[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Proposed Rules]
[Pages 42797-42807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19861]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Parts 2520, 2560 and 2570

RIN 1210-AA67 and RIN 1210-AA68


Furnishing Documents to the Secretary of Labor on Request Under 
ERISA Section 104(a)(6) and Assessment of Civil Penalties Under ERISA 
Section 502(c)(6)

AGENCY: Pension and Welfare Benefits Administration, Department of 
Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains a proposed rulemaking under the 
Employee Retirement Income Security Act of 1974 (ERISA) that would 
implement certain amendments to ERISA added as part of the Taxpayer 
Relief Act of 1997. Specifically, the proposed rule would implement the 
requirement that the administrator of any employee benefit plan subject 
to Part 1 of Title I of ERISA furnish to the Department, on request, 
any documents relating to the employee benefit plan. The proposed rule 
also would establish procedures relating to the assessment of civil 
penalties for failures or refusals by administrators to furnish 
requested documents and procedures relating to administrative hearings 
in connection with the assessment of such civil penalties.

DATES: Written comments concerning the proposed regulation must be 
received by October 4, 1999.

ADDRESSES: Written comments (preferably three copies) should be sent to 
the Office of Regulations and Interpretations, Pension and Welfare 
Benefits Administration, U.S. Department of Labor, Rm. N-5669, 200 
Constitution Avenue, NW, Washington DC, 20210, Attention: ``ERISA 
502(c)(6) Project.'' All submissions will be available for public 
inspection in the Public Documents Room of the Pension and Welfare 
Benefits Administration, U.S. Department of Labor, Room N-5638, 200 
Constitution Ave, NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Jeffrey J. Turner, Office of 
Regulations and Interpretations, Pension and Welfare Benefits 
Administration, (202) 219-8671, or Paul D. Mannina, Plan Benefits 
Security Division, Office of the Solicitor, (202) 219-9141 (not toll-
free numbers).

SUPPLEMENTARY INFORMATION:

Part I--Background

    The Taxpayer Relief Act of 1997 (TRA '97) eliminated the 
requirement under ERISA that employee benefit plan administrators file 
with the Department copies of the summary plan descriptions (SPDs) and 
summaries of material plan modifications (SMMs) that are required to be 
furnished to plan participants and beneficiaries. TRA '97 added 
paragraph (6) to section 104(a) of ERISA which provides that the 
administrator of any employee benefit plan subject to Part 1 of Title I 
of ERISA is required to furnish to the Department, on request, any 
documents relating to the employee benefit plan, including but not 
limited

[[Page 42798]]

to, the latest SPD (including any summaries of plan changes not 
contained in the SPD), and the bargaining agreement, trust agreement, 
contract, or other instrument under which the plan is established or 
operated.1 TRA '97 also added section 502(c)(6) of ERISA 
which provides that if, within 30 days of a request by the Department 
to a plan administrator for documents under section 104(a)(6), the plan 
administrator fails to furnish the material requested to the 
Department, the Department may assess a civil penalty against the plan 
administrator of up to $100 a day from the date of such failure (but in 
no event in excess of $1,000 per request). Section 502(c)(6) of ERISA 
also provides that no penalty shall be imposed under that paragraph for 
any failure resulting from matters reasonably beyond the control of the 
plan administrator.
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    \1\ Prior to TRA '97, this authority was in section 104(a)(1) of 
ERISA, which stated that ``the administrator shall also furnish to 
the Secretary, upon request, any documents relating to the employee 
benefit plan, including but not limited to the bargaining agreement, 
trust agreement, contract, or other instrument under which the plan 
is established or operated.''
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    Prior to these TRA '97 amendments, Congress provided in ERISA for 
the filing of SPDs and SMMs with the Department in order to ensure that 
participants and beneficiaries would have a means by which to obtain a 
copy of these documents without having to request them from the plan or 
plan sponsor. The elimination of the SPD/SMM filing requirement taken 
together with the amendments establishing ERISA section 104(a)(6) and 
the civil penalty provision in section 502(c)(6) clearly evidence 
Congress' intent that the Department would exercise its authority under 
ERISA section 104(a)(6) to obtain a copy of a plan's SPD in response to 
requests from participants or beneficiaries. Consistent with that 
intent, the Department will request copies of SPDs from plan 
administrators on behalf of a requesting participant or beneficiary. 
The Department generally will not request SPDs on behalf of persons 
other than participants and beneficiaries of the plan for which the SPD 
is requested. For this purpose, the Department will treat as a 
participant or beneficiary any individual who is: a participant or 
beneficiary within the meaning of ERISA sections 3(7) and 3(8), 
respectively; an alternate payee under a qualified domestic relations 
order (see ERISA section 206(d)(3)(K)) or prospective alternate payee 
(spouses, former spouses, children or other dependents), a qualified 
beneficiary under COBRA (see ERISA section 607(3)) or prospective 
qualified beneficiary (spouse or dependent child); an alternate 
recipient under a qualified medical child support order (see ERISA 
section 609(a)(2)(C)) or a prospective alternate recipient; or a 
representative of any of the foregoing.
    The proposed rules described below are intended to implement the 
substantive requirements in section 104(a)(6) of ERISA as well as the 
related penalty provisions in section 502(c)(6) of ERISA. They would, 
if promulgated as a final rules, become effective 60 days after 
publication as final rules in the Federal Register.

Part II--Furnishing Documents to the Department on Request Under 
Section 104(a)(6)

    Proposed Sec. 2520.104a-8 implements the requirements of section 
104(a)(6) of ERISA. Paragraph (a)(1) provides that the administrator 
(within the meaning of section 3(16)(A) of ERISA) of any employee 
benefit plan has an obligation to furnish to the Department, upon 
request, any documents relating to the plan. Paragraph (a)(2) clarifies 
that multiple requests under section 104(a)(6) and Sec. 2520.104a-8(a) 
for the same or similar document or documents shall be considered 
separate requests for purposes of penalties under section 502(c)(6) and 
Sec. 2560.502c-6(a). For example, if the Department were to receive a 
series of requests from several participants for a particular plan's 
SPD, the Department could make separate requests for that document on 
behalf of each participant to ensure that the participants each receive 
the latest updated version of the SPD. A failure by the plan 
administrator to comply with any such requests may result in the 
assessment of penalties with respect to each such failure. Paragraph 
(b) adopts the service of notice rules in proposed Sec. 2560.502c-6(i) 
(which adopts the service of notice rules already in effect under 
Sec. 2560.502c-2(i)) for purposes of serving the plan administrator 
with a request under section 104(a)(6). Paragraph (c) provides that a 
document is not considered furnished to the Department until the date 
on which such document is received by the Department of Labor at the 
address specified in the request.

Part III--Authority to Assess Civil Penalties for Violations of 
Section 104(a)(6) of ERISA

    In general, proposed regulation Sec. 2560.502c-6 addresses the: 
circumstances under which a penalty may be assessed for a failure or 
refusal to provide documents requested under section 104(a)(6) of ERISA 
(Sec. 2560.502c-6(a)); amount of the penalty (Sec. 2560.502c-6(b)); 
notice required to be given to the plan administrator of the 
Department's intent to assess a penalty (Sec. 2560.502c-6(c)); the 
Department's authority to waive the penalty (Sec. 2560.502c-6(d)) upon 
a showing that the failure or refusal was the result of matters 
reasonably beyond the control of the plan administrator 
(Sec. 2560.502c-6(e)); effect of a failure to file a statement under 
Sec. 2560.502c-6(e) alleging matters reasonably beyond the 
administrator's control (Sec. 2560.502c-6(f)); notice required to be 
given to the administrator which sets forth the Department's findings 
as to the statement of matters reasonably beyond the control of the 
plan administrator (Sec. 2560.503c-6(g)); right to hearings before an 
administrative law judge (Sec. 2560.502c-6(h)); service of notices 
(Sec. 2560.502c-6(i)); and the liability of the administrator or 
administrators for assessed penalties (Sec. 2560.502c-6(j)).
    a. General Rule. Proposed Sec. 2560.502c-6(a) addresses the general 
application of section 502(c)(6) of ERISA. Paragraph (a)(1) provides 
that the administrator, as defined in ERISA section 3(16)(A), of an 
employee benefit plan is liable for the civil penalties assessed under 
section 502(c)(6) in each case in which there is a failure or refusal 
to furnish to the Department any document requested under section 
104(a)(6) of ERISA and Sec. 2520.104a-8. Paragraph (a)(2) defines such 
a failure or refusal as a failure or refusal, in whole or in part, to 
furnish documents at the time and in the manner prescribed in the 
request.
    b. Amount Assessed. Proposed Sec. 2560.502c-6(b) sets forth the 
amount of penalties that may be assessed under section 502(c)(6) of 
ERISA. Consistent with the terms of section 502(c)(6) of ERISA, 
paragraph (b)(1) provides that the Department may assess a penalty of 
up to $100 per day, but not in excess of $1,000 per request.
    c. Notice of Intent to Assess a Penalty. Proposed Sec. 2560.502c-
6(c) provides that, prior to the assessment of any penalty under 
section 502(c)(6) of ERISA, the Department shall provide the 
administrator with written notice indicating the Department's intent to 
assess a penalty, the amount of the penalty, the period to which the 
penalty applies, and the reason(s) for the penalty. The notice would be 
served in accordance with Sec. 2560.502c-6(i) of this proposed 
regulation (service of notice provision). Under Sec. 2560.502c-6(f) of 
this proposed regulation, the notice would become a final order of the 
Department, within the meaning of proposed regulation Sec. 2570.111(g) 
(also

[[Page 42799]]

published as part of this rulemaking), within 30 days of the service of 
the notice, unless a statement described in Sec. 2560.502c-6(e) is 
filed with the Department.
    d. Waiver of Penalty. Paragraphs (d), (e), (f), (g), and (h) of 
this proposal generally relate to the waiver of penalties under section 
502(c)(6) of ERISA. Paragraph (d) provides that the Department may 
waive all or part of the penalty to be assessed under section 502(c)(6) 
upon a showing by the administrator, under paragraph (e), that the 
failure or refusal to comply with a request under section 104(a)(6) and 
Sec. 2520.104a-8 was due to matters reasonably beyond the control of 
the plan administrator. Under paragraph (e), the administrator has 30 
days from receipt of the notice required under Sec. 2560.502c-6(c) 
within which to make such a showing or offer other reasons why the 
penalty, as calculated, should not be assessed.2
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    \2\ In the event that another fiduciary of the plan has custody 
of a document requested under section 104(a)(6) and Sec. 2520.104a-
8, or if the administrator of a plan engages a third party to 
perform services for the plan and pursuant to the engagement the 
third party has custody of documents related to the plan, the 
administrator's lack of custody would not be considered by the 
Department to be a matter reasonably beyond the administrator's 
control.
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    Paragraph (f) provides that a failure to file a timely statement 
under (e) will constitute a waiver of the right to appear and contest 
the facts alleged in the notice (Sec. 2560.502c-(6)(c)) for purposes of 
any adjudicatory proceeding involving the assessment of a penalty under 
section 502(c)(6) of ERISA.
    Paragraph (g)(1) provides that, following a review of the facts 
alleged in the statement under (e), the Department shall notify the 
administrator of its intention to waive the penalty, in whole or in 
part, and/or assess a penalty. If it is the intention of the Department 
to assess a penalty, the notice shall indicate the amount of the 
penalty. Under paragraph (g)(2), this notice becomes a final order 30 
days after the date of service of the notice, except as provided in 
paragraph (h). Paragraph (h) provides in general that the notice 
described in paragraph (g) shall not become a final order if, within 30 
days of the date of service of that notice, the administrator initiates 
an adjudicatory proceeding under part 18 of Title 29, as modified by 
proposed regulations Secs. 2570.110 through 2570.121 (also published as 
part of this rulemaking). Specifically, the administrator would be 
required to file, within 30 days of the date of service of the notice 
under (g), an answer, as defined in proposed Sec. 2570.111(c), in 
accordance with proposed Sec. 2570.112.
    e. Service of Notices. Proposed Sec. 2560.502c-6(i) describes the 
rules on service of the (1) Department's notice of intent to assess a 
penalty (Sec. 2560.502c-6(c)), and (2) Department's notice of 
determination on the statement of matters reasonably beyond the control 
of the plan administrator (Sec. 2560.502c-6(g)).3 Paragraph 
(i) provides that service shall be made in one of three ways: (1) By 
delivering a copy at the principal office, place of business, or 
residence of the administrator or representative thereof, (2) by 
leaving a copy at the principal office, place of business, or residence 
of the administrator or representative thereof, or (3) by mailing a 
copy to the last known address of the administrator or representative 
thereof.
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    \3\ As noted above, under proposed Sec. 2520.104a-8(b) these 
service rules would also apply to the Department's initial request 
for documents under section 104(a)(6) and Sec. 2520.104a-8.
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    f. Liability. Proposed Sec. 2560.502c-6(j) is intended to clarify 
the liability of the parties for penalties assessed under section 
502(c)(6) of ERISA. Paragraph (1) provides that, if more than one 
person is responsible as administrator for the failure to furnish 
document(s) requested by the Department, all such persons shall be 
jointly and severally liable for such failure. Paragraph (2) provides 
that any person against whom a penalty is assessed under section 
502(c)(6) of ERISA is personally liable for the payment of such 
penalty. Paragraph (2) is intended to make clear that liability for the 
payment of penalties assessed under section 502(c)(6) of ERISA is a 
personal liability of the person against whom the penalty is assessed 
and not a liability of the plan. Accordingly, the payment of penalties 
assessed under section 502(c)(6) of ERISA from assets of the plan would 
not constitute a reasonable expense of the plan for purposes of ERISA 
sections 403 and 404.

Part IV--Administrative Law Procedures for the Assessment of Civil 
Penalties Under Section 502(c)(6) of ERISA

    The proposed regulation contained in this Notice would establish 
procedures for hearings before an Administrative Law Judge (ALJ) with 
respect to an assessment by the Department of a civility penalty under 
section 502(c)(6) and appealing an ALJ decision to the Secretary or her 
delegate. In this regard, the Secretary has established the Pension and 
Welfare Benefits Administration (PWBA) within the Department for 
purposes of carrying out most of the Secretary's responsibilities under 
ERISA. See Secretary's Order 1-87, 52 FR 13139 (April 27, 1987).
    As noted above, the Department has already published rules of 
practice and procedure for administrative hearings before the Office of 
Administrative Law Judges at 29 CFR part 18 (48 FR 32538 (1983)). As 
explained in 29 CFR 18.1, those provisions generally govern 
administrative hearings before ALJs assigned to the Department and are 
intended to provide maximum uniformity in the conduct of administrative 
hearings. However, in the event of an inconsistency or conflict between 
the provisions of 29 CFR part 18 and a rule or procedure required by 
statute, executive order or regulation, the latter controls.
    The Department has reviewed the applicability of the provisions of 
29 CFR part 18 to the assessment of civil penalties under ERISA section 
502(c)(6) and has decided to adopt many, though not all, of the 
provisions thereunder for ERISA 502(c)(6) proceedings. Accordingly, 
adjudications relating to civil penalties under ERISA section 502(c)(6) 
will be governed by the following sections of 29 CFR part 18:

Sec.
18.4  Time Computations.
18.5  (c)-(e) Responsive Pleading; answer and request for hearing.
18.6  Motions and requests.
18.7  Pre-hearing statements.
18.8  Pre-hearing conferences.
18.11  Consolidation of hearings.
18.12  Amicus Curiae.
18.13  Discovery Methods.
18.15  Protective orders.
18.16  Supplementation of responses.
18.17  Stipulations regarding discovery.
18.18  Written interrogatories to parties.
18.19  Production of documents and other evidence.
18.20  Admissions.
18.21  Motion to compel discovery.
18.22  Depositions.
18.23  Use of depositions at hearings.
18.24  Subpoenas.
18.25  Designation of administrative law judge.
18.27  Notice of hearing.
18.28  Continuances.
18.29  Authority of administrative law judges.
18.30  Unavailability of administrative law judge.
18.31  Disqualification.
18.32  Separation of functions.
18.33  Expedition.
18.34  Representation.
18.35  Legal assistance.
18.36  Standards of conduct.
18.37  Hearing room conduct.
18.38  Ex parte communications.
18.39  Waiver of right to appear and failure to participate or to 
appear.
18.40  Motion for summary decision.

[[Page 42800]]

18.43  Formal hearings.
18.44  Evidence.
18.45  Official notice.
18.46  In camera and protective orders.
18.47  Exhibits.
18.48  Records in other proceedings.
18.49  Designation of parts of documents.
18.50  Authenticity.
18.51  Stipulations.
18.52  Record of hearings.
18.53  Closing of hearings.
18.54  Closing of record.
18.55  Receipt of documents after hearing.
18.56  Restricted access.
18.59  Certification of official record.

    The regulations proposed herein relate specifically to procedures 
for assessing civil penalties under section 502(c)(6) of ERISA and are 
controlling to the extent they are inconsistent with any portion of 29 
CFR part 18. The proposed regulations are designed to maintain the 
rules set forth at 29 CFR part 18 consistent with the need for an 
expedited procedure, while recognizing the special characteristics of 
proceedings under ERISA section 502(c)(6). For purposes of clarity, 
where a particular section of the existing procedural rules would be 
affected by the proposed rules the entire section (with appropriate 
modifications) has been set out in this document. Thus, only a portion 
of the provisions of the procedural regulations set forth below involve 
changes from, or additions to, the rules in 29 CFR part 18. The 
specific modifications to the rules in 29 CFR part 18, and their 
relationship to the conduct of these proceedings generally, are 
outlined below.
    The general applicability of these procedural rules under section 
502(c)(6) is set forth in Sec. 2570.110. Proposed Sec. 2560.502c-6, 
also being published today in this Notice, sets forth the procedures 
relating to the issuance by PWBA of notices of intent to assess a 
penalty under ERISA section 502(c)(6) as well as procedures for agency 
determination on statements of matters reasonably beyond the control of 
plan administrators filed by persons against whom a penalty would be 
assessed. Under the proposed procedural rules contained in this Notice, 
an adjudicatory proceeding before an ALJ is commenced only when a 
person against whom the Department intends to assess a penalty under 
section 502(c)(6) files an ``answer'' to a notice of the agency 
determination on a statement of matters reasonably beyond the control 
of the plan administrator. See Sec. 2570.111(c) and (d) below, and 
proposed regulation Sec. 2560.502c-6(h).
    The definition section (Sec. 2570.111) incorporates the basic 
adjudicatory principles set forth at 29 CFR part 18, but includes terms 
and concepts of specific relevance to proceedings under ERISA section 
502(c)(6). In this respect it differs from its more general counterpart 
at Sec. 18.2 of Title 29 of the CFR. In particular, Sec. 2570.111 
states that the term ``Secretary'' means the Secretary of Labor and 
includes various individuals to whom the Secretary may delegate 
authority. The Department contemplates that the duties assigned to the 
Secretary under the procedural regulation will in fact be discharged by 
the Assistant Secretary for Pension and Welfare Benefits.
    In general, the burden to initiate adjudicatory proceedings before 
an ALJ will be on the party (respondent) against whom the Department is 
seeking to assess a civil penalty under ERISA section 502(c)(6). 
However, a respondent must comply with the procedures relating to 
agency review set forth in proposed regulation Sec. 2560.502c-6 before 
initiating adjudicatory proceedings. In this regard, it should be noted 
that both the notice of intent to assess a penalty, as described in 
proposed regulation Sec. 2560.502c-6(c) and the notice of determination 
on a statement of reasonable cause as described in proposed regulation 
Sec. 2560.502c-6(g), will be issued by PWBA, the agency responsible for 
administration and enforcement of section 502(c)(6) of ERISA, in 
accordance with the service of notice provisions described in proposed 
Sec. 2560.502c-6(i). Proposed regulation Sec. 2570.111(c) and (d), 
together with proposed regulation Sec. 2560.502c-6(h), contemplate that 
adjudicatory proceedings will be initiated with the filing of an answer 
to a notice of the agency's determination on a statement of matters 
reasonably beyond the control of the plan administrator.
    The service of documents by the parties to an adjudicatory 
proceeding, as well as by the ALJ, will be governed by proposed 
regulation Sec. 2570.112.
    A section on the consequences of default (Sec. 2570.114) has been 
included in these proposed rules to indicate that if the respondent 
fails to file an answer to the Department's notice of determination 
(Sec. 2560.502c-6(g)) within the 30-day period provided by proposed 
Sec. 2560.502c-6(h), such failure shall be deemed to constitute a 
waiver of the right to appear and contest the facts alleged in the 
notice and an admission of the facts alleged in the notice for purposes 
of any proceeding involving the assessment of a civil penalty under 
section 502(c)(6). Proposed regulation Sec. 2570.114 makes clear that 
in the event of such failure, the assessment of penalty becomes final.
    A section on consent orders or settlements (Sec. 2570.115) states 
that the ALJ's decision shall include the terms and conditions of any 
consent order or settlement which has been agreed to by the parties. 
That section also provides that the decision of the ALJ which 
incorporates such consent order shall become a final agency action 
within the meaning of 5 U.S.C. 704.
    The rules in 29 CFR part 18 concerning the computation of time, 
pleadings, prehearing conferences and statements, and settlements are 
adopted in these procedures for adjudications under ERISA section 
502(c)(6). The section on the designation of parties (Sec. 2570.113) 
differs from its counterpart under Sec. 18.10 of this title in that it 
specifies that the respondent in these proceedings will, as indicated 
above, be the party against whom the Department seeks to assess a civil 
penalty under ERISA section 502(c)(6).
    29 CFR 2570.116 states that discovery may be ordered by the ALJ 
only upon a showing of good cause by the party seeking discovery. This 
differs from the more liberal standard for discovery contained in 29 
CFR 18.14. In cases in which discovery is ordered by the ALJ, the order 
shall expressly limit the scope and terms of discovery to that for 
which good cause has been shown. To the extent that the order of the 
ALJ does not specify rules for the conduct of the discovery permitted 
by such order, the rules governing the conduct of discovery from 29 CFR 
part 18 are to be applied in any proceeding under section 502(c)(6) of 
ERISA. For example, if the order of the ALJ states only that 
interrogatories on certain subjects may be permitted, the rules under 
29 CFR part 18 concerning the service and answering of such 
interrogatories shall apply. The procedures under 29 CFR part 18 for 
the submission of facts to the ALJ during the hearing are also to be 
applied in proceedings under ERISA section 502(c)(6).
    The section on summary decisions (Sec. 2570.117) provides for 
requisite authorization for an ALJ to issue a summary decision which 
may become final when there are no genuine issues of material fact in a 
case arising under ERISA section 502(c)(6). The section concerning the 
decision of the ALJ (Sec. 2570.118) differs from its counterpart at 
Sec. 18.57 of this title in that it states that the decision of the ALJ 
in an ERISA section 502(c)(6) case shall become the final decision of 
the Secretary unless a timely appeal is filed.
    The procedures for appeals of ALJ decisions under ERISA section 
502(c)(6) of ERISA would be governed solely by the proposed rules set 
forth in

[[Page 42801]]

Sec. Sec. 2570.119 through 2570.121, and without any reference to the 
appellate procedures contained in 29 CFR part 18. Proposed 
Sec. 2570.119 would establish the time limit within which such appeals 
must be filed and the manner in which the issues for appeal are 
determined and the procedure for making the entire record before the 
ALJ available to the Secretary. Proposed Sec. 2570.120 provides that 
review of the Secretary shall not be on a de novo basis, but rather on 
the basis of the record before the ALJ and without an opportunity for 
oral argument. Proposed Sec. 2570.121 sets forth the procedure for 
establishing a briefing schedule for such appeals and states that the 
decision of the Secretary on such an appeal shall be a final agency 
action within the meaning of 5 U.S.C. 714. As noted above, the 
authority of the Secretary with respect to the appellate procedures has 
been delegated to the Assistant Secretary for Pension and Welfare 
Benefits. As required by the Administrative Procedure Act (5 U.S.C. 
552(a)(2)(A)) all final decisions of the Department under section 
502(c)(6) of ERISA shall be compiled in the Public Documents Room of 
the Pension and Welfare Benefits Administration, Room N-5638, U.S. 
Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210.

Executive Order 12866 Statement

    Under Executive Order 12866, the Department must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Under section 3(f), the order defines a 
``significant regulatory action'' as an action that is likely to result 
in a rule (1) Having an annual effect on the economy of $100 million or 
more, or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order. Accordingly, the 
Department has determined that this regulatory action is not 
significant within the meaning of the Executive Order.
    The costs of the proposed regulation would be borne by the plan 
when responding to requests from the Department for copies of the 
latest SPD (including any summaries of plan changes not contained in 
the SPD) as well as other documents relating to the plan. It is 
expected that most of the costs will be attendant to furnishing SPDs to 
the Department to enable the Department to respond to requests from 
participants.4 The individual cost of each such request is 
estimated to be minimal because each administrator of an employee 
pension or welfare benefit plan covered under Title I of ERISA is 
required by section 101(a)(1) to furnish a SPD to each participant 
covered under the plan and each beneficiary who is receiving benefits 
under the plan, and to update the SPD on a regular basis in accordance 
with section 104(b)(1). Moreover, many documents other than SPDs that 
may be requested are required to be made available to participants and 
beneficiaries pursuant to section 104(b)(2). Thus, administrators are 
not expected to incur costs in preparing or obtaining these documents 
in response to a request from the Department.
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    \4\ The Department's authority to request documents under 
section 104(a)(6) of ERISA was, prior to TRA '97, codified in 
section 104(a)(1) of ERISA. TRA '97 re-codified this authority in 
section 104(a)(6) of ERISA and simultaneously eliminated the 
requirement to file SPDs/SMMs. It is anticipated that the vast 
majority of requests under section 104(a)(6) will stem from 
responding to participants' requests for SPDs/SMMs that, in the 
absence of TRA '97, would have been filed with Department and 
available to the public.
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    The proposed regulation is expected to benefit plan participants 
and beneficiaries who may have been unable to obtain a current SPD or 
other document relating to the plan, and who might otherwise not have 
an alternative means of obtaining such documents in the absence of the 
requirement for the plan administrator to file such documents with the 
Department. The provisions implementing the penalty for failure to 
furnish such documents on request may serve to ensure timely compliance 
with such requests.

Paperwork Reduction Act

    The Department of Labor, as part of its continuing effort to reduce 
paperwork and respondent burden, conducts a preclearance consultation 
program to provide the general public and Federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the Paperwork Reduction Act of 1995 (PRA 
95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data 
can be provided in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the impact of collection requirements on respondents 
can be properly assessed.
    Currently, the Pension and Welfare Benefits Administration is 
soliciting comments concerning the proposed information collection 
request (ICR) included in the proposal with respect to Furnishing 
Documents To The Secretary of Labor on Request Under ERISA section 
104(a)(6) And Assessment Of Civil Penalties Under ERISA section 
502(c)(6). A copy of the ICR may be obtained by contacting the office 
listed in the addressee section of this proposed regulation. This 
proposed regulation would implement the provisions of ERISA section 
104(a)(6), which requires plan administrators to provide certain 
documents to the Department on request, and section 502(c)(6) of ERISA, 
which implements procedures for assessment of civil penalties for 
failure to provide the documents requested pursuant to section 
104(a)(6).
    The Department has submitted a copy of the proposed information 
collection to OMB in accordance with 44 U.S.C. 3507(d) for review of 
its information collections. The Department and OMB are particularly 
interested in comments that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    Comments should be sent to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503; Attention: Desk Officer for the 
Pension and Welfare Benefits Administration. Although comments may be 
submitted through October 4, 1999, OMB requests that comments be 
received within 30

[[Page 42802]]

days of publication of the Notice of Proposed Rulemaking to ensure 
their consideration.

ADDRESSEE (PRA 95): Gerald B. Lindrew, Office of Policy and Research, 
U.S. Department of Labor, Pension and Welfare Benefits Administration, 
200 Constitution Avenue, NW, Room N-5647, Washington, DC 20210. 
Telephone: (202) 219-4782; Fax: (202) 219-4745. These are not toll-free 
numbers.
    The ICR included in the proposal involves the gathering and mailing 
of plan documents requested by the Department to an address specified 
in the request. These requests are expected to be made of plan 
administrators as needed to satisfy requests for SPDs and other 
documents received from plan participants and beneficiaries. These 
requests may be received by the Public Disclosure Room of the Pension 
and Welfare Benefits Administration or by the national office and field 
offices in the course of providing technical assistance to the public. 
The estimate of the number of requests by participants and 
beneficiaries is based on the actual rate of requests to the Public 
Disclosure Room during the last two years, adjusted for requests 
expected to be made with other offices.
    It is assumed that approximately 5 minutes of time at non-
professional hourly rates will be required to respond to the 
Department's document request within 30 days. Some administrators may 
be expected to respond only after receiving notice of the Department's 
intent to assess a penalty, and/or to provide additional information 
concerning matters reasonably beyond their control which would prevent 
or delay the satisfaction of the request. Each of these events would 
increase the anticipated burden of providing documents requested by the 
Department. The burden estimated here has been adjusted to account for 
a portion of plans which by choice or for reasons beyond their control 
will satisfy the request in a more burdensome fashion. Mailing costs 
are assumed to total $1.00 per request.
    The penalty assessment provisions of Sec. 2560.502c-6, and the 
procedures for hearings before ALJs and appeals to the Secretary or her 
delegate of Secs. 2570.110 through 2570.121, do not contain an 
``information collection request'' as defined in 44 U.S.C. 3502(3).
    Type of Review: New.
    Agency: Pension and Welfare Benefits Administration.
    Title: Furnishing Documents To The Secretary of Labor on Request 
Under ERISA section 104(a)(6) And Assessment of Civil Penalties Under 
ERISA section 502(c)(6).
    OMB Number: 1210-NEW.
    Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
    Frequency of Response: On occasion.
    Total Respondents: 1,000.
    Total Responses: 1,000.
    Estimated Burden Hours: 95.
    Estimated Annual Costs (Operating and Maintenance): $1,000.
    Comments submitted in response to this notice will be summarized 
and/or included in the request for OMB approval of the information 
collection request; they will also become a matter of public record.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are 
likely to have a significant economic impact on a substantial number of 
small entities. If an agency determines that a proposed rule is likely 
to have a significant economic impact on a substantial number of small 
entities, section 603 of the RFA requires that the agency present an 
initial regulatory flexibility analysis at the time of the publication 
of the notice of proposed rulemaking describing the impact of the rule 
on small entities, and seeking public comment on such impact. Small 
entities include small businesses, organizations, and governmental 
jurisdictions.
    For purposes of analysis under the RFA, PWBA proposes to continue 
to consider a small entity to be an employee benefit plan with fewer 
than 100 participants. The basis of this definition is found in section 
104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe 
simplified annual reports for pension plans which cover fewer than 100 
participants. Under section 104(a)(3), the Secretary may also provide 
for simplified annual reporting and disclosure if the statutory 
requirements of Part 1 of Title I of ERISA would otherwise be 
inappropriate for welfare benefit plans. Pursuant to the authority of 
section 104(a)(3), the Department has previously issued at 
Secs. 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46 and 2520.104b-
10 certain simplified reporting provisions and limited exemptions from 
reporting and disclosure requirements for small plans, including 
unfunded or insured welfare plans covering fewer than 100 participants 
and which satisfy certain other requirements.
    Further, while some large employers may have small plans, in 
general, most small plans are maintained by small employers. Thus, PWBA 
believes that assessing the impact of this proposed rule on small plans 
is an appropriate substitute for evaluating the effect on small 
entities. The definition of small entity considered appropriate for 
this purpose differs, however, from a definition of small business 
which is based on size standards promulgated by the Small Business 
Administration (SBA) (13 CFR 121.201) pursuant to the Small Business 
Act (5 U.S.C. 631 et seq.). PWBA therefore requests comments on the 
appropriateness of the size standard used in evaluating the impact of 
this proposed rule on small entities.
    On this basis, however, PWBA has preliminarily determined that this 
proposed regulation will not have a significant economic impact on a 
substantial number of small entities. In support of this determination, 
and in an effort to provide a sound basis for this conclusion, PWBA has 
considered the elements of an initial regulatory flexibility analysis 
in the discussion which follows.
    This proposed regulation would apply to all small employee benefit 
plans covered by Title I of ERISA. Employee benefit plans with fewer 
than 100 participants include 631,000 pension plans, 2.6 million health 
plans, and 3.4 million non-health welfare plans (mainly life and 
disability insurance plans).
    The Department believes that responding to a request for a SPD or 
other plan document primarily requires clerical skills, although a 
professional may read the request and direct others to respond. The 
documents to be mailed in response to the request are expected to be 
readily available.
    The Department does not have information concerning whether the 
participants and beneficiaries who request its assistance in obtaining 
plan documents are participants in small plans. However, even if it is 
assumed that all plans which receive requests for documents pursuant to 
section 104(a)(6) are small plans, the number affected in any year is 
very small (i.e., 1,000 of approximately 6.6 million plans). The 
mailing cost per request satisfied, or per letter exchanged in 
providing reasonable cause, is expected to amount to approximately 
$1.00, and accumulating the documents is expected to require about 5 
minutes. If it is assumed that a cost is incurred for this time at a 
rate of $11 per hour, the

[[Page 42803]]

total cost per request is estimated at about $2.00. This is not 
expected to constitute a significant impact for any plan.
    Further, the proposed regulation is intended to provide sufficient 
information to small entities such that they may understand the 
request, provide information as to a reasonable cause for failure to 
comply if necessary, and receive notice before assessment of a penalty 
is initiated.
    The Department invites interested persons to submit comments 
regarding its preliminary determination that the proposal will not have 
a significant economic impact on a substantial number of small 
entities. The Department also requests comments from small entities 
regarding what, if any, special problems they might encounter if the 
proposal were to be adopted, and what changes, if any, could be made to 
minimize those problems.

Small Business Regulatory Enforcement Fairness Act

    The proposed rule is subject to the provisions of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et 
seq.) and, if finalized, will be transmitted to Congress and the 
Comptroller General for review. The rule is not a ``major rule'' as 
that term is defined in 5 U.S.C. 804, because it is not likely to 
result in (1) An annual effect on the economy of $100 million or more; 
(2) a major increase in costs or prices for consumers, individual 
industries, or federal, State, or local government agencies, or 
geographic regions; or (3) significant adverse effects on competition, 
employment, investment, productivity, innovation, or on the ability of 
United States-based enterprises to compete with foreign-based 
enterprises in domestic or export markets.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, this proposed rule does not 
include any Federal mandate that may result in expenditures by State, 
local, or tribal governments, nor does it include mandates which may 
impose an annual burden of $100 million or more on the private sector.

Statutory Authority

    These regulations are proposed pursuant to the authority contained 
in sections 505, 104(a), and 502(c)(6) of ERISA (Pub. L. 93-406, 88 
Stat. 894, 29 U.S.C. 1024, 1132, and 1135).

List of Subjects

29 CFR Part 2520

    Accountants, Disclosure requirements, Employee benefit plans, 
Employee Retirement Income Security Act, Pension plans, and Reporting 
and recordkeeping requirements.

29 CFR Part 2560

    Claims, Employee benefit plans, Employee Retirement Income Security 
Act, Law enforcement, Pensions.

29 CFR Part 2570

    Administrative practice and procedure, Employee benefit plans, 
Employee Retirement Income Security Act, Party in interest, Law 
enforcement, Pensions, Prohibited transactions.

Proposed Regulations

    In view of the foregoing, the Department proposes to amend parts 
2520, 2560, and 2570 of Chapter XXV of title 29 of the Code of Federal 
Regulations as follows:

PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE

    1. The authority citation for part 2520 continues to read as 
follows:

    Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111 (b)(2), 
111 (c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C. 
1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74, 
13-76, 1-87, and Labor Management Services Administration Order 2-6.

    Sections 2520.102-3, 2520.104b-1, and 2520.104b-3 also are 
issued under sec. 101(a), (c), and (g)(4) of Pub. L. 104-191, 110 
Stat. 1936, 1939, 1951 and 1955 and, sec. 603 of Pub. L. 104-204, 
110 Stat. 2935 (29 U.S.C. 1185 and 1191c).

    2. By adding a new Sec. 2520.104a-8 to read as follows:


Sec. 2520.104a-8  Requirement to furnish documents to the Secretary of 
Labor on request.

    (a) In general. (1) Under section 104(a)(6) of the Act, the 
administrator of any employee benefit plan subject to the provisions of 
Part 1 of Title I of the Act shall furnish to the Secretary, upon 
service of a written request, any documents relating to the employee 
benefit plan.
    (2) Multiple requests for document(s). Multiple requests under this 
section for the same or similar document or documents shall be 
considered separate requests for purposes of Sec. 2560.502c-6(a) of 
this chapter.
    (b) Service of request. Requests under this section shall be served 
in accordance with Sec. 2560.502c-6(i) of this chapter.
    (c) Furnishing documents. A document is not considered furnished to 
the Secretary until the date on which such document is received by the 
Department of Labor at the address specified in the request.

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

    3. The authority citation for part 2560 continues to read as 
follows:

    Section 2560.502-1 also issued under sec. 502(b)(2), 29 U.S.C. 
1132(b)(2).
    Section 2560.502i-1 also issued under sec. 502(i), 29 U.S.C. 
1132(i).
    Section 2560.503-1 also issued under sec. 503, 29 U.S.C. 1133.
    Authority: Secs. 502, 505 of ERISA, 29 U.S.C. 1132, 1135, and 
Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).

    4. By adding a new Sec. 2560.502c-6 in the appropriate place to 
read as follows:


Sec. 2560.502c-6  Civil Penalties Under section 502(c)(6).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(6) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the administrator (within the meaning of 
section 3(16)(A)) of an employee benefit plan (within the meaning of 
section 3(3) and Sec. 2510.3-1 of this chapter) shall be liable for 
civil penalties assessed by the Secretary under section 502(c)(6) of 
the Act in each case in which there is a failure or refusal to furnish 
to the Secretary documents requested under section 104(a)(6) of the Act 
and Sec. 2520.104a-8 of this chapter.
    (2) For purposes of this section, a failure or refusal to furnish 
documents shall mean a failure or refusal to furnish, in whole or in 
part, the documents requested under section 104(a)(6) of the Act and 
Sec. 2520.104a-8 of this chapter at the time and in the manner 
prescribed in the request.
    (b) Amount assessed. (1) The amount assessed under section 
502(c)(6) shall be an amount up to $100 a day determined by the 
Department of Labor, taking into consideration the amount of 
willfulness of the failure or refusal to furnish the documents 
requested under section 104(a)(6), but in no event in excess of $1,000 
per request. Subject to paragraph (b)(2) of this section, the amount 
shall be computed from the date of the administrator's failure or 
refusal to furnish any document or documents requested by the 
Department.
    (2) For purposes calculating the amount to be assessed under this 
section, the date of a failure or refusal to furnish documents shall 
not be earlier than the 30th day after service of the

[[Page 42804]]

request under section 104(a)(6) of ERISA and Sec. 2520.104a-8 of this 
chapter.
    (c) Notice of intent to assess a penalty. Prior to the assessment 
of any penalty under section 502(c)(6), the Department shall provide to 
the administrator of the plan a written notice that indicates the 
Department's intent to assess a penalty under section 502(c)(6), the 
amount of the penalty, the period to which the penalty applies, and the 
reason(s) for the penalty.
    (d) Waiver of assessed penalty. The Department may waive all or 
part of the penalty to be assessed under section 502(c)(6) on a showing 
by the administrator that the failure or refusal to furnish a document 
or documents requested by the Secretary was the result of matters 
reasonably beyond the administrator's control.
    (e) Statement showing matters reasonably beyond the control of the 
plan administrator. Upon issuance by the Department of a notice of 
intent to assess a penalty, the administrator shall have 30 days from 
the date of the service of the notice, as described in paragraph (i) of 
this section, to file a statement that the failure resulted from 
matters reasonably beyond the control of the administrator or that the 
penalty, as calculated, should not be assessed. The statement must be 
in writing and set forth all the facts alleged as matters reasonably 
beyond the control of the administrator. The statement must contain a 
declaration by the administrator that the statement is made under the 
penalties of perjury.
    (f) Failure to file a statement of matters reasonably beyond the 
control of the plan administrator. Failure to file a statement of 
matters reasonably beyond the control of the administrator within the 
30 day period described in paragraph (e) of this section shall be 
deemed to constitute a waiver of the right to appear and contest the 
facts alleged in the notice, and such failure shall be deemed an 
admission of the facts alleged in the notice for purposes of any 
proceeding involving the assessment of a civil penalty under section 
502(c)(6). Such notice shall then become a final order of the 
Secretary, within the meaning of Sec. 2570.111(g) of this chapter.
    (g) Notice of determination on statement of matters reasonably 
beyond the control of the plan administrator. (1) The Department, 
following a review of all of the facts alleged in support of a complete 
or partial waiver of the penalty, shall notify the administrator, in 
writing, of its intention to waive the penalty, in whole or in part, 
and/or assess a penalty. If it is the intention of the Department to 
assess a penalty, the notice shall indicate the amount of the penalty, 
not to exceed the amount described in paragraph (c) of this section. 
This notice is a ``pleading'' for purposes of Sec. 2570.111(m) of this 
chapter.
    (2) Except as provided in paragraph (h) of this section, a notice 
issued pursuant to paragraph (g)(1) of this section indicating the 
Department's intention to assess a penalty shall become a final order, 
within the meaning of Sec. 2570.111(g) of this chapter, 30 days after 
the date of service of the notice.
    (h) Administrative hearings. A notice issued pursuant to paragraph 
(g)(1) of this section will not become a final order, within the 
meaning of Sec. 2570.111(g) of this chapter, if, within 30 days from 
the date of service of the notice, an answer, as defined in 
Sec. 2570.111(c) of this chapter, is filed in accordance with 
Sec. 2570.112 of this chapter.
    (i) Service of notice. (1) Service of notice under this section 
shall be made by:
    (i) Delivering a copy to the administrator or representative 
thereof;
    (ii) Leaving a copy at the principal office, place of business, or 
residence of the administrator or representative thereof; or (iii) 
Mailing a copy to the last known address of the administrator or 
representative thereof.
    (2) If service is accomplished by certified mail, service is 
complete upon mailing. If done by regular mail, service is complete 
upon receipt by the addressee.
    (j) Liability. (1) If more than one person is responsible as 
administrator for the failure to furnish the document or documents 
requested under section 104(a)(6) and its implementing regulations 
(Sec. 2520.104a-8 of this chapter), all such persons shall be jointly 
and severally liable with respect to such failure.
    (2) Any person, or persons under paragraph (j)(1), against whom a 
civil penalty has been assessed under section 502(c)(6) pursuant to a 
final order, within the meaning of Sec. 2570.111(g) of this chapter, 
shall be personally liable for the payment of such penalty.
    (k) Cross reference. See Secs. 2570.110 through 2570-121 of this 
chapter for procedural rules relating to administrative hearings under 
section 502(c)(6) of the Act.

PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT

    5. Revise the authority citation for part 2570 to read as follow:

    Authority: 29 U.S.C. 1108 (a), 1132 (c), 1132 (i), 1135; 5 
U.S.C. 8477 (c) (3); Reorganization Plan no. 4 of 1978; Secretary of 
Labor's Order 1-87.

    Subpart A is also issued under 29 U.S.C. 1132(c)(1).
    Subpart F is also issued under sec. 4, Pub. L. 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note), as amended by sec. 31001(s)(1), 
Pub. L. 104-134, 110 Stat. 1321-373.

    6. Part 2570 is amended by adding new subpart F to read as follows:

Subpart F--Procedures for the Assessment of Civil Penalties Under ERISA 
Section 502(c)(6)

Sec.
2570.110  Scope of rules.
2570.111  Definitions.
2570.112  Service: Copies of documents and pleadings.
2570.113  Parties, how designated.
2570.114  Consequences of default.
2570.115  Consent order or settlement.
2570.116  Scope of discovery.
2570.117  Summary Decisions.
2570.118  Decision of the administrative law judge.
2570.119  Review by the Secretary.
2570.120  Scope of review.
2570.121  Procedures for review by the Secretary.

Subpart F--Procedures for the Assessment of Civil Penalties Under 
ERISA Section 502(c)(6)


Sec. 2570.110  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(6) civil penalty proceedings'' (as defined in Sec. 2570.111(n) 
of this subpart) under section 502(c)(6) of the Employee Retirement 
Income Security Act of 1974. The rules of procedure for administrative 
hearings published by the Department's Office of Law Judges at part 18 
of this title will apply to matters arising under ERISA section 
502(c)(6) except as modified by this section. These proceedings shall 
be conducted as expeditiously as possible, and the parties shall make 
every effort to avoid delay at each stage of the proceedings.


Sec. 2570.111  Definitions.

    For section 502(c)(6) civil penalty proceedings, this section shall 
apply in lieu of the definitions in Sec. 18.2 of this title:
    (a) Adjudicatory proceeding means a judicial-type proceeding before 
an administrative law judge leading to the formulation of a final 
order;
    (b) Administrative law judge means an administrative law judge 
appointed pursuant to the provisions of 5 U.S.C. 3105;
    (c) Answer is defined for these proceedings as set forth in 
Sec. 18.5(d)(1) of this title;

[[Page 42805]]

    (d) Commencement of proceeding is the filing of an answer by the 
respondent;
    (e) Consent agreement means any written document containing a 
specified proposed remedy or other relief acceptable to the Department 
and consenting parties;
    (f) ERISA means the Employee Retirement Income Security Act of 
1974, as amended;
    (g) Final order means the final decision or action of the 
Department of Labor concerning the assessment of a civil penalty under 
ERISA section 502(c)(6) against a particular party. Such final order 
may result from a decision of an administrative law judge or the 
Secretary, the failure of a party to file a statement of matters 
reasonably beyond the control of the plan administrator described in 
Sec. 2560.502c-6(e) of this chapter within the prescribed time limits, 
or the failure of a party to invoke the procedures for hearings or 
appeals under this title within the prescribed time limits. Such a 
final order shall constitute final agency action within the meaning of 
5 U.S.C. 704;
    (h) Hearing means that part of a proceeding which involves the 
submission of evidence, either by oral presentation or written 
submission, to the administrative law judge;
    (i) Order means the whole or any part of a final procedural or 
substantive disposition of a matter under ERISA section 502(c)(6);
    (j) Party includes a person or agency named or admitted as a party 
to a proceeding;
    (k) Person includes an individual, partnership, corporation, 
employee benefit plan, association, exchange or other entity or 
organization;
    (l) Petition means a written request, made by a person or party, 
for some affirmative action;
    (m) Pleading means the notice as defined in Sec. 2560.502c-6(g) of 
this chapter, the answer to the notice, any supplement or amendment 
thereto, and any reply that may be permitted to any answer, supplement 
or amendment;
    (n) 502(c)(6) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for 
in section 502(c)(6) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(6);
    (p) Secretary means the Secretary of Labor and includes, pursuant 
to any delegation of authority by the Secretary, any assistant 
secretary (including the Assistant Secretary for Pension and Welfare 
Benefits), administrator, commissioner, appellate body, board, or other 
official; and
    (q) Solicitor means the Solicitor of Labor or his or her delegate.


Sec. 2570.112  Service: Copies of documents and pleadings.

    For 502(c)(6) penalty proceedings, this section shall apply in lieu 
of Sec. 18.3 of this title.
    (a) General. Copies of all documents shall be served on all parties 
of record. All documents should clearly designate the docket number, if 
any, and short title of all matters. All documents to be filed shall be 
delivered or mailed to the Chief Docket Clerk, Office of Administrative 
Law Judges, 800 K Street, NW, Suite 400, Washington, DC 20001-8002, or 
to the OALJ Regional Office to which the proceeding may have been 
transferred for hearing. Each document filed shall be clear and 
legible.
    (b) By parties. All motions, petitions, pleadings, briefs, or other 
documents shall be filed with the Office of Administrative Law Judges 
with a copy, including any attachments, to all other parties or record. 
When a party is represented by an attorney, service shall be made upon 
the attorney. Service of any document upon any party may be made by 
personal delivery or by mailing a copy to the last known address. The 
Department shall be served by delivery to the Associate Solicitor, Plan 
Benefits Security Division, ERISA section 502(c)(6) Proceeding, PO Box 
1914, Washington, DC 20013. The person serving the document shall 
certify to the manner and date of service.
    (c) By the Office of Administrative Law Judges. Service of orders, 
decisions and all other documents shall be made by regular mail to the 
last known address.
    (d) Form of pleadings. (1) Every pleading shall contain information 
indicating the name of the Pension and Welfare Benefits Administration 
(PWBA) as the agency under which the proceeding is instituted, the 
title of the proceeding, the docket number (if any) assigned by the 
Office of Administrative Law Judges and a designation of the type of 
pleading or paper (e.g., notice, motion to dismiss, etc.). The pleading 
or paper shall be signed and shall contain the address and telephone 
number of the party or person representing the party. Although there 
are no formal specifications for documents, they should be typewritten 
when possible on standard size 8\1/2\ x 11 inch paper.
    (2) Illegible documents, whether handwritten, typewritten, 
photocopies, or otherwise, will not be accepted. Papers may be 
reproduced by any duplicating process provided all copies are clear and 
legible.


Sec. 2570.113  Parties, how designated.

    For 502(c)(6) civil penalty proceedings, this section shall apply 
in lieu of Sec. 18.10 of this title.
    (a) The term ``party'' wherever used in these rules shall include 
any natural person, corporation, employee benefit plan, association, 
firm, partnership, trustee, receiver, agency, public or private 
organization, or government agency. A party against whom a civil 
penalty is sought shall be designated as ``respondent.'' The Department 
shall be designated as the ``complainant.''
    (b) Other persons or organizations shall be permitted to 
participate as parties only if the administrative law judge finds that 
the final decision could directly and adversely affect them or the 
class they represent, that they may contribute materially to the 
disposition of the proceedings and their interest is not adequately 
represented by existing parties, and that in the discretion of the 
administrative law judge the participation of such persons or 
organizations would be appropriate.
    (c) A person or organization not named as a respondent wishing to 
participate as a party under this section shall submit a petition to 
the administrative law judge within fifteen (15) days after the person 
or organization has knowledge of or should have known about the 
proceeding. The petition shall be filed with the administrative law 
judge and served on each person or organization who has been made a 
party at the time of filing. Such petition shall concisely state:
    (1) Petitioner's interest in the proceeding;
    (2) How his or her participation as a party will contribute 
materially to the disposition of the proceeding;
    (3) Who will appear for petitioner;
    (4) The issues on which petitioner wishes to participate; and
    (5) Whether petitioner intends to present witnesses.
    (d) Objections to the petition may be filed by a party within 
fifteen (15) days of the filing of the petition. If objections to the 
petition are filed, the administrative law judge shall then determine 
whether petitioners have the requisite interest to be a party in the 
proceedings, as defined in paragraph (b) of this section, and shall 
permit or deny participation accordingly. Where petitions to 
participate as parties are made by individuals or groups with common 
interests, the administrative law judge may request all such 
petitioners to designate a single representative, or he or she may

[[Page 42806]]

recognize one or more of such petitioners. The administrative law judge 
shall give each such petitioner, as well as the parties, written notice 
of the decision on his or her petition. For each petition granted, the 
administrative law judge shall provide a brief statement of the basis 
of the decision. If the petition is denied, he or she shall briefly 
state the grounds for denial and shall then treat the petition as a 
request for participation as amicus curiae.


Sec. 2570.114  Consequences of default.

    For 502(c)(6) civil penalty proceedings, this section shall apply 
in lieu of Sec. 18.5 (a) and (b) of this title. Failure of the 
respondent to file an answer to the notice of determination described 
in Sec. 2560.502c-6(g) of this chapter within the 30-day period 
provided by Sec. 2560.502c-6(h) of this chapter shall be deemed to 
constitute a waiver of his or her right to appear and contest the 
allegations of the notice of determination, and such failure shall be 
deemed to be an admission of the facts as alleged in the notice for 
purposes of any proceeding involving the assessment of a civil penalty 
under section 502(c)(6) of the Act. Such notice shall then become the 
final order of the Secretary.


Sec. 2570.115  Consent order or settlement.

    For 502(c)(6) civil penalty proceedings, the following shall apply 
in lieu of Sec. 18.9 of this title.
    (a) General. At any time after the commencement of a proceeding, 
but at least five (5) days prior to the date set for hearing, the 
parties jointly may move to defer the hearing for a reasonable time to 
permit negotiation of a settlement or an agreement containing findings 
and an order disposing of the whole or any part of the proceeding. The 
allowance of such a deferral and the duration thereof shall be in the 
discretion of the administrative law judge, after consideration of such 
factors as the nature of the proceeding, the requirements of the public 
interest, the representations of the parties and the probability of 
reaching an agreement which will result in a just disposition of the 
issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice and the agreement;
    (3) A waiver of any further procedural steps before the 
administrative law judge;
    (4) A waiver of any right to challenge or contest the validity of 
the order and decision entered into in accordance with the agreement; 
and
    (5) That the order and decision of the administrative law judge 
shall be final agency action.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, but, in any case, at least five (5) days prior to the 
date set for hearing, the parties or their authorized representative or 
their counsel may:
    (1) Submit the proposed agreement containing consent findings and 
an order to the administrative law judge; or
    (2) Notify the administrative law judge that the parties have 
reached a full settlement and have agreed to dismissal of the action 
subject to compliance with the terms of the settlement; or
    (3) Inform the administrative law judge that agreement cannot be 
reached.
    (d) Disposition. In the event a settlement agreement containing 
consent findings and an order is submitted within the time allowed 
therefore, the administrative law judge shall issue a decision 
incorporating such findings and agreement within thirty (30) days of 
his receipt of such document. The decision of the administrative law 
judge shall incorporate all of the findings, terms, and conditions of 
the settlement agreement and consent order of the parties. Such 
decision shall become final agency action within the meaning of 5 
U.S.C. 704.
    (e) Settlement without consent of all parties. In cases in which 
some, but not all, of the parties to a proceeding submit a consent 
agreement to the administrative law judge, the following procedure 
shall apply:
    (1) If all of the parties have not consented to the proposed 
settlement submitted to the administrative law judge, then such non-
consenting parties must receive notice, and a copy, of the proposed 
settlement at the time it is submitted to the administrative law judge;
    (2) Any non-consenting party shall have fifteen (15) days to file 
any objections to the proposed settlement with the administrative law 
judge and all other parties;
    (3) If any party submits an objection to the proposed settlement, 
the administrative law judge shall decide within thirty (30) days after 
receipt of such objections whether he shall sign or reject the proposed 
settlement. Where the record lacks substantial evidence upon which to 
base a decision or there is a genuine issue of material fact, then the 
administrative law judge may establish procedures for the purpose of 
receiving additional evidence upon which a decision on the contested 
issues may reasonably be based;
    (4) If there are no objections to the proposed settlement, or if 
the administrative law judge decides to sign the proposed settlement 
after reviewing any such objections, the administrative law judge shall 
incorporate the consent agreement into a decision meeting the 
requirements of paragraph (d) of this section.


Sec. 2570.116  Scope of discovery.

    For 502(c)(6) civil penalty proceedings, this section shall apply 
in lieu of Sec. 18.14 of this title.
    (a) A party may file a motion to conduct discovery with the 
administrative law judge. The motion for discovery shall be granted by 
the administrative law judge only upon a showing of good cause. In 
order to establish ``good cause'' for the purposes of this section, a 
party must show that the discovery requested relates to a genuine issue 
as to a material fact that is relevant to the proceeding. The order of 
the administrative law judge shall expressly limit the scope and terms 
of discovery to that for which ``good cause'' has been shown, as 
provided in this paragraph.
    (b) A party may obtain discovery of documents and tangible things 
otherwise discoverable under paragraph (a) of this section and prepared 
in anticipation of or for the hearing by or for another party's 
representative (including his or her attorney, consultant, surety, 
indemnitor, insurer, or agent) only upon showing that the party seeking 
discovery has substantial need of the materials or information in the 
preparation of his or her case and that he or she is unable without 
undue hardship to obtain the substantial equivalent of the materials or 
information by other means. In ordering discovery of such materials 
when the required showing has been made, the administrative law judge 
shall protect against disclosure of the mental impressions, 
conclusions, opinions, or legal theories of an attorney or other 
representatives of a party concerning the proceeding.


Sec. 2570.117  Summary decision.

    For 502(c)(6) civil penalty proceedings, this section shall apply 
in lieu of Sec. 18.41 of this title.
    (a) No genuine issue of material fact. (1) Where no issue of a 
material fact is found to have been raised, the administrative law 
judge may issue a

[[Page 42807]]

decision which, in the absence of an appeal pursuant to Secs. 2570.119 
through 2570.121 of this subpart, shall become a final order.
    (2) A decision made under this paragraph shall include a statement 
of:
    (i) Findings of fact and conclusions of law, and the reasons 
therefor, on all issues presented; and
    (ii) Any terms and conditions of the rule or order.
    (3) A copy of any decision under this paragraph shall be served on 
each party.
    (b) Hearings on issues of fact. Where a genuine question of a 
material fact is raised, the administrative law judge shall, and in any 
other case may, set the case for an evidentiary hearing.


Sec. 2570.118  Decision of the administrative law judge.

    For section 502(c)(6) civil penalty proceedings, this section shall 
apply in lieu of Sec. 18.57 of this title.
    (a) Proposed findings of fact, conclusions, and order. Within 
twenty (20) days of the filing of the transcript of the testimony, or 
such additional time as the administrative law judge may allow, each 
party may file with the administrative law judge, subject to the 
judge's discretion, proposed findings of fact, conclusions of law, and 
order together with a supporting brief expressing the reasons for such 
proposals. Such proposals and briefs shall be served on all parties, 
and shall refer to all portions of the record and to all authorities 
relied upon in support of each proposal.
    (b) Decision of the administrative law judge. Within a reasonable 
time after the time allowed for the filing of the proposed findings of 
fact, conclusions of law, and order, or within thirty (30) days after 
receipt of an agreement containing consent findings and order disposing 
of the disputed matter in whole, the administrative law judge shall 
make his or her decision. The decision of the administrative law judge 
shall include findings of fact and conclusions of law with reasons 
therefor upon each material issue of fact or law presented on the 
record. The decision of the administrative law judge shall be based 
upon the whole record. In a contested case in which the Department and 
the Respondent have presented their positions to the administrative law 
judge pursuant to the procedures for 502(c)(6) civil penalty 
proceedings as set forth in this subpart, the penalty (if any) which 
may be included in the decision of the administrative law judge shall 
be limited to the penalty expressly provided for in section 502(c)(6) 
of ERISA. It shall be supported by reliable and probative evidence. The 
decision of the administrative law judge shall become final agency 
action within the meaning of 5 U.S.C. 704 unless an appeal is made 
pursuant to the procedures set forth in Secs. 2570.119 through 
2570.121.


Sec. 2570.119  Review by the Secretary.

    (a) The Secretary may review a decision of an administrative law 
judge. Such a review may occur only when a party files a notice of 
appeal from a decision of an administrative law judge within twenty 
(20) days of the issuance of such decision. In all other cases, the 
decision of the administrative law judge shall become final agency 
action within the meaning of 5 U.S.C. 704.
    (b) A notice of appeal to the Secretary shall state with 
specificity the issue(s) in the decision of the administrative law 
judge on which the party is seeking review. Such notice of appeal must 
be served on all parties of record.
    (c) Upon receipt of a notice of appeal, the Secretary shall request 
the Chief Administrative Law Judge to submit to him or her a copy of 
the entire record before the administrative law judge.


Sec. 2570.120  Scope of review.

    The review of the Secretary shall not be de novo proceeding but 
rather a review of the record established before the administrative law 
judge. There shall be no opportunity for oral argument.


Sec. 2570.121  Procedures for review by the Secretary.

    (a) Upon receipt of the notice of appeal, the Secretary shall 
establish a briefing schedule which shall be served on all parties of 
record. Upon motion of one or more of the parties, the Secretary may, 
in his or her discretion, permit the submission of reply briefs.
    (b) The Secretary shall issue a decision as promptly as possible 
after receipt of the briefs of the parties. The Secretary may affirm, 
modify, or set aside, in whole or in part, the decision on appeal and 
shall issue a statement of reasons and bases for the action(s) taken. 
Such decision by the Secretary shall be final agency action within the 
meaning of 5 U.S.C. 704.

    Signed at Washington, DC, this 28th day of July 1999.
Richard M. McGahey,
Assistant Secretary, Pension and Welfare Benefits Administration, 
Department of Labor.
[FR Doc. 99-19861 Filed 8-4-99; 8:45 am]
BILLING CODE 4510-29-P