[Federal Register Volume 67, Number 4 (Monday, January 7, 2002)]
[Rules and Regulations]
[Pages 777-789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-141]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Parts 2520, 2560 and 2570

RIN 1210-AA67, 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: Final rule.

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SUMMARY: This document contains a final rulemaking under the Employee 
Retirement Income Security Act of 1974 (ERISA) that implements certain 
amendments to ERISA added as part of the Taxpayer Relief Act of 1997 
(TRA '97). The final rule implements section 104(a)(6) of ERISA by 
requiring the administrator of an employee benefit plan subject to Part 
1 of Title I of ERISA to furnish to the Department, upon request, 
certain documents relating to the employee benefit plan. The final rule 
also establishes procedures relating to the assessment of civil 
penalties for failures or refusals by administrators to furnish 
requested documents to the Department and establishes procedures for 
review of such penalties by the Department. The final rule affects 
employee pension and welfare benefit plans, plan sponsors, 
administrators and fiduciaries, and plan participants and 
beneficiaries.

DATES: This regulation is effective March 8, 2002.

FOR FURTHER INFORMATION CONTACT: Lisa M. Fields, Office of Regulations 
and Interpretations, Pension and Welfare Benefits Administration, (202) 
693-8500 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

A. Background

    The Taxpayer Relief Act of 1997 (TRA '97) eliminated the 
requirement under ERISA that employee benefit plan administrators 
automatically file

[[Page 778]]

summary plan descriptions (SPDs) and summaries of material plan 
modifications (SMMs) with the Department. 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 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 providing the Secretary with the 
authority to assess civil penalties for a plan administrator's failure 
to furnish material requested under section 104(a)(6) of ERISA. 
Specifically, section 502(c)(6) provides that, if within 30 days of a 
request by the Department, the plan administrator fails to furnish 
materials requested by the Department, the Department may assess a 
civil penalty against the 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) also provides that no penalty shall be imposed for 
failures 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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    On August 5, 1999, the Department published a notice in the Federal 
Register (64 FR 42797) inviting public comment on a proposal to add 
regulations at 29 CFR 2520.104a-8 and 29 CFR 2560.502c-6 that would 
implement the above TRA `97 amendments. In response to this notice, the 
Department received four public comment letters. Set forth below is a 
description of the regulations, and a discussion of public comments 
received and specific changes from the proposal reflected in the final 
rule.

B. Description of Regulations, Comments and Changes

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

    Section 2520.104a-8 implements section 104(a)(6) of ERISA. As 
proposed, paragraph (a)(1) of Sec. 2520.104a-8 provides that the 
administrator (within the meaning of section 3(16)(A) of ERISA) of any 
employee benefit plan subject to Part 1 of Title I of ERISA has an 
obligation to furnish to the Department, upon request, any document 
relating to the plan. Paragraph (a)(2) clarifies that multiple requests 
under ERISA section 104(a)(6) and Sec. 2520.104a-8 for the same or 
similar document or documents shall be considered separate requests for 
purposes of penalties under ERISA section 502(c)(6) and Sec. 2560.502c-
6(a). Paragraph (b) of the proposal incorporates the service of notice 
rules in Sec. 2560.502c-6(i), for purposes of serving the plan 
administrator with a request under ERISA section 104(a)(6); and 
paragraph (c) of the proposed regulation describes when a document 
would be deemed to be received by the Secretary.
    Most of the commenters focused on two general issues--what 
documents will be requested by the Department and on whose behalf the 
Department will request documents. With regard to the first issue, the 
commenters expressed concern that the regulation, as proposed, would 
permit the Department to request, on behalf of participants and 
beneficiaries, any document relating to the plan, including 
proprietary, confidential and other plan-related information with 
respect to which participants and beneficiaries generally would not 
have access. Commenters argued that the Department should limit its 
authority to requesting only those documents that a participant or 
beneficiary is otherwise entitled under section 104(b)(4) of ERISA.\2\ 
The second issue related to commenter concerns that plan-related 
information would be provided to persons who were not plan participants 
or beneficiaries. In this regard, the commenters suggested that the 
final regulation should make clear that the Department will only 
request documents on behalf of participants and beneficiaries and 
should include a process that the Department will follow in determining 
whether a given individual is entitled to obtain documents.
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    \2\ Under section 104(b)(4) of ERISA, the administrator must, 
upon written request of any participant or beneficiary, ``furnish a 
copy of 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.''
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    In the preamble to the proposed regulation, the Department 
indicated that, while section 104(a)(6) conferred broad authority on 
the Secretary to request documents, the Department generally intended 
to limit the exercise of its authority under Sec. 2520.104a-8 to 
requesting SPDs on behalf of participants and beneficiaries. The 
Department also envisioned that it may intervene to assist a 
participant and beneficiary in obtaining documents or instruments 
pursuant to which a plan is established or operated where a plan 
administrator fails or refuses to respond to the request of a 
participant or beneficiary.
    In response to the concerns of the commenters, the Department has 
modified the final regulation to more specifically comport with the 
Department's views expressed in the preamble to the proposed 
regulation. In this regard, the final regulation specifically limits 
the application of Sec. 2520.104a-8 to requests from the Department for 
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)\3\ and any 
other documents described in section 104(b)(4) of ERISA 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. See 
Sec. 2520.104a-8(a)(1)(i) and (ii).
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    \3\ For purposes of a request by the Department under ERISA 
section 104(a)(6), any separate documents required to be furnished 
with the SPD, e.g., a plan's claims procedures provided as a 
separate document under 29 CFR Sec. 2520.102-3(s), would be 
considered part of the plan's latest updated summary plan 
description.
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    As revised, the final regulation clearly limits the documents to be 
requested from plan administrators by the Department on behalf of 
participants and beneficiaries to those documents with respect to which 
participants and beneficiaries have a statutory right to examine and 
obtain copies.\4\
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    \4\ See sections 104(b)(2) and 104(b)(4) of ERISA. Also, the 
Department notes that the final rule relates solely to requests by 
the Department for documents pursuant to section 104(a)(6) and, 
accordingly, does not serve to limit or otherwise affect the 
authority of the Department to request documents pursuant to other 
provisions of ERISA, including the Department's authority under 
section 504.
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    Also, by limiting the circumstances under which the Department will 
request documents and instruments pursuant to which a plan is 
established or operated to those where a participant or beneficiary has 
previously made a written request to the plan for such documents or 
instruments, plan administrators are afforded the opportunity to raise, 
with both the requesting individual and the Department, issues 
concerning the status of the requesting individual as a participant or 
beneficiary.

[[Page 779]]

    The final regulation does not condition requests for updated 
summary plan descriptions on a participant or beneficiary first seeking 
the document directly from the plan. As explained in the preamble to 
the proposed regulation, the Department believes that the elimination 
of the SPD filing requirements, taken together with the establishment 
of civil penalties for failures to furnish requested documents, clearly 
evidences Congress' intent that the Department would exercise its 
authority to ensure that participants and beneficiaries would have an 
independent source for SPDs. The value of such access is predicated on 
the rights of participants and beneficiaries to choose not to go to the 
plan or plan sponsor for such information.
    In addition to the foregoing, the final rule has been modified to 
clarify the persons who will be considered participants or 
beneficiaries for purposes of requests pursuant to section 104(a)(6) 
and the regulation. A new paragraph (b) was added to the final 
regulation,\5\ provides that a participant or beneficiary will include 
any individual who is: (i) A participant or beneficiary within the 
meaning of ERISA sections 3(7) and 3(8), respectively; (ii) 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); (iii) a qualified beneficiary 
under COBRA (see ERISA section 607(3)) or prospective qualified 
beneficiary (spouse or dependent child); (iv) an alternate recipient 
under a qualified medical child support order (see ERISA section 
609(a)(2)(C)) or a prospective alternate recipient; or (v) a 
representative of any of the foregoing. In the preamble to the proposed 
regulation, the Department expressed the view that such persons would 
be treated as participants and beneficiaries for purposes of the 
regulation. Upon further consideration, and taking into account there 
were no public comments objecting to the Department's position on this 
issue, the Department has determined that, in the interest of clarity, 
the persons to be treated as participants and beneficiaries for 
purposes of the regulation should be codified in the regulation.
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    \5\ Paragraphs (b) and (c) of the proposal have been 
redesignated as paragraphs (c) and (d) of the final regulation.
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    In addition to the comments discussed above, one commenter 
suggested that plans should be required to include a notice in their 
SPDs informing participants and beneficiaries that they can ask the 
Department for help in obtaining documents from their plan 
administrator. The Department, as part of a separate rule amending its 
regulations governing the content of SPDs, made improvements to the 
``ERISA statement of rights'' currently required to be included in each 
SPD pursuant to 29 CFR 2520.102-3(t) to ensure that participants and 
beneficiaries understand their right to request certain documents from 
their plan and the availability of assistance from the Department. See 
65 FR 70226, 70243 (November 21, 2000).
    One commenter argued that inasmuch as the plan may charge 
participants and beneficiaries for copies of documents available under 
section 104(b)(4) of ERISA, plans should be able to charge the 
Department for materials furnished in response to requests by the 
Department on behalf of participants and beneficiaries. The Department 
notes that there is no statutory basis for permitting the imposition of 
charges on the Department attendant to costs incurred in connection 
with requests under section 104(a)(6) of ERISA. Further, in view of the 
fact that SPDs have been available to participants through the 
Department's public disclosure room and that Congress, in enacting the 
TRA '97 changes, intended to ensure that participants have continued 
access to SPDs through the Department, the Department does not believe 
passing such charges back to participants would be consistent with 
Congressional intent. With respect to other documents described in 
section 104(b)(4) of ERISA, the Department's involvement in requesting 
such documents will result from the failure or refusal of a plan 
administrator to furnish the requested documents under circumstances 
where a reasonable charge could have been imposed for copies. For these 
reasons, the Department has not modified the regulation in response to 
the foregoing comments.
    One commenter noted that the proposed regulation did not indicate 
whether the Department will retain copies of documents submitted in 
response to requests on behalf of participants and beneficiaries, nor 
did it indicate whether the Department will discard documents that were 
filed with the Department prior to the enactment of the TRA '97 
amendments. The Department does not intend to retain copies of 
materials furnished in response to requests under ERISA section 
104(a)(6) made on behalf of participants and beneficiaries or other 
persons. In the case of previously filed SPDs and SMMs, the Department 
is maintaining the SPDs and SMMs filed prior to the TRA '97 amendments. 
These documents are currently available for examination and copying 
through PWBA's public disclosure room.
    One commenter expressed the view that proposed Sec. 2520.104a-8(c), 
which provides that ``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,'' should 
be modified to provide that documents mailed by certified mail will be 
considered received when mailed. The Department agrees that such a 
change is appropriate and would establish consistency with the rules 
governing ``service,'' as set forth in Sec. 2560.502c-6(i), applicable 
to the assessment of civil penalties for a failure to comply with a 
request for documents from the Department. Accordingly, paragraph (d) 
of the final regulation (which was paragraph (c) of the proposal) has 
been amended to provide that, in the case of documents furnished to the 
Secretary by certified mail, the document shall be considered received 
on the date on which the document is mailed to the Department of Labor 
at the address specified in the request.
    One commenter noted that the proposed regulation did not take into 
account that many multiemployer plans may not always be able to comply 
with the Department's requests for documents within 30 days. Due to the 
often decentralized administrative structure of multiemployer plans, 
necessitated by the large number of participants and contributing 
employers, the commenter noted that a multiemployer plan's designated 
plan administrator might not have possession or control of certain 
documents that the Department may request and such plan administrator 
may have to locate the person with control of the requested documents 
and then request copies of the documents from an unaffiliated third 
party over whom the plan administrator may not be able to exercise any 
authority. The commenter suggested that the final regulation include a 
procedure for plans to obtain an extension of time to respond to the 
Department's request for documents if good cause for the extension is 
demonstrated, without the imposition of the penalty prescribed in 
section 502(c)(6) of ERISA or the need for a penalty appeal. In 
addition, the commenter noted that, in the event multiple requests for 
documents are received from the Department one after another, the 
volume of requests may prevent a plan administrator from filing a 
response within 30 days, and the

[[Page 780]]

commenter recommended that the final regulation should provide that the 
Department will waive any fines that may otherwise be assessed under 
section 502(c)(6) of ERISA if the plan administrator demonstrates to 
the satisfaction of the Department that a timely response was not 
practicable. Two commenters suggested that a plan administrator should 
be allowed to initially decline production of documents and challenge 
the propriety of requests if the plan administrator believes that such 
documents do not relate to the plan or that they contain information of 
a confidential or proprietary nature and that a sanction should be 
stayed pending review of the claim and production of the documents 
following a decision adverse to the plan administrator. One of these 
commenters noted that the proposed regulation would subject plan 
administrators challenging the Department's requests to substantial 
fines that may only be reduced or waived by engagement in an 
adjudicatory process with the Department. This commenter noted that 
such adjudicatory proceedings to appeal the assessment of the 
Department's fines would result in expenditures of valuable resources 
that would be better used for providing benefits to plan participants.
    The Department believes that most of the concerns raised by these 
commenters are adequately addressed by the changes to the final rule 
that clarify the limited range of documents the Department will request 
under section 104(a)(6). Moreover, the Department believes that the 
provisions of Sec. 2520.104a-8 and Sec. 2560.502c-6 provide the 
Department with sufficient flexibility, prior to the assessment of a 
civil penalty, to take into account matters reasonably beyond the 
control of a plan administrator that would affect an administrator's 
ability to comply with a request from the Department in a timely 
manner. Furthermore, the Department believes that the processes 
provided in the regulations are sufficiently flexible to enable plan 
administrators to raise concerns with the Department regarding the 
production or disclosure of requested documents. In particular, the 
Department notes that there is nothing in Sec. 2520.104a-8 that would 
limit the Department's ability to consider, following the issuance of a 
request for documents, information provided by a plan administrator 
concerning the administrator's inability to comply with the request in 
a timely fashion or an administrator's concerns relating to the 
disclosure of the requested information. In addition, an administrator 
may, pursuant to Sec. 2560.502c-6(e), submit a statement setting forth 
why matters reasonably beyond the control of the administrator 
precluded timely compliance with the Department's request for 
documents.

Authority To Assess Civil Penalties for Violations of Section 104(a)(6) 
of ERISA

    Section 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.
    Section 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. Paragraph (b)(2) provides that the date 
of a failure or refusal to furnish any documents requested under 
section 104(a)(6) of ERISA and Sec. 2520.104a-8 shall not be earlier 
than the thirtieth day after service of the request.
    Section 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 is to be served in accordance with Sec. 2560.502c-6(i) 
(service of notice provision). Under Sec. 2560.502c-6(f), the notice 
would become a final order of the Department, within the meaning of 
Sec. 2570.111(g) (also 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.
    Paragraphs (d), (e), (f), (g), and (h) of section 2560.502c-6 
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 ERISA 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.\6\
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    \6\ In the event another fiduciary of the plan has custody of or 
control over a document requested under ERISA section 104(a)(6) and 
Sec. 2520.104a-8, or if the administrator engages a third party to 
perform services for the plan and, pursuant to the engagement, the 
third party has custody of or control over such a document, 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 paragraph (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 paragraph (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 that the notice 
described in paragraph (g) will become the final order of the 
Department unless, within 30 days of the date of service of the notice, 
the administrator or representative files a request for a hearing under 
Sec. 2570.110 et seq. (published as part of this rulemaking) and files 
an answer, in writing, opposing the proposed sanction.
    Section 2560.502c-6(i) describes the rules relating to 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)).\7\ 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

[[Page 781]]

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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    \7\ As noted above, under Sec. 2520.104a-8(c) these service 
rules would also apply to the Department's initial request for 
documents under ERISA section 104(a)(6) and Sec. 2520.104a-8.
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    Section 2560.502c-6(j) clarifies 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) also clarifies 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.
    The Department's Office of Administrative Law Judges (OALJ) 
commented that, in its experience, various respondents in ERISA 
proceedings have found that the method for requesting a hearing is 
confusing. The OALJ suggested that the situation could be improved by 
changing proposed regulation Sec. 2560.502c-6(h) to read as follows:

    (h) Administrative hearing. A notice issued pursuant to 
paragraph (g) of this section will become the final order of the 
Department of Labor, unless, within 30 days from the date of the 
service of the notice, the administrator or representative thereof 
files a request for a hearing under Sec. 2570.110 et seq., and files 
an answer to the notice. The request for hearing and answer shall be 
filed in accordance with Sec. 2570.112. 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 Sec. 2560.502c-6.

    The OALJ also recommended that proposed Sec. 2570.111(c) be 
modified to define the term ``Answer'', rather than referencing the 
definition at Sec. 18.5(d)(1). The term ``Answer'' is defined to mean 
``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).'' The Department has incorporated 
these recommendations into the final regulation sections 2560.502c-6(h) 
and 2570.111(c).
    With regard to paragraph (i) of Sec. 2560.502c-6, one commenter 
suggested that service should only be effectuated by the Department's 
mailing or delivering of the respective documents to the plan 
administrator's regular place of business, or such other location as 
the plan may specify in its communication with the Department. With 
respect to a multiemployer plan that designates its board of trustees 
as the plan administrator, the commenter noted that service of the 
Department's request for documents and notice of intent to assess a 
penalty should be made on the fund office, rather than on the 
individual trustees, as individual trustees should not be responsible 
for accepting service unless the trustees are acting in an official 
capacity. This commenter expressed the view that further clarification 
is needed with regard to service in the context of multiemployer plans.
    The Department does not believe any further clarification of the 
service requirement is warranted. The proposal states that service of a 
request for documents or other notices may be served by delivering a 
copy to the administrator or representative thereof, by leaving a copy 
at the principal office, place of business or residence of the 
administrator or representative thereof, or by mailing a copy to the 
last known address of the administrator or representative thereof. It 
is the Department's view that application of the service of notice 
requirement does not need further clarification and, accordingly, the 
Department is adopting paragraph (i) of Sec. 2560.502c-6 without 
change.
    One commenter stated that the proposed regulation unfairly and 
unnecessarily requires that any fines assessed under section 502(c)(6) 
of ERISA be paid by the plan administrator, rather than the plan. The 
commenter urged the Department to revise the proposed regulation to 
permit plans to pay any fines that may be assessed under ERISA section 
502(c)(6), unless the Department concludes that the plan 
administrator's failure to furnish the requested documents within the 
30-day period was willful.
    It is the view of the Department that, in the absence of statutory 
language to the contrary, liability for payment of civil penalties is a 
personal liability of the person against whom the penalty is assessed 
and not the liability of the plan. Accordingly, as noted in the 
supplementary information accompanying the proposal, the payment of 
penalties assessed under ERISA section 502(c)(6) from plan assets would 
not constitute a reasonable expense of administering a plan for 
purposes of ERISA sections 403 and 404. In contrast, reasonable 
expenses attendant to compliance with a request from the Department for 
documents, such as expenses for copying and mailing the requested 
documents, would constitute reasonable expenses of administering a plan 
for purposes of ERISA sections 403 and 404.

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

    Except as noted above, Sec. 2570.110, et seq., establishing 
procedures for hearings before an Administrative Law Judge (ALJ) with 
respect to assessment by the Department of a civil penalty under ERISA 
section 502(c)(6) and appealing an ALJ decision to the Secretary or her 
delegate are being adopted as proposed.
    With regard to such procedures, 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). 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.
    The final rule relates specifically to procedures for assessing 
civil penalties under section 502(c)(6) of ERISA and is controlling to 
the extent it is inconsistent with any portion of 29 CFR part 18. The 
final rule is 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 final rule, 
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 involves changes from, or additions to, the 
rules in 29 CFR part 18. The specific

[[Page 782]]

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 the procedural rules under section 
502(c)(6) of ERISA is set forth in Sec. 2570.110. 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 
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 or his or her delegee.
    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 Sec. 2560.502c-6 before initiating 
adjudicatory proceedings. Section 2570.111(c) and (d), together with 
Sec. 2560.502c-6(h), contemplate that a notice issued pursuant to 
Sec. 2560.502c-6(g) will become the final order of the Department, 
unless, within 30 days from the date of the service of the notice, the 
administrator or representative thereof files a request for a hearing 
under Sec. 2570.110 et seq., and files an answer to the notice.
    The service of documents by the parties to an adjudicatory 
proceeding, as well as by the ALJ, are governed by Sec. 2570.112. 
Section 2570.114 provides that if the respondent fails to request a 
hearing by filing an answer to the Department's notice of determination 
(Sec. 2560.502c-6(g)) within the 30-day period provided by 
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 shall be deemed to constitute an admission of the facts 
alleged in the notice for purposes of any proceeding involving the 
assessment of a civil penalty under section 502(c)(6) of ERISA. Section 
2570.114 makes clear that in the event of such failure, the assessment 
of penalty becomes final.
    Section 2570.115 provides 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. This 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 Sec. 2570.118 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 Secs. 2570.119 through 
2570.121, and without any reference to the appellate procedures 
contained in 29 CFR part 18. Section 2570.119 establishes the time 
limit within which such appeals must be filed, 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. Section 
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. Section 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. 704. 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 Disclosure Room of the Pension and Welfare 
Benefits Administration, Room N-1513, 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 regulation will be borne by the plan when 
responding to requests from the Department for copies of the latest SPD 
and other documents described in section 104(b)(4) of ERISA that a 
participant or beneficiary has requested, in writing, from the plan 
administrator and which the administrator has failed or refused to 
furnish in a timely fashion. The individual cost of each such request 
is estimated to be minimal because only a participant or beneficiary 
may make a

[[Page 783]]

request and each administrator of an employee pension or welfare 
benefit plan covered under Title I of ERISA already is required by 
section 101(a)(1) to furnish an 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, other documents under which the plan is 
established or operated and that may be requested must 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.
    The regulation is expected to benefit plan participants and 
beneficiaries who may have been unable to obtain a current SPD or other 
document described in ERISA section 104(b)(4), and who might otherwise 
not have an effective 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

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520) (PRA '95), the Department submitted the information 
collection request (ICR) included in this regulation to the Office of 
Management and Budget (OMB) for review and clearance at the time the 
Notice of Proposed Rulemaking (NPRM) was published in the Federal 
Register (August 5, 1999, 64 FR 42797). OMB approved the ICR under OMB 
control number 1210-0112. The approval will expire on October 31, 2002. 
The public is not required to respond to an information collection 
request unless it displays a currently valid OMB control number.
    The estimated burden cost has been adjusted in response to a 
revision in the terms of the proposal. In this final rule, the 
Department has adopted a commenter's suggestion that documents 
delivered by certified mail be considered received on the date the 
document is mailed instead of the date the document is actually 
received. Although the use of certified mail is not required, both the 
comment and the provisions of this final rule suggest that plan 
administrators do find it reasonable from time to time to use certified 
mail for important communications. To account for this in burden 
estimates, the mailing cost assumption has been increased to $4 per 
request from the $1 used for the proposal's estimate.
    Agency: Pension and Welfare Benefits Administration, Department of 
Labor.
    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: 1210-0112.
    Affected Public: Individuals or households, Business or other for-
profit institutions; 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): $4,000.

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. Unless an agency certifies that a rule will not have a 
significant economic impact on a substantial number of small entities, 
section 604 of the RFA requires that the agency present a final 
regulatory flexibility analysis at the time of the publication of the 
notice of final rulemaking describing the impact of the rule on small 
entities. Small entities include small businesses, organizations, and 
governmental jurisdictions.
    For purposes of analysis under the RFA, PWBA continues 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 
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 solicited comments on the use of this 
standard for evaluating the effects of the proposal on small entities. 
No comments were received with respect to the standard. Therefore, a 
summary of the final regulatory flexibility analysis based on the 100 
participant size standard is presented below. This final regulation is 
not expected to have a significant impact on small plans.
    This regulation applies to all small employee benefit plans covered 
by Title I of ERISA. Employee benefit plans with fewer than 100 
participants include 655,000 pension plans, 2.6 million health plans, 
and 3.4 million non-health welfare plans (mainly life and disability 
insurance plans). Nonetheless, the Department estimates few of these 
small plans will be affected by the regulation because plans will 
receive relatively few requests for SPDs and other documents described 
under section 104(b)(4) that a participant or beneficiary has 
requested, in writing, from the plan administrator and which the 
administrator has failed or refused to furnish in a timely fashion. The 
Department estimates about 1,000 requests for assistance by 
participants and beneficiaries in obtaining SPDs and other such 
documents per year, 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. The percentage of these 
requests that pertain to small plans is unknown. However, even if it is 
assumed that all plans that 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 Department also believes that the time required to respond to a 
request under the regulation for an SPD or other document under which a 
plan was established or operated will be minimal. Responding to a 
request primarily requires clerical skills, although a professional may 
read the request and

[[Page 784]]

direct others to respond. The documents to be mailed in response to the 
request are expected to be readily available, so accumulating and 
mailing the documents is expected to take about 5 minutes. If it is 
assumed that a cost is incurred for this time at a rate of $20 per hour 
and that the maximum mailing cost per request is $4, the total cost per 
request is estimated at less than $6. This total cost is not expected 
to constitute a significant impact for any plan. For the purposes of 
this final RFA analysis, PWBA has increased the assumed labor rate from 
$11 to $20 to account for inflation, and the estimated mailing cost 
from $1 to $4, to account for the fact that some plans may make use of 
certified mail in responding to requests from the Department.
    Further, the regulation is intended to assist small plan 
administrators by providing sufficient information for them to 
understand the request and the process they may use to offer a 
reasonable cause for failure to comply if they are unable to do so 
within the initial deadline, by ensuring that they receive notice 
before the assessment of a penalty is initiated.

Small Business Regulatory Enforcement Fairness Act

    The rule is subject to the provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and 
has been 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 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.

Federalism Statement

    Executive Order 13132 (August 4, 1999) outlines fundamental 
principles of federalism and requires the adherence to specific 
criteria by Federal agencies in the process of their formulation and 
implementation of policies that have substantial direct effects on the 
States, the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This final rule does not have federalism 
implications because it has no substantial direct effect on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. Section 514 of ERISA provides, with certain 
exceptions specifically enumerated, that the provisions of Titles I and 
IV of ERISA supersede any and all laws of the States as they relate to 
any employee benefit plan covered under ERISA. This final rule 
implements the requirement that administrators of an employee benefit 
plan furnish the Department, on request, the latest SPD and any other 
documents described under section 104(b)(4) that a participant or 
beneficiary has requested, in writing, from the plan administrator and 
which the administrator has failed or refused to furnish in a timely 
fashion. The final rule also establishes procedures relating to the 
assessments of civil penalties for failure to furnish such requested 
SPDs and documents and procedures for review of such penalties by the 
Department. The requirements implemented in this final rule do not 
alter the fundamental reporting and disclosure requirements or penalty 
provisions of the statute with respect to employee benefit plans, and 
as such have no implications for the States or the relationship or 
distribution of power between the national government and the States.

Statutory Authority

    These final regulations set forth herein are issued 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, 
Pension plans, and Reporting and recordkeeping requirements.

29 CFR Part 2560

    Claims, Employee benefit plans, Law enforcement, Pensions.

29 CFR Part 2570

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

    In view of the foregoing, Parts 2520, 2560, and 2570 of Chapter XXV 
of title 29 of the Code of Federal Regulations are amended 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. Add 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 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).

[[Page 785]]

    (b) For purposes of this section, a participant or beneficiary will 
include any individual who is:
    (1) A participant or beneficiary within the meaning of ERISA 
sections 3(7) and 3(8), respectively;
    (2) An alternate payee under a qualified domestic relations order 
(see ERISA section 206(d)(3)(K)) or prospective alternate payee 
(spouses, former spouses, children or other dependents);
    (3) A qualified beneficiary under COBRA (see ERISA section 607(3)) 
or prospective qualified beneficiary (spouse or dependent child);
    (4) An alternate recipient under a qualified medical child support 
order (see ERISA section 609(a)(2)(C)) or a prospective alternate 
recipient; or
    (5) A representative of any of the foregoing.
    (c) Service of request. Requests under this section shall be served 
in accordance with Sec. 2560.502c-6(i).
    (d) Furnishing documents. A document shall be deemed to be 
furnished to the Secretary on the date the document is received by the 
Department of Labor at the address specified in the request; or, if a 
document is delivered by certified mail, the date on which the document 
is mailed to the Department of Labor at the address specified in the 
request.

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

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

    Authority: Secs. 502, 505 of ERISA, 29 U.S.C. 1132, 1135, and 
Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).
    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.


    4. Add Sec. 2560.502c-6 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 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 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) of the Act, 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 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) Waiver of assessed penalty. The Department may waive all or 
part of the penalty to be assessed under section 502(c)(6) of the Act 
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) 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.
    (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 (b) 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) 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 hearing. A notice issued pursuant to paragraph 
(g) of this section will become the final order of the Department of 
Labor, unless, within 30 days from the date of the service of the 
notice, the administrator or representative thereof files a request for 
a hearing under Sec. 2570.110 through 2570.121 of this chapter, and 
files an answer to the notice. The request for hearing and answer shall 
be filed in accordance with Sec. 2570.112 of this chapter. 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 notice. (1) Service of notice under this section 
shall be made by:
    (i) Delivering a copy to the administrator or representative 
thereof;

[[Page 786]]

    (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) 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.

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

    5. Revise the authority citation for Part 2570 to read as set forth 
below:

    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. Add new Subpart F to part 2570 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 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 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 means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to Sec. 2560.502c-6(g) of this chapter;
    (d) Commencement of proceeding is the filing of an answer by the 
respondent;
    (e) Consent agreement means any written document containing a 
specified proposed remedy or other relief acceptable to the Department 
and consenting parties;
    (f) ERISA means the Employee Retirement Income Security Act of 
1974, as amended;
    (g) Final order means the final decision or action of the 
Department of Labor concerning the assessment of a civil penalty under 
ERISA section 502(c)(6) against a particular party. Such final order 
may result from a decision of an administrative law judge or the 
Secretary, the failure of a party to file a statement of matters 
reasonably beyond the control of the plan administrator described in 
Sec. 2560.502c-6(e) of this chapter within the prescribed time limits, 
or the failure of a party to invoke the procedures for hearings or 
appeals under this title within the prescribed time limits. Such a 
final order shall constitute final agency action within the meaning of 
5 U.S.C. 704;
    (h) Hearing means that part of a proceeding which involves the 
submission of evidence, either by oral presentation or written 
submission, to the administrative law judge;
    (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

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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 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, 
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.


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

[[Page 788]]

consent findings and an order is submitted within the time allowed 
therefor, the administrative law judge shall issue a decision 
incorporating such findings and agreement within 30 days of his receipt 
of such document. The decision of the administrative law judge shall 
incorporate all of the findings, terms, and conditions of the 
settlement agreement and consent order of the parties. Such decision 
shall become final agency action within the meaning of 5 U.S.C. 704.
    (e) Settlement without consent of all parties. In cases in which 
some, but not all, of the parties to a proceeding submit a consent 
agreement to the administrative law judge, the following procedure 
shall apply:
    (1) If all of the parties have not consented to the proposed 
settlement submitted to the administrative law judge, then such non-
consenting parties must receive notice, and a copy, of the proposed 
settlement at the time it is submitted to the administrative law judge;
    (2) Any non-consenting party shall have fifteen (15) days to file 
any objections to the proposed settlement with the administrative law 
judge and all other parties;
    (3) If any party submits an objection to the proposed settlement, 
the administrative law judge shall decide within 30 days after receipt 
of such objections whether he shall sign or reject the proposed 
settlement. Where the record lacks substantial evidence upon which to 
base a decision or there is a genuine issue of material fact, then the 
administrative law judge may establish procedures for the purpose of 
receiving additional evidence upon which a decision on the contested 
issues may reasonably be based;
    (4) If there are no objections to the proposed settlement, or if 
the administrative law judge decides to sign the proposed settlement 
after reviewing any such objections, the administrative law judge shall 
incorporate the consent agreement into a decision meeting the 
requirements of paragraph (d) of this section.


Sec. 2570.116  Scope of discovery.

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


Sec. 2570.117  Summary decision.

    For 502(c)(6) civil penalty proceedings, this section shall apply 
in lieu of Sec. 18.41 of this title.
    (a) No genuine issue of material fact. (1) Where no issue of a 
material fact is found to have been raised, the administrative law 
judge may issue a decision which, in the absence of an appeal pursuant 
to Secs. 2570.119 through 2570.121 of this subpart, shall become a 
final order.
    (2) A decision made under this paragraph (a) shall include a 
statement of:
    (i) Findings of fact and conclusions of law, and the reasons 
therefor, on all issues presented; and
    (ii) Any terms and conditions of the rule or order.
    (3) A copy of any decision under this paragraph shall be served on 
each party.
    (b) Hearings on issues of fact. Where a genuine question of a 
material fact is raised, the administrative law judge shall, and in any 
other case may, set the case for an evidentiary hearing.


Sec. 2570.118  Decision of the administrative law judge.

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


Sec. 2570.119  Review by the Secretary.

    (a) The Secretary may review a decision of an administrative law 
judge. Such a review may occur only when a party files a notice of 
appeal from a decision of an administrative law judge within twenty 
(20) days of the issuance of such decision. In all other cases, the 
decision of the administrative law judge shall become final agency 
action within the meaning of 5 U.S.C. 704.
    (b) A notice of appeal to the Secretary shall state with 
specificity the 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

[[Page 789]]

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.

    Signed at Washington, DC, this 22nd day of December, 2001.
Ann L. Combs,
Assistant Secretary, Pension and Welfare Benefits Administration, U.S. 
Department of Labor.
[FR Doc. 02-141 Filed 1-4-02; 8:45 am]
BILLING CODE 4510-29-P