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)
    XXVIII  Department of Justice (Parts 3800--3899)

[[Page 1225]]

      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 (Parts 4300--
                4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)
     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)

[[Page 1226]]

     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Partys 10000--10049)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         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)

[[Page 1227]]

        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)
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      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 Policy and New Uses, 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)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and 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--499)

[[Page 1228]]

         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 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)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      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)
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)

[[Page 1229]]

        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research (Parts 1600--1699)
      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--1199)
         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)
        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)

[[Page 1230]]

       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  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599)

                     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)

[[Page 1231]]

         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, 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 Service, 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)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       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)
        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)

[[Page 1232]]

       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)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 1233]]

                           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 (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        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)
        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)

[[Page 1234]]

        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  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 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)
        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)

[[Page 1235]]

      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)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      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)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     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 Homeland Security (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)
        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)

[[Page 1236]]

        IV  Office of Career, Technical and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  [Reserved]
       XII  National Council on Disability (Parts 1200--1299)

                          Title 35 [Reserved]

             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)
        VI  [Reserved]
       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 (Parts 1500--
                1599)
       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  U.S. Copyright Office, Library of Congress (Parts 
                200--299)
       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

[[Page 1237]]

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        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)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            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)
   62--100  [Reserved]
            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)
  103--104  [Reserved]
       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)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System [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 1238]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       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--599)
         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 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             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 1239]]

        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         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  Administration for Children and Families, 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 Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (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)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)

[[Page 1240]]

         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  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)
         7  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)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        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) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)

[[Page 1241]]

        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                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 Homeland Security (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 (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   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)

[[Page 1243]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2017)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  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
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 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
  National Institute of Food and Agriculture      7, XXXIV
  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

[[Page 1244]]

Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
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
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
Career, Technical and Adult Education, Office of  34, IV
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazardous Investigation       40, VI
     Board
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX
     for the District of Columbia
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  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
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       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 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 Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense Contract Audit Agency                     32, I

[[Page 1245]]

Defense Department                                2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 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
Denali Commission                                 45, IX
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical and Adult Education, Office   34, IV
       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
  Career, Technical, and Adult Education, Office  34, IV
       of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
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                             2, IX; 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                   2, XV; 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
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99

[[Page 1246]]

  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           2, XXXV; 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                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
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 Agency                    5, LXXX; 12, XII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
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
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
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

[[Page 1247]]

Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  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 Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 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, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing and Urban Development, Department of      2, XXIV; 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
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI

[[Page 1248]]

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
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, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department                               2, XIV
  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
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Enforcement Bureau, Bureau of        30, II
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  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 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
Investment Security, Office of                    31, VIII
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                                2, XXVIII; 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
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  2, XXIX; 5, XLII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI

[[Page 1249]]

  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, VII
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. 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, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
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
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 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   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
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                    5, C; 34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
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

[[Page 1250]]

National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 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, IV
     Administration
National Transportation Safety Board              49, VIII
Natural Resources Conservation Service            7, VI
Natural Resource Revenue, Office of               30, XII
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                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
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                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 5, IV; 45, 
                                                  VIII
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory 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
Privacy and Civil Liberties Oversight Board       6, X
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
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
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
Safety and Environmental Enforcement, Bureau of   30, II
Saint Lawrence Seaway Development Corporation     33, IV

[[Page 1251]]

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                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 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                                  2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
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
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                     2, XII; 5, L
  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; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  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                               2, X;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 and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, 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
U.S. Copyright Office                             37, II
Utah Reclamation Mitigation and Conservation      43, III
   Commission
[[Page 1252]]

Veterans Affairs Department                       2, VIII; 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
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 1253]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2012 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, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.fdsys.gov. For changes to this volume of the CFR 
prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 1964-
1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. The 
``List of CFR Sections Affected 1986-2000'' is available at 
www.fdsys.gov.

                                  2012

29 CFR
                                                                   77 FR
                                                                    Page
Chapter XVII
1952  Authority citation revised...................................58490
1952.313  Removed..................................................58490
1952.314  Revised..................................................58490
1978  Revised......................................................44134
1983  Revised......................................................40503
Chapter XXV
2550.408b-2  (c) revised............................................5655
2550.408b-2  (c)(1)(ix)(F) revised.................................41680
2590  Policy statement..............................................8706
2590.715-2713  Regulation at 76 FR 46625 confirmed..................8730
2590.715-2715  Added................................................8700
Chapter XXVII
2700.1  (a)(1) amended.............................................48430
2700.4  (b)(1) amended.............................................48430
2700.5  (b)(1) and (i) amended.....................................48430
2700.82  (d) amended...............................................48430
2701.4  Amended....................................................48430
2702.2  Revised....................................................48430
2702.3  (a) amended................................................48430
2702.4  (a) amended................................................48430
2704.201  (a) amended..............................................48430
2704.308  (b) amended..............................................48430
2705.4  Amended....................................................48430
2705.8  Amended....................................................48430
2706.170  (c) amended..............................................48431
Chapter XL
4003.1  (a) amended; (b)(5) through (10) redesignated as (b)(6) 
        through (11); new (b)(5) added.............................22489
4007  Policy statement..............................................6675
4007.5  Correctly reinstated; CFR correction.......................20295
4022  Appendix B amended.........2016, 8731, 15257, 22215, 28477, 35838, 
                                41270, 48855, 56771, 62434, 68685, 74354
    Appendix C amended....2016, 8731, 15257, 22215, 28478, 35839, 41271, 
                                       48856, 56771, 62434, 68686, 74354
4044  Appendix B corrected..................................14275, 14276
    Appendix B amended........................15257, 35839, 56771, 75550
    Appendix D amended.............................................71322

                                  2013

29 CFR
                                                                   78 FR
                                                                    Page
Chapter XVII
1960.2  (b) revised................................................47190
1960.7  (b) revised................................................47190
1960.30  (f) added.................................................47190
1960.66  (f) added.................................................47190
1960.71  (a)(1) and (b) revised....................................47190
1960.72  Added.....................................................47190
1960.73  Added.....................................................47191
1984  Added; interim...............................................13231
1986  Added; interim................................................8402

[[Page 1254]]

Chapter XXV
2510  Authority citation revised...................................39894
2510.3-16  Added...................................................39894
2520  Authority citation revised...................................13792
2520.101-2  Revised................................................13792
2520.103-1  (a) introductory text, (b) introductory text and 
        (c)(1) revised; (c)(2)(ii)(C) and (D) amended; (f) 
        redesignated as (g); (c)(2)(ii)(E) and new (f) added.......13796
2520.104-20  (b)(2)(iii) and (3)(ii) amended; (b)(4) added.........13796
2520.104-41  (c) revised...........................................13796
2560  Authority citation revised...................................13805
2560.521-1  Added..................................................13805
2560.521-2  Added..................................................13805
2560.521-3  Added..................................................13805
2560.521-4  Added..................................................13805
2571  Added........................................................13808
2590  Authority citation revised............................39894, 68276
2590.702  (f) revised; eff. 8-2-13.................................33181
2590.712  Revised..................................................68276
2590.715-2705  Added; eff. 8-2-13..................................33186
2590.715-2713  (a)(1) introductory text and (iv) revised...........39894
2590.715-2713A  Added..............................................39894
2590.715-2719  (d) introductory text amended; (d)(1)(i) revised....68286
Chapter XXVII
2700.3  (c) revised; interim.......................................77356
2700.5  Revised; interim...........................................77356
2700.6  Revised; interim...........................................77357
2700.7  Revised; interim...........................................77357
2700.8  Revised; interim...........................................77358
2700.9  (a) revised; interim.......................................77358
2700.24  (d) revised; interim......................................77358
2700.31  (d) revised; interim......................................77358
2700.45  (a), (b) and (f) revised; interim.........................77359
2700.46  (d) added; interim........................................77359
2700.70  (f) revised; interim......................................77359
2700.75  (f) revised; interim......................................77359
Chapter XL
4022  Appendix B amended........2882, 11093, 16402, 22192, 28491, 42009, 
                                       49683, 56604, 62427, 68740, 75897
    Appendix C amended...2882, 11093, 16402, 22192, 28491, 42009, 49683, 
                                              56604, 62427, 68740, 75898
    Appendix C correctly amended....................................8985
    Appendix B amended.............................................35755
    Appendix C amended.............................................35755
4044  Appendix B amended......................16402, 35755, 56605, 75898
    Appendix D amended.............................................72019

                                  2014

29 CFR
                                                                   79 FR
                                                                    Page
Chapter XVII
1952.314  (b) revised...............................................8857
1985  Added; interim...............................................18639
1987  Added; interim................................................8627
Chapter XXV
2510  Heading and authority citation revised.......................51099
2510.3-16  (b) revised; (c) added; interim.........................51099
2520  Policy statement; interim....................................66617
2590  Authority citation revised............................51100, 59136
2590.701-1  (b) revised............................................10308
2590.701-2  Amended................................................10308
2590.701-3  Heading, (a) heading and (b) revised; (a)(1) heading, 
        (2), (3), (c), (d), (e) and (f) removed; (a)(1)(i) and 
        (ii) redesignated as (a)(1) and (2); new (a)(2) amended....10308
2590.701-4  (a)(3) and (c) removed; (b) revised....................10309
2590.701-5  Revised................................................10309
2590.701-6  (a)(3)(i)(E) removed; (a)(3)(i)(C), (D), (4)(i) and 
        (d)(2) revised.............................................10309
2590.701-7  Revised................................................10309
2590.702  (b)(1)(i) and (2)(i)(B) revised; (b)(2)(i)(D), (d)(4), 
        (e)(2)(i)(B) and (g)(1)(ii) amended; (b)(3) removed........10309
2590.715-2708  Added...............................................10311
    (c)(3)(iii) and (f) Example 11 added; eff. 8-25-14.............35947
2590.715-2713A  (b), (c)(1) and (2)(i) introductory text revised; 
        interim....................................................51100
2590.731  (c)(2) revised...........................................10312
2590.732  (b)(2)(i) removed; (b)(2)(ii) through (ix) redesignated 
        as (b)(2)(i) through (viii)................................10312
    (c)(3)(i) and (ii) revised; (c)(3)(vi) added...................59136

[[Page 1255]]

Chapter XXVII
2700.3  Regulation at 78 FR 77356 comment period extended..........20098
2700.5  Regulation at 78 FR 77356 comment period extended..........20098
2700.6  Regulation at 78 FR 77357 comment period extended..........20098
2700.7  Regulation at 78 FR 77357 comment period extended..........20098
2700.8  Regulation at 78 FR 77358 comment period extended..........20098
2700.9  Regulation at 78 FR 77358 comment period extended..........20098
2700.24  Regulation at 78 FR 77358 comment period extended.........20098
2700.31  Regulation at 78 FR 77358 comment period extended.........20098
2700.45  Regulation at 78 FR 77359 comment period extended.........20098
2700.46  Regulation at 78 FR 77359 comment period extended.........20098
2700.70  Regulation at 78 FR 77359 comment period extended.........20098
2700.75  (f) and (g) correctly revised; interim.....................3105
    Regulation at 78 FR 77359 and 79 FR 3105 comment period 
extended...........................................................20098
Chapter XL
4000.3  (b)(1)(i) removed; (b)(1)(ii), (iii) and (iv) redesignated 
        as new (b)(1)(i), (ii) and (iii)...........................13559
4001.2  Amended....................................................70094
4006.2  Amended....................................................13559
4006.3  Introductory text amended; (a) and (b) revised; (c) and 
        (d) removed................................................13559
4006.4  (a), (b)(2) introductory text and (ii) amended; (b)(3) 
        added......................................................13560
4006.5  (a) introductory text, (3) introductory text, (ii), 
        (e)(2)(ii) and (f)(1) amended; (a)(4) added; (c), (d), 
        (e)(1) and (g) revised.....................................13560
4006.7  (b) amended................................................13561
4007.2  (a) and (b) amended........................................13561
4007.3  (a) revised; (b) amended...................................13561
4007.8  (f), (g), (h) and (i) removed................................350
    (a) introductory text amended; (f) through (i) removed; new 
(f) added; (j) redesignated as new (g); (a)(1), (2) and new (g) 
introductory text revised..........................................13561
4007.11  (a) introductory text and (3)(ii) amended; (a)(3)(i) and 
        (iii) removed................................................350
    Revised........................................................13561
4007.12  (b) revised...............................................13562
4007.13  (a)(1) introductory text, (2) introductory text, (d)(1), 
        (e)(3) introductory text, (4) introductory text, (i) and 
        (f) introductory text amended..............................13562
4007  Appendix amended.............................................13562
4022.2  Amended....................................................25672
    Amended........................................................70094
4022.7  (b)(2)(i) amended; (b)(2)(iii) added; (c)(2) revised.......70094
4022.8  (f) added..................................................70095
4022.22  (d) added.................................................70095
4022.24  (e) revised...............................................25672
    (g) added......................................................70095
4022.27  Redesignated as 4022.28; new 4022.27 added................25672
4022.28  Redesignated from 4022.27.................................25672
4022.62  (c)(2)(i) amended.........................................25674
4022  Appendix B amended..........2591, 8857, 15009, 21128, 27732, 33861
    Appendix C amended............2592, 8857, 15010, 21128, 27732, 33861
         Appendices B and C amended........41134,  48038, 54905, 61762, 
                                                            68117, 74022
4041A.24  Heading and (a) revised; (b) introductory text amended 
                                                                   30462
4044.12  (b)(4) and (c)(4) added...................................70095
4044  Appendix B amended......................15010, 33862, 54905, 74023
    Appendix D amended.............................................71019
4047.4  (c) amended................................................13562
4231.8  (a)(1) introductory text and (f)(1) amended................30463
4281.43  Heading revised; (b), (d) and (f) removed; (c) and (e) 
        redesignated as new (b) and (c)............................30463
4281.44  Heading revised; (a)(4), (c) and (d) removed; (a)(5) 
        through (13) redesignated as new (a)(4) through (12).......30463
4281.46  (a) introductory text amended.............................30463
4281.47  (c) introductory text amended.............................30463

[[Page 1256]]

                                  2015

29 CFR
                                                                   80 FR
                                                                    Page
Chapter XVII
1952  Authority citation revised...................................49904
    Regulation at 80 FR 49904 eff. date confirmed..................78977
1952.1--1952.22 (Subpart A)  Revised...............................49904
    Regulation at 80 FR 49904 eff. date confirmed..................78977
1952.23--1952.27 (Subpart B)  Added................................49907
    Regulation at 80 FR 49907 eff. date confirmed..................78977
1952.90--1952.97 (Subpart C)  Removed..............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.100--1952.107 (Subpart D)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.110--1952.117 (Subpart E)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.120--1952.125 (Subpart F)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.150--1952.157 (Subpart I)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.160--1952.167 (Subpart J)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.170--1952.175 (Subpart K)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.200--1952.206 (Subpart N)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.210--1952.217 (Subpart O)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.220--1952.227 (Subpart P)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.230--1952.237 (Subpart Q)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.240--1952.246 (Subpart R)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.260--1952.267 (Subpart T)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.270--1952.275 (Subpart U)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.290--1952.297 (Subpart W)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.310--1952.316 (Subpart Y)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.320--1952.327 (Subpart Z)  Removed............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.340--1952.347 (Subpart BB)  Removed...........................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.350--1952.357 (Subpart CC)  Removed...........................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.360--1952.267 (Subpart DD)  Removed...........................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.370--1952.377 (Subpart EE)  Removed...........................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1952.380--1952.385 (Subpart FF)  Removed...........................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1953  Authority citation revised...................................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1953.3  (c) revised................................................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1954  Authority citation revised...................................49908

[[Page 1257]]

    Regulation at 80 FR 49908 eff. date confirmed..................78977
1954.3  (d)(1)(ii) and (iii) revised...............................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1955  Authority citation revised...................................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1955.2  (a)(4) revised.............................................49908
    Regulation at 80 FR 49908 eff. date confirmed..................78977
1956  State plans..................................................46487
    Authority citation revised.....................................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1956.40--1956.44 (Subpart E)  Removed..............................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1956.50--1956.55 (Subpart F)  Removed..............................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1956.60--1956.64 (Subpart G)  Removed..............................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1956.70--1956.74 (Subpart H)  Removed..............................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1956.80--1956.84 (Subpart I)  Removed..............................49909
    Regulation at 80 FR 49909 eff. date confirmed..................78977
1980  Revised......................................................11880
1982  Revised......................................................69132
Chapter XXV
2509.08-1  Removed.................................................65137
2509.2015-01  Added................................................65137
2509.2015-02  Added................................................71937
2510  Regulation at 79 FR 51099 confirmed..........................41345
2510.3-16  Regulation at 79 FR 51099 confirmed.....................41345
2520  Authority citation revised....................................5645
2520.101-4  Removed.................................................5645
2520.101-5  Added...................................................5645
2520.104-46  (b)(1)(i)(B) introductory text revised.................5663
2520.104b-10  (g)(7) and (8) revised; (g)(9) added..................5663
2550  Authority citation revised...................................14304
2550.404a-5  (h)(1) revised........................................14304
2590  Regulation at 79 FR 51100 confirmed..........................41345
    Regulation at 75 FR 27136 confirmed............................72256
2590.701-2  Regulation at 75 FR 37229 confirmed; amended...........72256
2590.701-3  Regulation at 75 FR 37229 confirmed; (a)(1) revised....72256
2590.715-1251  Regulations at 75 FR 34562 and 70121 confirmed; 
        revised....................................................72256
2590.715-2704  Regulation at 75 FR 37229 confirmed.................72256
    Revised........................................................72261
2590.715-2711  Regulation at 75 FR 37229 confirmed.................72256
    Revised........................................................72261
2590.715-2712  Regulation at 75 FR 37231 confirmed.................72256
    Revised........................................................72263
2590.715-2713  Regulation at 75 FR 41757 confirmed; (a)(3), (4) 
        and (b)(2) revised.........................................41345
2590.715-2713A  Regulation at 79 FR 51100 confirmed; (a) revised 
                                                                   41345
2590.715-2714  Regulations at 75 FR 27136 and 34566 confirmed......72256
    Revised........................................................72263
2590.715-2715  Revised; eff. 8-17-15...............................34307
2590.715-2719  Revised.............................................72264
2590.715-2719A  Regulation at 75 FR 37232 confirmed................72256
    Revised........................................................72270
2590.732  (c)(3)(vii) added........................................14005
Chapter XL
4000  Authority citation revised...................................55002
4000.3  (b)(3) added...............................................55002
    (b)(3) revised.................................................55745
    (b)(4) correctly added.........................................57717
4000.53  (c) and (d) amended.......................................55002
4001.2  Amended....................................................55002
4022  Appendices B and C amended.......2011, 13240, 20159, 27858, 34053, 
                                       41437, 48688, 61982, 70171, 77570
    Appendix B amended.......................................7967, 55249
    Appendix C amended.......................................7968, 55250
4041A.11  (d) added................................................55745
4041A.25  (d) amended..............................................55745
4043  Revised......................................................55002
4044  Appendix B amended......................13241, 34053, 55250, 79477

[[Page 1258]]

    Appendix D amended.............................................74987
4204.12  Amended...................................................55009
4206.7  Amended....................................................55009
4231.2  Amended....................................................55010
4231.6  (b)(4)(ii), (c)(2) and (5) amended.........................55010
4233  Added; interim...............................................35229
    Regulation at 80 FR 35229 confirmed............................79694
4233.4  (a) amended................................................79694
4233.6  (a) amended................................................79694
4233.7  (a)(3)(iii), (5)(iii) and (8) revised; (a)(9) and (10) 
        added......................................................79694
4233.8  Revised....................................................79694
4233.10  (b) and (c) revised.......................................79694
4233.12  (c) revised...............................................79695
4233.13  (a)(3) and (4) revised....................................79695
4281.3  (b) revised................................................55745
    (b) corrected..................................................57717
4281.43  (a) revised...............................................55745
4281.47  (b) revised...............................................55745

                                  2016

29 CFR
                                                                   81 FR
                                                                    Page
Subtitle B
Chapter XVII
1952.28  Added......................................................6178
1984  Revised......................................................70620
1985  Revised......................................................14383
1986  Revised......................................................63409
1987  Revised......................................................22539
1988  Added; interim...............................................13984
    Regulation at 81 FR 13984 confirmed............................90198
Chapter XX
2201.3  (a)(5) and (c) amended; (d) revised........................95037
2201.4  (a) amended; (b) removed; (c), (d) and (e) redesignated as 
        new (b), (c) and (d); new (b) introductory text, (1), (5), 
        (6) and (c) revised........................................95037
2201.5  Revised....................................................95037
2201.6  (c), (f) and (h) revised...................................95038
2201.7  Redesignated as 2201.8; added..............................95038
2201.8  Redesignated as 2201.9; redesignated from 2201.7...........95038
    (b)(3) redesignated as (b)(5); (a), (b) introductory text, 
(1), (2)(v), new (5), (h) and (i) revised; new (b)(3) and (4) 
added..............................................................95039
2201.9  Redesignated as 2201.10; redesignated from 2201.8..........95038
    (a) amended....................................................95039
2201.10  Redesignated as 2201.11; redesignated from 2201.9.........95038
    Revised........................................................95039
2201.11  Redesignated from 2201.10.................................95038
    (b) amended....................................................95040
2201.12  Added.....................................................95040
Chapter XXV
2509.08-2  Removed.................................................95882
2509.96-1  Removed.................................................20997
2509.2016-01  Added................................................95882
2510  Authority citation revised.....................20997, 59476, 92653
2510.3-2  (a) revised; (h) added...................................59476
    (h) revised (eff. date pending)................................92653
2510.3-21  Revised.................................................20997
    (j) added; eff. 6-7-16 to 4-10-17..............................21001
2550  Policy statement.........21002, 21089, 21139, 21147, 21181, 21208, 
                                                            44773, 44784
2560  Authority citation revised............................43453, 92341
2560.502c-2  (b)(1) amended; eff. 8-1-16...........................43453
2560.502c-4  (b)(1) amended; eff. 8-1-16...........................43453
2560.502c-5  (b)(1) amended; eff. 8-1-16...........................43453
2560.502c-6  (b)(1) amended; eff. 8-1-16...........................43453
2560.502c-7  (b)(1) amended; eff. 8-1-16...........................43453
2560.502c-8  (b)(1) amended; eff. 8-1-16...........................43454
2560.503-1  (o) redesignated as (p); (b)(7), (g)(1)(vii), (viii), 
        (j)(6), (7) and new (o) added; (g)(1)(v), (h)(4), 
        (i)(3)(i), (j)(4), (5) introductory text, (l), (m)(4) and 
        new (p) revised............................................92341
2575.1--2575.502c-6 (Subpart A)  Authority citation revised........43454
2575.1  Added; eff. 8-1-16.........................................43454
2575.2  Added; eff. 8-1-16.........................................43454
2575.3  Added; eff. 8-1-16.........................................43454
2575.100  Removed; eff. 8-1-16.....................................43455
2575.209b-1  Removed; eff. 8-1-16..................................43455
2575.502c-2  Removed; eff. 8-1-16..................................43455
2575.502c-5  Removed; eff. 8-1-16..................................43455
2575.502c-6  Removed; eff. 8-1-16..................................43455
2590  Authority citation revised............................43455, 75325
2590.701-2  Amended................................................75325
2590.715-2711  (c) revised.........................................75325

[[Page 1259]]

2590.715-2715  (e) amended; eff. 8-1-16............................43455
2590.732  (c)(2)(ix) added; (c)(5)(i)(C) revised...................75325
2590.736  Amended..................................................75326
Chapter XL
4007.8  (a) introductory text, (1) and (2) amended; (h) added......65545
4010.2  Amended....................................................15439
4010.4  (a) introductory text, (1) and (2) amended; (d) removed; 
        (e) and (f) redesignated as new (d) and (e); (b) and new 
        (e) revised................................................15439
4010.8  (h) removed; (i) redesignated as new (h); (a)(5), (b) and 
        new (h) revised; (a)(6), (9), (11)(vi), (c)(1)(i), 
        (d)(2)(i) and (ii) amended.................................15439
4010.11  Revised...................................................15440
4010.14  Amended; eff. 8-1-16......................................29766
4022  Appendices B and C amended........2089, 7455, 13743, 22184, 29767, 
                                       38949, 45970, 53921, 63415, 70941
    Appendix B amended......................................80002, 91032
    Appendix C amended......................................80003, 91033
4041.6  Amended; eff. 8-1-16.......................................29766
4044  Appendix B amended......................13744, 38949, 63415, 93600
    Appendix D amended.............................................83138
4071  Authority citation revised...................................29766
4071.3  Amended; eff. 8-1-16.......................................29766
4302  Authority citation revised...................................29767
4302.3  Amended; eff. 8-1-16.......................................29767

                                  2017

   (Regulations published from January 1, 2017, through July 1, 2017)

29 CFR
                                                                   82 FR
                                                                    Page
Chapter XXV
2510  Authority citation revised...................................16918
2510.3-2  (a) revised; (h) removed.................................29237
2510.3-21  (h)(2), (j)(1) introductory text and (3) amended........16918
2575.3  Revised.....................................................5383
Chapter XL
4022  Appendices B and C amended......................6243, 10708, 17939
    Appendix B amended......................................13755, 22279
    Appendix B amended.............................................27422
    Appendix C amended......................................13756, 22280
    Appenidx C amended.............................................27423
4044  Appendix B amended...........................................13756
    Appendix B amended.............................................27423
4071  Regulation at 81 FR 29766 confirmed...........................8814
4071.3  Regulation at 81 FR 29766 confirmed; amended................8814
4302  Regulation at 81 FR 29767 confirmed...........................8814
4302.3  Regulation at 81 FR 29767 confirmed; amended................8814
4901.3  Revised....................................................26991
4901.4  Heading and introductory text revised; (d)(1), (2) and (3) 
        amended; (d)(4) and (5) added..............................26991
4901.5  (a) amended................................................26992
4901.14  (a), (c) and (d) amended..................................26992
4901.15  (a) amended...............................................26992
4901.31  (a) introductory text amended; (e) added..................26992


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