[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Rules and Regulations]
[Pages 41678-41680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17013]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2550

RIN 1210-AB54


Amendment Relating to Reasonable Contract or Arrangement Under 
Section 408(b)(2)--Fee Disclosure/Web Page

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Direct final rule.

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SUMMARY: This document revises the mailing address and web-based 
submission procedures for filing certain notices under the Department 
of Labor (Department) Employee Benefits Security Administration's 
fiduciary-level fee disclosure regulation under section 408(b)(2) of 
the Employee Retirement Income Security Act of 1974 (ERISA). 
Responsible plan fiduciaries of employee pension benefit plans must 
file these notices with the Department to obtain relief from ERISA's 
prohibited transaction provisions that otherwise may apply when a 
covered service provider to the plan fails to disclose information in 
accordance with the regulation's requirements.

DATES: This amendment to the 408(b)(2) regulation is effective 
September 14, 2012, without further action or notice, unless 
significant adverse comment is received by August 15, 2012. If 
significant adverse comment is received, the Department will publish a 
timely withdrawal of this amendment in the Federal Register.

ADDRESSES: Written comments may be submitted to the addresses specified 
below. All comments will be made available to the public. Warning: Do 
not include any personally identifiable information (such as name, 
address, or other contact information) or confidential business 
information that you do not want publicly disclosed. All comments may 
be posted on the Internet and can be retrieved by most Internet search 
engines. Comments may be submitted anonymously.
    Comments, identified by RIN 1210-AB54, may be submitted by one of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected].
     Mail or Hand Delivery: Office of Regulations and 
Interpretations, Employee Benefits Security Administration, Room N-
5655, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210, Attention: RIN 1210-AB54; Class Exemption 
Notice--Web Submission.
    Comments received by the Department of Labor may be posted without 
change to http://www.regulations.gov and http://www.dol.gov/ebsa, and 
will be made available for public inspection at the Public Disclosure 
Room, N-1513, Employee Benefits Security Administration, 200 
Constitution Avenue NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Allison Wielobob, Office of 
Regulations and Interpretations, Employee Benefits Security 
Administration, (202) 693-8500. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

    On February 3, 2012, the Department published a final regulation 
under ERISA section 408(b)(2) (the ``408(b)(2) regulation''), requiring 
that certain service providers to pension plans disclose information 
about the service providers' compensation and potential conflicts of 
interest.\1\ These disclosure requirements were established to provide 
guidance for compliance with a statutory exemption from ERISA's 
prohibited transaction provisions. If the disclosure requirements of 
the 408(b)(2) regulation are not satisfied, a prohibited provision of 
services under ERISA section 406(a)(1)(C) will occur, with consequences 
for both the responsible plan fiduciary and the covered service 
provider. However, paragraph (c)(1)(ix) of the final regulation exempts 
a responsible plan fiduciary from the prohibited transaction 
restrictions, if the fiduciary takes certain specified steps upon 
discovery of a disclosure failure. Among other steps, the responsible 
plan fiduciary must make a written request to the covered service 
provider for the undisclosed information. If the covered service 
provider does not comply with this request within 90 days, the 
responsible plan fiduciary must so notify the Department.
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    \1\ 77 FR 5632 (Feb. 3, 2012).
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    The final 408(b)(2) regulation, in paragraph (c)(1)(ix)(F), 
provides two alternative methods for submitting such notices to the 
Department. Responsible plan fiduciaries may send notices to the 
following address: U.S. Department of Labor, Employee Benefits Security 
Administration, Office of Enforcement, 200 Constitution Ave. NW., Suite 
600, Washington, DC 20210. Alternatively, notices may be sent 
electronically to [email protected]. The direct final rule 
published today, and described below, amends these submission 
procedures to reflect a new mailing address and to provide for 
electronic submission through the Department's Web site.

B. Overview of Amendment to 408(b)(2) Regulation

    The direct final rule being published today as part of this notice 
amends 29 CFR 2550.408b-2(c)(1)(ix)(F) to revise the mailing address 
and enhance the web-based submission procedure for responsible plan 
fiduciaries to file required notices under the regulation's fiduciary 
class exemption provision. Fiduciaries may continue to send paper 
notices to the Department; however, a dedicated post office box has 
been established to replace the original mailing address. The new 
mailing address is: U.S. Department of Labor, Employee Benefits 
Security Administration, Office of Enforcement, P.O. Box 75296, 
Washington, DC 20013. Further, effective September 14, 2012, the 
Department is eliminating the previously available email address ([email protected]). Instead, pursuant to instructions that 
will be separately provided by the Department, responsible plan 
fiduciaries who wish to submit notices electronically will be able to 
do so through a dedicated link on the Department's Web site, at 
www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html. This Web page 
will include clear instructions for how to submit the required 
notification and will provide immediate confirmation to responsible 
plan fiduciaries that the notice has been received by the Department.
    The Department believes that the new web submission procedure will 
benefit both responsible plan fiduciaries and the Department and, 
therefore, does not anticipate any significant adverse comment on this 
amendment. The submission process will be easier for responsible plan 
fiduciaries, because the Web page will include clear instructions and 
will assist responsible plan fiduciaries by ensuring that they include 
all of the information required by the regulation's notice provision. 
Plan fiduciaries, especially for small plans, will be more easily able 
to take advantage of the relief provided by the 408(b)(2) regulation's 
class exemption

[[Page 41679]]

provision. Further, unlike submissions by email or paper mail, the web-
based submission procedure will include immediate, electronic 
confirmation for responsible plan fiduciaries that their notice has 
been received. The online submission procedure also will benefit the 
Department by enabling its staff to more efficiently receive, process, 
and review class exemption notices under the 408(b)(2) regulation, 
which in turn will benefit responsible plan fiduciaries who wish to 
avail themselves of relief provided by the regulation's class 
exemption. The Department expects that responsible plan fiduciary 
errors will be fewer, due to the web-based procedures that will include 
clear instructions and better ensure that complete information is 
submitted, and that transcription and other errors by the Department 
will be fewer, due to the automated procedures that will occur when 
submissions are received electronically.

C. Good Cause Finding That Proposed Rulemaking Unnecessary

    Rulemaking under section 553 of the Administrative Procedure Act (5 
U.S.C. 551 et seq.) (APA) ordinarily involves publication of a notice 
of proposed rulemaking in the Federal Register and the public is given 
an opportunity to comment on the proposed rule. However, an agency may 
issue a rule without prior notice and comment procedures if it 
determines for good cause that public notice and comment procedures are 
impracticable, unnecessary, or contrary to the public interest for such 
rule, and incorporates a statement of the finding with the underlying 
reasons in the final rule issued. For the reasons mentioned in section 
B of this preamble, the Department finds that publishing a proposed 
rule and seeking public comment is unnecessary.
    Notwithstanding the foregoing, in the ``Proposed Rules'' section of 
today's Federal Register, the Department is publishing a separate 
document that will serve as a notice of proposal to amend part 2550 as 
described in this direct final rule. If the Department receives 
significant adverse comment during the comment period, it will publish, 
in a timely manner, a document in the Federal Register withdrawing this 
direct final rule. The Department will then address public comments in 
a subsequent final rule based on the proposed rule. The Department will 
not institute a second comment period on this rule. Any parties 
interested in commenting must do so during this comment period.

D. Regulatory Impact Analysis

1. Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    Section 3(f) of Executive Order 12866 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. Pursuant to the terms 
of the Executive Order, OMB has been determined that this action is not 
``significant'' within the meaning of section 3(f)(4) of the Executive 
Order and therefore is not subject to review by OMB.

2. Regulatory Flexibility Analysis

    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 APA (5 
U.S.C. 551 et seq.) and that are likely to have a significant economic 
impact on a substantial number of small entities. Under Section 553(b) 
of the APA, a general notice of proposed rulemaking is not required 
when an agency, for good cause, finds that notice and public comment 
thereon are impracticable, unnecessary, or contrary to the public 
interest. This direct final regulation is exempt from the APA's notice 
and comment requirements because the Department made a good cause 
finding earlier in this preamble that a general notice of proposed 
rulemaking is not necessary. Therefore, the RFA does not apply and the 
Department is not required to either certify that this regulation would 
not have a significant economic impact on a substantial number of small 
entities or conduct a regulatory flexibility analysis.
    Nevertheless, the Department carefully considered the likely impact 
of the rule on small entities. The direct final rule will enhance the 
web-based submission procedure for responsible plan fiduciaries, 
especially for small plans, to file required notices under the 
regulation's fiduciary class exemption provision. The Web page will 
include clear instructions and ensure that responsible plan fiduciaries 
include all of the required information and provide an immediate 
electronic confirmation that their notice has been received. No 
additional burden is imposed on such fiduciaries, because, as discussed 
earlier in this preamble, the direct final rule allows them to continue 
to send notices to a dedicated post office box that the Department has 
established to replace the original mailing address provided in the 
final rule. Based on the foregoing, the Department hereby certifies 
that the proposed rule is not likely to have a significant economic 
impact on a substantial number of small entities.

3. Paperwork Reduction Act

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA) (44 U.S.C. 3506(c)(2)), the Department submitted an 
information collection request (ICR) to OMB in accordance with 44 
U.S.C. 3507(d) for the final regulation that was published on February 
3, 2012. OMB approved the ICR on March 29, 2012, under control number 
1210-0133, which is currently schedule to expire on March 31, 2015. A 
copy of the ICR may be obtained by contacting the PRA addressee shown 
below.
    PRA Addressee: G. Christopher Cosby, Office of Policy and Research, 
U.S. Department of Labor, Employee Benefits Security Administration, 
200 Constitution Avenue NW., Room N 5647, Washington, DC 20210. 
Telephone (202) 219-8410; Fax: (202) 219-4745. These are not toll free 
numbers.
    OMB has determined that the direct final rule does not implement 
any substantive or material change to the information collection; 
therefore, no change is made to the ICR and no further review is 
requested of OMB at this time.

4. Congressional Review Act

    This direct final rule is subject to the Congressional Review Act 
provisions of

[[Page 41680]]

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.

5. Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, the direct final rule does 
not include any Federal mandate that may result in expenditures by 
State, local, or tribal governments in the aggregate of more than $100 
million, adjusted for inflation, or increase expenditures by the 
private sector of more than $100 million, adjusted for inflation.

6. 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 States, or 
on the distribution of power and responsibilities among the various 
levels of government. The direct 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. The requirements 
implemented in the direct final rule do not alter the fundamental 
reporting and disclosure requirements 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.

List of Subjects in 29 CFR Part 2550

    Employee benefit plans, Exemptions, Fiduciaries, Investments, 
Pensions, Prohibited transactions, Reporting and recordkeeping 
requirements, and Securities.

    For the reasons set forth in the preamble, the Department amends 
chapter XXV, subchapter F, part 2550 of title 29 of the Code of Federal 
Regulations as follows:

SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974

PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY

0
1. The authority citation for part 2550 continues to read as follows:

    Authority: 29 U.S.C. 1135 and Secretary of Labor's Order No. 6-
2009, 74 FR Sec.  21524 (May 7, 2009). Sec. 2550.401c-1 also issued 
under 29 U.S.C. 1101. Sec. 2550.404a-1 also issued under sec. 657, 
Pub. L. 107-16, 115 Stat. 38. Sections 2550.404c-1 and 2550.404c-5 
also issued under 29 U.S.C. 1104. Sec. 2550.408b-1 also issued under 
29 U.S.C. 1108(b)(1) and sec. 102, Reorganization Plan No. 4 of 
1978, 5 U.S.C. App. 1. Sec. 2550.408b-19 also issued under sec. 611, 
Pub. L. 109-280, 120 Stat. 780, 972, and sec. 102, Reorganization 
Plan No. 4 of 1978, 5 U.S.C. App. 1. Sec. 2550.412-1 also issued 
under 29 U.S.C. 1112.


0
2. Section 2550.408b-2 is amended by revising paragraph (c)(1)(ix)(F) 
to read as follows:


Sec.  2550.408b-2  General statutory exemption for services or office 
space.

* * * * *
    (c) * * *
    (1) * * *
    (ix) * * *
    (F) The notice required by paragraph (c)(1)(ix)(C) of this section 
shall be furnished to the U.S. Department of Labor electronically in 
accordance with instructions published by the Department; or may be 
sent to the following address: U.S. Department of Labor, Employee 
Benefits Security Administration, Office of Enforcement, P.O. Box 
75296, Washington, DC 20013; and
* * * * *

    Signed at Washington, DC, this 2nd day of July 2012.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2012-17013 Filed 7-13-12; 8:45 am]
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