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)

DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Parts 2520, 2560 and 2570

RIN 1210-AA67 and RIN 1210-AA68

Furnishing Documents to the Secretary of Labor on Request Under

ERISA Section 104(a)(6) and Assessment of Civil Penalties Under ERISA

Section 502(c)(6)

AGENCY: Pension and Welfare Benefits Administration, Department of

Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains a proposed rulemaking under the

Employee Retirement Income Security Act of 1974 (ERISA) that would

implement certain amendments to ERISA added as part of the Taxpayer

Relief Act of 1997. Specifically, the proposed rule would implement the

requirement that the administrator of any employee benefit plan subject

to Part 1 of Title I of ERISA furnish to the Department, on request,

any documents relating to the employee benefit plan. The proposed rule

also would establish procedures relating to the assessment of civil

penalties for failures or refusals by administrators to furnish

requested documents and procedures relating to administrative hearings

in connection with the assessment of such civil penalties.

DATES: Written comments concerning the proposed regulation must be

received by October 4, 1999.

ADDRESSES: Written comments (preferably three copies) should be sent to

the Office of Regulations and Interpretations, Pension and Welfare

Benefits Administration, U.S. Department of Labor, Rm. N-5669, 200

Constitution Avenue, NW, Washington DC, 20210, Attention: ``ERISA

502(c)(6) Project.'' All submissions will be available for public

inspection in the Public Documents Room of the Pension and Welfare

Benefits Administration, U.S. Department of Labor, Room N-5638, 200

Constitution Ave, NW, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Jeffrey J. Turner, Office of

Regulations and Interpretations, Pension and Welfare Benefits

Administration, (202) 219-8671, or Paul D. Mannina, Plan Benefits

Security Division, Office of the Solicitor, (202) 219-9141 (not toll-

free numbers).

SUPPLEMENTARY INFORMATION:

Part I--Background

The Taxpayer Relief Act of 1997 (TRA '97) eliminated the

requirement under ERISA that employee benefit plan administrators file

with the Department copies of the summary plan descriptions (SPDs) and

summaries of material plan modifications (SMMs) that are required to be

furnished to plan participants and beneficiaries. TRA '97 added

paragraph (6) to section 104(a) of ERISA which provides that the

administrator of any employee benefit plan subject to Part 1 of Title I

of ERISA is required to furnish to the Department, on request, any

documents relating to the employee benefit plan, including but not

limited

[[Page 42798]]

to, the latest SPD (including any summaries of plan changes not

contained in the SPD), and the bargaining agreement, trust agreement,

contract, or other instrument under which the plan is established or

operated.1 TRA '97 also added section 502(c)(6) of ERISA

which provides that if, within 30 days of a request by the Department

to a plan administrator for documents under section 104(a)(6), the plan

administrator fails to furnish the material requested to the

Department, the Department may assess a civil penalty against the plan

administrator of up to $100 a day from the date of such failure (but in

no event in excess of $1,000 per request). Section 502(c)(6) of ERISA

also provides that no penalty shall be imposed under that paragraph for

any failure resulting from matters reasonably beyond the control of the

plan administrator.

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\1\ Prior to TRA '97, this authority was in section 104(a)(1) of

ERISA, which stated that ``the administrator shall also furnish to

the Secretary, upon request, any documents relating to the employee

benefit plan, including but not limited to the bargaining agreement,

trust agreement, contract, or other instrument under which the plan

is established or operated.''

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Prior to these TRA '97 amendments, Congress provided in ERISA for

the filing of SPDs and SMMs with the Department in order to ensure that

participants and beneficiaries would have a means by which to obtain a

copy of these documents without having to request them from the plan or

plan sponsor. The elimination of the SPD/SMM filing requirement taken

together with the amendments establishing ERISA section 104(a)(6) and

the civil penalty provision in section 502(c)(6) clearly evidence

Congress' intent that the Department would exercise its authority under

ERISA section 104(a)(6) to obtain a copy of a plan's SPD in response to

requests from participants or beneficiaries. Consistent with that

intent, the Department will request copies of SPDs from plan

administrators on behalf of a requesting participant or beneficiary.

The Department generally will not request SPDs on behalf of persons

other than participants and beneficiaries of the plan for which the SPD

is requested. For this purpose, the Department will treat as a

participant or beneficiary any individual who is: a participant or

beneficiary within the meaning of ERISA sections 3(7) and 3(8),

respectively; an alternate payee under a qualified domestic relations

order (see ERISA section 206(d)(3)(K)) or prospective alternate payee

(spouses, former spouses, children or other dependents), a qualified

beneficiary under COBRA (see ERISA section 607(3)) or prospective

qualified beneficiary (spouse or dependent child); an alternate

recipient under a qualified medical child support order (see ERISA

section 609(a)(2)(C)) or a prospective alternate recipient; or a

representative of any of the foregoing.

The proposed rules described below are intended to implement the

substantive requirements in section 104(a)(6) of ERISA as well as the

related penalty provisions in section 502(c)(6) of ERISA. They would,

if promulgated as a final rules, become effective 60 days after

publication as final rules in the Federal Register.

Part II--Furnishing Documents to the Department on Request Under

Section 104(a)(6)

Proposed Sec. 2520.104a-8 implements the requirements of section

104(a)(6) of ERISA. Paragraph (a)(1) provides that the administrator

(within the meaning of section 3(16)(A) of ERISA) of any employee

benefit plan has an obligation to furnish to the Department, upon

request, any documents relating to the plan. Paragraph (a)(2) clarifies

that multiple requests under section 104(a)(6) and Sec. 2520.104a-8(a)

for the same or similar document or documents shall be considered

separate requests for purposes of penalties under section 502(c)(6) and

Sec. 2560.502c-6(a). For example, if the Department were to receive a

series of requests from several participants for a particular plan's

SPD, the Department could make separate requests for that document on

behalf of each participant to ensure that the participants each receive

the latest updated version of the SPD. A failure by the plan

administrator to comply with any such requests may result in the

assessment of penalties with respect to each such failure. Paragraph

(b) adopts the service of notice rules in proposed Sec. 2560.502c-6(i)

(which adopts the service of notice rules already in effect under

Sec. 2560.502c-2(i)) for purposes of serving the plan administrator

with a request under section 104(a)(6). Paragraph (c) provides that a

document is not considered furnished to the Department until the date

on which such document is received by the Department of Labor at the

address specified in the request.

Part III--Authority to Assess Civil Penalties for Violations of

Section 104(a)(6) of ERISA

In general, proposed regulation Sec. 2560.502c-6 addresses the:

circumstances under which a penalty may be assessed for a failure or

refusal to provide documents requested under section 104(a)(6) of ERISA

(Sec. 2560.502c-6(a)); amount of the penalty (Sec. 2560.502c-6(b));

notice required to be given to the plan administrator of the

Department's intent to assess a penalty (Sec. 2560.502c-6(c)); the

Department's authority to waive the penalty (Sec. 2560.502c-6(d)) upon

a showing that the failure or refusal was the result of matters

reasonably beyond the control of the plan administrator

(Sec. 2560.502c-6(e)); effect of a failure to file a statement under

Sec. 2560.502c-6(e) alleging matters reasonably beyond the

administrator's control (Sec. 2560.502c-6(f)); notice required to be

given to the administrator which sets forth the Department's findings

as to the statement of matters reasonably beyond the control of the

plan administrator (Sec. 2560.503c-6(g)); right to hearings before an

administrative law judge (Sec. 2560.502c-6(h)); service of notices

(Sec. 2560.502c-6(i)); and the liability of the administrator or

administrators for assessed penalties (Sec. 2560.502c-6(j)).

a. General Rule. Proposed Sec. 2560.502c-6(a) addresses the general

application of section 502(c)(6) of ERISA. Paragraph (a)(1) provides

that the administrator, as defined in ERISA section 3(16)(A), of an

employee benefit plan is liable for the civil penalties assessed under

section 502(c)(6) in each case in which there is a failure or refusal

to furnish to the Department any document requested under section

104(a)(6) of ERISA and Sec. 2520.104a-8. Paragraph (a)(2) defines such

a failure or refusal as a failure or refusal, in whole or in part, to

furnish documents at the time and in the manner prescribed in the

request.

b. Amount Assessed. Proposed Sec. 2560.502c-6(b) sets forth the

amount of penalties that may be assessed under section 502(c)(6) of

ERISA. Consistent with the terms of section 502(c)(6) of ERISA,

paragraph (b)(1) provides that the Department may assess a penalty of

up to $100 per day, but not in excess of $1,000 per request.

c. Notice of Intent to Assess a Penalty. Proposed Sec. 2560.502c-

6(c) provides that, prior to the assessment of any penalty under

section 502(c)(6) of ERISA, the Department shall provide the

administrator with written notice indicating the Department's intent to

assess a penalty, the amount of the penalty, the period to which the

penalty applies, and the reason(s) for the penalty. The notice would be

served in accordance with Sec. 2560.502c-6(i) of this proposed

regulation (service of notice provision). Under Sec. 2560.502c-6(f) of

this proposed regulation, the notice would become a final order of the

Department, within the meaning of proposed regulation Sec. 2570.111(g)

(also

[[Page 42799]]

published as part of this rulemaking), within 30 days of the service of

the notice, unless a statement described in Sec. 2560.502c-6(e) is

filed with the Department.

d. Waiver of Penalty. Paragraphs (d), (e), (f), (g), and (h) of

this proposal generally relate to the waiver of penalties under section

502(c)(6) of ERISA. Paragraph (d) provides that the Department may

waive all or part of the penalty to be assessed under section 502(c)(6)

upon a showing by the administrator, under paragraph (e), that the

failure or refusal to comply with a request under section 104(a)(6) and

Sec. 2520.104a-8 was due to matters reasonably beyond the control of

the plan administrator. Under paragraph (e), the administrator has 30

days from receipt of the notice required under Sec. 2560.502c-6(c)

within which to make such a showing or offer other reasons why the

penalty, as calculated, should not be assessed.2

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\2\ In the event that another fiduciary of the plan has custody

of a document requested under section 104(a)(6) and Sec. 2520.104a-

8, or if the administrator of a plan engages a third party to

perform services for the plan and pursuant to the engagement the

third party has custody of documents related to the plan, the

administrator's lack of custody would not be considered by the

Department to be a matter reasonably beyond the administrator's

control.

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Paragraph (f) provides that a failure to file a timely statement

under (e) will constitute a waiver of the right to appear and contest

the facts alleged in the notice (Sec. 2560.502c-(6)(c)) for purposes of

any adjudicatory proceeding involving the assessment of a penalty under

section 502(c)(6) of ERISA.

Paragraph (g)(1) provides that, following a review of the facts

alleged in the statement under (e), the Department shall notify the

administrator of its intention to waive the penalty, in whole or in

part, and/or assess a penalty. If it is the intention of the Department

to assess a penalty, the notice shall indicate the amount of the

penalty. Under paragraph (g)(2), this notice becomes a final order 30

days after the date of service of the notice, except as provided in

paragraph (h). Paragraph (h) provides in general that the notice

described in paragraph (g) shall not become a final order if, within 30

days of the date of service of that notice, the administrator initiates

an adjudicatory proceeding under part 18 of Title 29, as modified by

proposed regulations Secs. 2570.110 through 2570.121 (also published as

part of this rulemaking). Specifically, the administrator would be

required to file, within 30 days of the date of service of the notice

under (g), an answer, as defined in proposed Sec. 2570.111(c), in

accordance with proposed Sec. 2570.112.

e. Service of Notices. Proposed Sec. 2560.502c-6(i) describes the

rules on service of the (1) Department's notice of intent to assess a

penalty (Sec. 2560.502c-6(c)), and (2) Department's notice of

determination on the statement of matters reasonably beyond the control

of the plan administrator (Sec. 2560.502c-6(g)).3 Paragraph

(i) provides that service shall be made in one of three ways: (1) By

delivering a copy at the principal office, place of business, or

residence of the administrator or representative thereof, (2) by

leaving a copy at the principal office, place of business, or residence

of the administrator or representative thereof, or (3) by mailing a

copy to the last known address of the administrator or representative

thereof.

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\3\ As noted above, under proposed Sec. 2520.104a-8(b) these

service rules would also apply to the Department's initial request

for documents under section 104(a)(6) and Sec. 2520.104a-8.

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f. Liability. Proposed Sec. 2560.502c-6(j) is intended to clarify

the liability of the parties for penalties assessed under section

502(c)(6) of ERISA. Paragraph (1) provides that, if more than one

person is responsible as administrator for the failure to furnish

document(s) requested by the Department, all such persons shall be

jointly and severally liable for such failure. Paragraph (2) provides

that any person against whom a penalty is assessed under section

502(c)(6) of ERISA is personally liable for the payment of such

penalty. Paragraph (2) is intended to make clear that liability for the

payment of penalties assessed under section 502(c)(6) of ERISA is a

personal liability of the person against whom the penalty is assessed

and not a liability of the plan. Accordingly, the payment of penalties

assessed under section 502(c)(6) of ERISA from assets of the plan would

not constitute a reasonable expense of the plan for purposes of ERISA

sections 403 and 404.

Part IV--Administrative Law Procedures for the Assessment of Civil

Penalties Under Section 502(c)(6) of ERISA

The proposed regulation contained in this Notice would establish

procedures for hearings before an Administrative Law Judge (ALJ) with

respect to an assessment by the Department of a civility penalty under

section 502(c)(6) and appealing an ALJ decision to the Secretary or her

delegate. In this regard, the Secretary has established the Pension and

Welfare Benefits Administration (PWBA) within the Department for

purposes of carrying out most of the Secretary's responsibilities under

ERISA. See Secretary's Order 1-87, 52 FR 13139 (April 27, 1987).

As noted above, the Department has already published rules of

practice and procedure for administrative hearings before the Office of

Administrative Law Judges at 29 CFR part 18 (48 FR 32538 (1983)). As

explained in 29 CFR 18.1, those provisions generally govern

administrative hearings before ALJs assigned to the Department and are

intended to provide maximum uniformity in the conduct of administrative

hearings. However, in the event of an inconsistency or conflict between

the provisions of 29 CFR part 18 and a rule or procedure required by

statute, executive order or regulation, the latter controls.

The Department has reviewed the applicability of the provisions of

29 CFR part 18 to the assessment of civil penalties under ERISA section

502(c)(6) and has decided to adopt many, though not all, of the

provisions thereunder for ERISA 502(c)(6) proceedings. Accordingly,

adjudications relating to civil penalties under ERISA section 502(c)(6)

will be governed by the following sections of 29 CFR part 18:

Sec.

18.4 Time Computations.

18.5 (c)-(e) Responsive Pleading; answer and request for hearing.

18.6 Motions and requests.

18.7 Pre-hearing statements.

18.8 Pre-hearing conferences.

18.11 Consolidation of hearings.

18.12 Amicus Curiae.

18.13 Discovery Methods.

18.15 Protective orders.

18.16 Supplementation of responses.

18.17 Stipulations regarding discovery.

18.18 Written interrogatories to parties.

18.19 Production of documents and other evidence.

18.20 Admissions.

18.21 Motion to compel discovery.

18.22 Depositions.

18.23 Use of depositions at hearings.

18.24 Subpoenas.

18.25 Designation of administrative law judge.

18.27 Notice of hearing.

18.28 Continuances.

18.29 Authority of administrative law judges.

18.30 Unavailability of administrative law judge.

18.31 Disqualification.

18.32 Separation of functions.

18.33 Expedition.

18.34 Representation.

18.35 Legal assistance.

18.36 Standards of conduct.

18.37 Hearing room conduct.

18.38 Ex parte communications.

18.39 Waiver of right to appear and failure to participate or to

appear.

18.40 Motion for summary decision.

[[Page 42800]]

18.43 Formal hearings.

18.44 Evidence.

18.45 Official notice.

18.46 In camera and protective orders.

18.47 Exhibits.

18.48 Records in other proceedings.

18.49 Designation of parts of documents.

18.50 Authenticity.

18.51 Stipulations.

18.52 Record of hearings.

18.53 Closing of hearings.

18.54 Closing of record.

18.55 Receipt of documents after hearing.

18.56 Restricted access.

18.59 Certification of official record.

The regulations proposed herein relate specifically to procedures

for assessing civil penalties under section 502(c)(6) of ERISA and are

controlling to the extent they are inconsistent with any portion of 29

CFR part 18. The proposed regulations are designed to maintain the

rules set forth at 29 CFR part 18 consistent with the need for an

expedited procedure, while recognizing the special characteristics of

proceedings under ERISA section 502(c)(6). For purposes of clarity,

where a particular section of the existing procedural rules would be

affected by the proposed rules the entire section (with appropriate

modifications) has been set out in this document. Thus, only a portion

of the provisions of the procedural regulations set forth below involve

changes from, or additions to, the rules in 29 CFR part 18. The

specific modifications to the rules in 29 CFR part 18, and their

relationship to the conduct of these proceedings generally, are

outlined below.

The general applicability of these procedural rules under section

502(c)(6) is set forth in Sec. 2570.110. Proposed Sec. 2560.502c-6,

also being published today in this Notice, sets forth the procedures

relating to the issuance by PWBA of notices of intent to assess a

penalty under ERISA section 502(c)(6) as well as procedures for agency

determination on statements of matters reasonably beyond the control of

plan administrators filed by persons against whom a penalty would be

assessed. Under the proposed procedural rules contained in this Notice,

an adjudicatory proceeding before an ALJ is commenced only when a

person against whom the Department intends to assess a penalty under

section 502(c)(6) files an ``answer'' to a notice of the agency

determination on a statement of matters reasonably beyond the control

of the plan administrator. See Sec. 2570.111(c) and (d) below, and

proposed regulation Sec. 2560.502c-6(h).

The definition section (Sec. 2570.111) incorporates the basic

adjudicatory principles set forth at 29 CFR part 18, but includes terms

and concepts of specific relevance to proceedings under ERISA section

502(c)(6). In this respect it differs from its more general counterpart

at Sec. 18.2 of Title 29 of the CFR. In particular, Sec. 2570.111

states that the term ``Secretary'' means the Secretary of Labor and

includes various individuals to whom the Secretary may delegate

authority. The Department contemplates that the duties assigned to the

Secretary under the procedural regulation will in fact be discharged by

the Assistant Secretary for Pension and Welfare Benefits.

In general, the burden to initiate adjudicatory proceedings before

an ALJ will be on the party (respondent) against whom the Department is

seeking to assess a civil penalty under ERISA section 502(c)(6).

However, a respondent must comply with the procedures relating to

agency review set forth in proposed regulation Sec. 2560.502c-6 before

initiating adjudicatory proceedings. In this regard, it should be noted

that both the notice of intent to assess a penalty, as described in

proposed regulation Sec. 2560.502c-6(c) and the notice of determination

on a statement of reasonable cause as described in proposed regulation

Sec. 2560.502c-6(g), will be issued by PWBA, the agency responsible for

administration and enforcement of section 502(c)(6) of ERISA, in

accordance with the service of notice provisions described in proposed

Sec. 2560.502c-6(i). Proposed regulation Sec. 2570.111(c) and (d),

together with proposed regulation Sec. 2560.502c-6(h), contemplate that

adjudicatory proceedings will be initiated with the filing of an answer

to a notice of the agency's determination on a statement of matters

reasonably beyond the control of the plan administrator.

The service of documents by the parties to an adjudicatory

proceeding, as well as by the ALJ, will be governed by proposed

regulation Sec. 2570.112.

A section on the consequences of default (Sec. 2570.114) has been

included in these proposed rules to indicate that if the respondent

fails to file an answer to the Department's notice of determination

(Sec. 2560.502c-6(g)) within the 30-day period provided by proposed

Sec. 2560.502c-6(h), such failure shall be deemed to constitute a

waiver of the right to appear and contest the facts alleged in the

notice and an admission of the facts alleged in the notice for purposes

of any proceeding involving the assessment of a civil penalty under

section 502(c)(6). Proposed regulation Sec. 2570.114 makes clear that

in the event of such failure, the assessment of penalty becomes final.

A section on consent orders or settlements (Sec. 2570.115) states

that the ALJ's decision shall include the terms and conditions of any

consent order or settlement which has been agreed to by the parties.

That section also provides that the decision of the ALJ which

incorporates such consent order shall become a final agency action

within the meaning of 5 U.S.C. 704.

The rules in 29 CFR part 18 concerning the computation of time,

pleadings, prehearing conferences and statements, and settlements are

adopted in these procedures for adjudications under ERISA section

502(c)(6). The section on the designation of parties (Sec. 2570.113)

differs from its counterpart under Sec. 18.10 of this title in that it

specifies that the respondent in these proceedings will, as indicated

above, be the party against whom the Department seeks to assess a civil

penalty under ERISA section 502(c)(6).

29 CFR 2570.116 states that discovery may be ordered by the ALJ

only upon a showing of good cause by the party seeking discovery. This

differs from the more liberal standard for discovery contained in 29

CFR 18.14. In cases in which discovery is ordered by the ALJ, the order

shall expressly limit the scope and terms of discovery to that for

which good cause has been shown. To the extent that the order of the

ALJ does not specify rules for the conduct of the discovery permitted

by such order, the rules governing the conduct of discovery from 29 CFR

part 18 are to be applied in any proceeding under section 502(c)(6) of

ERISA. For example, if the order of the ALJ states only that

interrogatories on certain subjects may be permitted, the rules under

29 CFR part 18 concerning the service and answering of such

interrogatories shall apply. The procedures under 29 CFR part 18 for

the submission of facts to the ALJ during the hearing are also to be

applied in proceedings under ERISA section 502(c)(6).

The section on summary decisions (Sec. 2570.117) provides for

requisite authorization for an ALJ to issue a summary decision which

may become final when there are no genuine issues of material fact in a

case arising under ERISA section 502(c)(6). The section concerning the

decision of the ALJ (Sec. 2570.118) differs from its counterpart at

Sec. 18.57 of this title in that it states that the decision of the ALJ

in an ERISA section 502(c)(6) case shall become the final decision of

the Secretary unless a timely appeal is filed.

The procedures for appeals of ALJ decisions under ERISA section

502(c)(6) of ERISA would be governed solely by the proposed rules set

forth in

[[Page 42801]]

Sec. Sec. 2570.119 through 2570.121, and without any reference to the

appellate procedures contained in 29 CFR part 18. Proposed

Sec. 2570.119 would establish the time limit within which such appeals

must be filed and the manner in which the issues for appeal are

determined and the procedure for making the entire record before the

ALJ available to the Secretary. Proposed Sec. 2570.120 provides that

review of the Secretary shall not be on a de novo basis, but rather on

the basis of the record before the ALJ and without an opportunity for

oral argument. Proposed Sec. 2570.121 sets forth the procedure for

establishing a briefing schedule for such appeals and states that the

decision of the Secretary on such an appeal shall be a final agency

action within the meaning of 5 U.S.C. 714. As noted above, the

authority of the Secretary with respect to the appellate procedures has

been delegated to the Assistant Secretary for Pension and Welfare

Benefits. As required by the Administrative Procedure Act (5 U.S.C.

552(a)(2)(A)) all final decisions of the Department under section

502(c)(6) of ERISA shall be compiled in the Public Documents Room of

the Pension and Welfare Benefits Administration, Room N-5638, U.S.

Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210.

Executive Order 12866 Statement

Under Executive Order 12866, the Department must determine whether

the regulatory action is ``significant'' and therefore subject to the

requirements of the Executive Order and subject to review by the Office

of Management and Budget (OMB). Under section 3(f), the order defines a

``significant regulatory action'' as an action that is likely to result

in a rule (1) Having an annual effect on the economy of $100 million or

more, or adversely and materially affecting a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local or tribal governments or communities (also

referred to as ``economically significant''); (2) creating serious

inconsistency or otherwise interfering with an action taken or planned

by another agency; (3) materially altering the budgetary impacts of

entitlement grants, user fees, or loan programs or the rights and

obligations of recipients thereof; or (4) raising novel legal or policy

issues arising out of legal mandates, the President's priorities, or

the principles set forth in the Executive Order. Accordingly, the

Department has determined that this regulatory action is not

significant within the meaning of the Executive Order.

The costs of the proposed regulation would be borne by the plan

when responding to requests from the Department for copies of the

latest SPD (including any summaries of plan changes not contained in

the SPD) as well as other documents relating to the plan. It is

expected that most of the costs will be attendant to furnishing SPDs to

the Department to enable the Department to respond to requests from

participants.4 The individual cost of each such request is

estimated to be minimal because each administrator of an employee

pension or welfare benefit plan covered under Title I of ERISA is

required by section 101(a)(1) to furnish a SPD to each participant

covered under the plan and each beneficiary who is receiving benefits

under the plan, and to update the SPD on a regular basis in accordance

with section 104(b)(1). Moreover, many documents other than SPDs that

may be requested are required to be made available to participants and

beneficiaries pursuant to section 104(b)(2). Thus, administrators are

not expected to incur costs in preparing or obtaining these documents

in response to a request from the Department.

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\4\ The Department's authority to request documents under

section 104(a)(6) of ERISA was, prior to TRA '97, codified in

section 104(a)(1) of ERISA. TRA '97 re-codified this authority in

section 104(a)(6) of ERISA and simultaneously eliminated the

requirement to file SPDs/SMMs. It is anticipated that the vast

majority of requests under section 104(a)(6) will stem from

responding to participants' requests for SPDs/SMMs that, in the

absence of TRA '97, would have been filed with Department and

available to the public.

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The proposed regulation is expected to benefit plan participants

and beneficiaries who may have been unable to obtain a current SPD or

other document relating to the plan, and who might otherwise not have

an alternative means of obtaining such documents in the absence of the

requirement for the plan administrator to file such documents with the

Department. The provisions implementing the penalty for failure to

furnish such documents on request may serve to ensure timely compliance

with such requests.

Paperwork Reduction Act

The Department of Labor, as part of its continuing effort to reduce

paperwork and respondent burden, conducts a preclearance consultation

program to provide the general public and Federal agencies with an

opportunity to comment on proposed and continuing collections of

information in accordance with the Paperwork Reduction Act of 1995 (PRA

95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data

can be provided in the desired format, reporting burden (time and

financial resources) is minimized, collection instruments are clearly

understood, and the impact of collection requirements on respondents

can be properly assessed.

Currently, the Pension and Welfare Benefits Administration is

soliciting comments concerning the proposed information collection

request (ICR) included in the proposal with respect to Furnishing

Documents To The Secretary of Labor on Request Under ERISA section

104(a)(6) And Assessment Of Civil Penalties Under ERISA section

502(c)(6). A copy of the ICR may be obtained by contacting the office

listed in the addressee section of this proposed regulation. This

proposed regulation would implement the provisions of ERISA section

104(a)(6), which requires plan administrators to provide certain

documents to the Department on request, and section 502(c)(6) of ERISA,

which implements procedures for assessment of civil penalties for

failure to provide the documents requested pursuant to section

104(a)(6).

The Department has submitted a copy of the proposed information

collection to OMB in accordance with 44 U.S.C. 3507(d) for review of

its information collections. The Department and OMB are particularly

interested in comments that:

Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including whether the information will have practical utility;

Evaluate the accuracy of the agency's estimate of the

burden of the proposed collection of information, including the

validity of the methodology and assumptions used;

Enhance the quality, utility, and clarity of the

information to be collected; and

Minimize the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology, e.g., permitting

electronic submission of responses.

Comments should be sent to the Office of Information and Regulatory

Affairs, Office of Management and Budget, Room 10235, New Executive

Office Building, Washington, DC 20503; Attention: Desk Officer for the

Pension and Welfare Benefits Administration. Although comments may be

submitted through October 4, 1999, OMB requests that comments be

received within 30

[[Page 42802]]

days of publication of the Notice of Proposed Rulemaking to ensure

their consideration.

ADDRESSEE (PRA 95): Gerald B. Lindrew, Office of Policy and Research,

U.S. Department of Labor, Pension and Welfare Benefits Administration,

200 Constitution Avenue, NW, Room N-5647, Washington, DC 20210.

Telephone: (202) 219-4782; Fax: (202) 219-4745. These are not toll-free

numbers.

The ICR included in the proposal involves the gathering and mailing

of plan documents requested by the Department to an address specified

in the request. These requests are expected to be made of plan

administrators as needed to satisfy requests for SPDs and other

documents received from plan participants and beneficiaries. These

requests may be received by the Public Disclosure Room of the Pension

and Welfare Benefits Administration or by the national office and field

offices in the course of providing technical assistance to the public.

The estimate of the number of requests by participants and

beneficiaries is based on the actual rate of requests to the Public

Disclosure Room during the last two years, adjusted for requests

expected to be made with other offices.

It is assumed that approximately 5 minutes of time at non-

professional hourly rates will be required to respond to the

Department's document request within 30 days. Some administrators may

be expected to respond only after receiving notice of the Department's

intent to assess a penalty, and/or to provide additional information

concerning matters reasonably beyond their control which would prevent

or delay the satisfaction of the request. Each of these events would

increase the anticipated burden of providing documents requested by the

Department. The burden estimated here has been adjusted to account for

a portion of plans which by choice or for reasons beyond their control

will satisfy the request in a more burdensome fashion. Mailing costs

are assumed to total $1.00 per request.

The penalty assessment provisions of Sec. 2560.502c-6, and the

procedures for hearings before ALJs and appeals to the Secretary or her

delegate of Secs. 2570.110 through 2570.121, do not contain an

``information collection request'' as defined in 44 U.S.C. 3502(3).

Type of Review: New.

Agency: Pension and Welfare Benefits Administration.

Title: Furnishing Documents To The Secretary of Labor on Request

Under ERISA section 104(a)(6) And Assessment of Civil Penalties Under

ERISA section 502(c)(6).

OMB Number: 1210-NEW.

Affected Public: Individuals or households; Business or other for-

profit; Not-for-profit institutions.

Frequency of Response: On occasion.

Total Respondents: 1,000.

Total Responses: 1,000.

Estimated Burden Hours: 95.

Estimated Annual Costs (Operating and Maintenance): $1,000.

Comments submitted in response to this notice will be summarized

and/or included in the request for OMB approval of the information

collection request; they will also become a matter of public record.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes

certain requirements with respect to Federal rules that are subject to

the notice and comment requirements of section 553(b) of the

Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are

likely to have a significant economic impact on a substantial number of

small entities. If an agency determines that a proposed rule is likely

to have a significant economic impact on a substantial number of small

entities, section 603 of the RFA requires that the agency present an

initial regulatory flexibility analysis at the time of the publication

of the notice of proposed rulemaking describing the impact of the rule

on small entities, and seeking public comment on such impact. Small

entities include small businesses, organizations, and governmental

jurisdictions.

For purposes of analysis under the RFA, PWBA proposes to continue

to consider a small entity to be an employee benefit plan with fewer

than 100 participants. The basis of this definition is found in section

104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe

simplified annual reports for pension plans which cover fewer than 100

participants. Under section 104(a)(3), the Secretary may also provide

for simplified annual reporting and disclosure if the statutory

requirements of Part 1 of Title I of ERISA would otherwise be

inappropriate for welfare benefit plans. Pursuant to the authority of

section 104(a)(3), the Department has previously issued at

Secs. 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46 and 2520.104b-

10 certain simplified reporting provisions and limited exemptions from

reporting and disclosure requirements for small plans, including

unfunded or insured welfare plans covering fewer than 100 participants

and which satisfy certain other requirements.

Further, while some large employers may have small plans, in

general, most small plans are maintained by small employers. Thus, PWBA

believes that assessing the impact of this proposed rule on small plans

is an appropriate substitute for evaluating the effect on small

entities. The definition of small entity considered appropriate for

this purpose differs, however, from a definition of small business

which is based on size standards promulgated by the Small Business

Administration (SBA) (13 CFR 121.201) pursuant to the Small Business

Act (5 U.S.C. 631 et seq.). PWBA therefore requests comments on the

appropriateness of the size standard used in evaluating the impact of

this proposed rule on small entities.

On this basis, however, PWBA has preliminarily determined that this

proposed regulation will not have a significant economic impact on a

substantial number of small entities. In support of this determination,

and in an effort to provide a sound basis for this conclusion, PWBA has

considered the elements of an initial regulatory flexibility analysis

in the discussion which follows.

This proposed regulation would apply to all small employee benefit

plans covered by Title I of ERISA. Employee benefit plans with fewer

than 100 participants include 631,000 pension plans, 2.6 million health

plans, and 3.4 million non-health welfare plans (mainly life and

disability insurance plans).

The Department believes that responding to a request for a SPD or

other plan document primarily requires clerical skills, although a

professional may read the request and direct others to respond. The

documents to be mailed in response to the request are expected to be

readily available.

The Department does not have information concerning whether the

participants and beneficiaries who request its assistance in obtaining

plan documents are participants in small plans. However, even if it is

assumed that all plans which receive requests for documents pursuant to

section 104(a)(6) are small plans, the number affected in any year is

very small (i.e., 1,000 of approximately 6.6 million plans). The

mailing cost per request satisfied, or per letter exchanged in

providing reasonable cause, is expected to amount to approximately

$1.00, and accumulating the documents is expected to require about 5

minutes. If it is assumed that a cost is incurred for this time at a

rate of $11 per hour, the

[[Page 42803]]

total cost per request is estimated at about $2.00. This is not

expected to constitute a significant impact for any plan.

Further, the proposed regulation is intended to provide sufficient

information to small entities such that they may understand the

request, provide information as to a reasonable cause for failure to

comply if necessary, and receive notice before assessment of a penalty

is initiated.

The Department invites interested persons to submit comments

regarding its preliminary determination that the proposal will not have

a significant economic impact on a substantial number of small

entities. The Department also requests comments from small entities

regarding what, if any, special problems they might encounter if the

proposal were to be adopted, and what changes, if any, could be made to

minimize those problems.

Small Business Regulatory Enforcement Fairness Act

The proposed rule is subject to the provisions of the Small

Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et

seq.) and, if finalized, will be transmitted to Congress and the

Comptroller General for review. The rule is not a ``major rule'' as

that term is defined in 5 U.S.C. 804, because it is not likely to

result in (1) An annual effect on the economy of $100 million or more;

(2) a major increase in costs or prices for consumers, individual

industries, or federal, State, or local government agencies, or

geographic regions; or (3) significant adverse effects on competition,

employment, investment, productivity, innovation, or on the ability of

United States-based enterprises to compete with foreign-based

enterprises in domestic or export markets.

Unfunded Mandates Reform Act

For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.

104-4), as well as Executive Order 12875, this proposed rule does not

include any Federal mandate that may result in expenditures by State,

local, or tribal governments, nor does it include mandates which may

impose an annual burden of $100 million or more on the private sector.

Statutory Authority

These regulations are proposed pursuant to the authority contained

in sections 505, 104(a), and 502(c)(6) of ERISA (Pub. L. 93-406, 88

Stat. 894, 29 U.S.C. 1024, 1132, and 1135).

List of Subjects

29 CFR Part 2520

Accountants, Disclosure requirements, Employee benefit plans,

Employee Retirement Income Security Act, Pension plans, and Reporting

and recordkeeping requirements.

29 CFR Part 2560

Claims, Employee benefit plans, Employee Retirement Income Security

Act, Law enforcement, Pensions.

29 CFR Part 2570

Administrative practice and procedure, Employee benefit plans,

Employee Retirement Income Security Act, Party in interest, Law

enforcement, Pensions, Prohibited transactions.

Proposed Regulations

In view of the foregoing, the Department proposes to amend parts

2520, 2560, and 2570 of Chapter XXV of title 29 of the Code of Federal

Regulations as follows:

PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE

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

follows:

Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111 (b)(2),

111 (c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.

1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,

13-76, 1-87, and Labor Management Services Administration Order 2-6.

Sections 2520.102-3, 2520.104b-1, and 2520.104b-3 also are

issued under sec. 101(a), (c), and (g)(4) of Pub. L. 104-191, 110

Stat. 1936, 1939, 1951 and 1955 and, sec. 603 of Pub. L. 104-204,

110 Stat. 2935 (29 U.S.C. 1185 and 1191c).

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

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

Labor on request.

(a) In general. (1) Under section 104(a)(6) of the Act, the

administrator of any employee benefit plan subject to the provisions of

Part 1 of Title I of the Act shall furnish to the Secretary, upon

service of a written request, any documents relating to the employee

benefit plan.

(2) Multiple requests for document(s). Multiple requests under this

section for the same or similar document or documents shall be

considered separate requests for purposes of Sec. 2560.502c-6(a) of

this chapter.

(b) Service of request. Requests under this section shall be served

in accordance with Sec. 2560.502c-6(i) of this chapter.

(c) Furnishing documents. A document is not considered furnished to

the Secretary until the date on which such document is received by the

Department of Labor at the address specified in the request.

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

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

follows:

Section 2560.502-1 also issued under sec. 502(b)(2), 29 U.S.C.

1132(b)(2).

Section 2560.502i-1 also issued under sec. 502(i), 29 U.S.C.

1132(i).

Section 2560.503-1 also issued under sec. 503, 29 U.S.C. 1133.

Authority: Secs. 502, 505 of ERISA, 29 U.S.C. 1132, 1135, and

Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).

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

read as follows:

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

(a) In general. (1) Pursuant to the authority granted the Secretary

under section 502(c)(6) of the Employee Retirement Income Security Act

of 1974, as amended (the Act), the administrator (within the meaning of

section 3(16)(A)) of an employee benefit plan (within the meaning of

section 3(3) and Sec. 2510.3-1 of this chapter) shall be liable for

civil penalties assessed by the Secretary under section 502(c)(6) of

the Act in each case in which there is a failure or refusal to furnish

to the Secretary documents requested under section 104(a)(6) of the Act

and Sec. 2520.104a-8 of this chapter.

(2) For purposes of this section, a failure or refusal to furnish

documents shall mean a failure or refusal to furnish, in whole or in

part, the documents requested under section 104(a)(6) of the Act and

Sec. 2520.104a-8 of this chapter at the time and in the manner

prescribed in the request.

(b) Amount assessed. (1) The amount assessed under section

502(c)(6) shall be an amount up to $100 a day determined by the

Department of Labor, taking into consideration the amount of

willfulness of the failure or refusal to furnish the documents

requested under section 104(a)(6), but in no event in excess of $1,000

per request. Subject to paragraph (b)(2) of this section, the amount

shall be computed from the date of the administrator's failure or

refusal to furnish any document or documents requested by the

Department.

(2) For purposes calculating the amount to be assessed under this

section, the date of a failure or refusal to furnish documents shall

not be earlier than the 30th day after service of the

[[Page 42804]]

request under section 104(a)(6) of ERISA and Sec. 2520.104a-8 of this

chapter.

(c) Notice of intent to assess a penalty. Prior to the assessment

of any penalty under section 502(c)(6), the Department shall provide to

the administrator of the plan a written notice that indicates the

Department's intent to assess a penalty under section 502(c)(6), the

amount of the penalty, the period to which the penalty applies, and the

reason(s) for the penalty.

(d) Waiver of assessed penalty. The Department may waive all or

part of the penalty to be assessed under section 502(c)(6) on a showing

by the administrator that the failure or refusal to furnish a document

or documents requested by the Secretary was the result of matters

reasonably beyond the administrator's control.

(e) Statement showing matters reasonably beyond the control of the

plan administrator. Upon issuance by the Department of a notice of

intent to assess a penalty, the administrator shall have 30 days from

the date of the service of the notice, as described in paragraph (i) of

this section, to file a statement that the failure resulted from

matters reasonably beyond the control of the administrator or that the

penalty, as calculated, should not be assessed. The statement must be

in writing and set forth all the facts alleged as matters reasonably

beyond the control of the administrator. The statement must contain a

declaration by the administrator that the statement is made under the

penalties of perjury.

(f) Failure to file a statement of matters reasonably beyond the

control of the plan administrator. Failure to file a statement of

matters reasonably beyond the control of the administrator within the

30 day period described in paragraph (e) of this section shall be

deemed to constitute a waiver of the right to appear and contest the

facts alleged in the notice, and such failure shall be deemed an

admission of the facts alleged in the notice for purposes of any

proceeding involving the assessment of a civil penalty under section

502(c)(6). Such notice shall then become a final order of the

Secretary, within the meaning of Sec. 2570.111(g) of this chapter.

(g) Notice of determination on statement of matters reasonably

beyond the control of the plan administrator. (1) The Department,

following a review of all of the facts alleged in support of a complete

or partial waiver of the penalty, shall notify the administrator, in

writing, of its intention to waive the penalty, in whole or in part,

and/or assess a penalty. If it is the intention of the Department to

assess a penalty, the notice shall indicate the amount of the penalty,

not to exceed the amount described in paragraph (c) of this section.

This notice is a ``pleading'' for purposes of Sec. 2570.111(m) of this

chapter.

(2) Except as provided in paragraph (h) of this section, a notice

issued pursuant to paragraph (g)(1) of this section indicating the

Department's intention to assess a penalty shall become a final order,

within the meaning of Sec. 2570.111(g) of this chapter, 30 days after

the date of service of the notice.

(h) Administrative hearings. A notice issued pursuant to paragraph

(g)(1) of this section will not become a final order, within the

meaning of Sec. 2570.111(g) of this chapter, if, within 30 days from

the date of service of the notice, an answer, as defined in

Sec. 2570.111(c) of this chapter, is filed in accordance with

Sec. 2570.112 of this chapter.

(i) Service of notice. (1) Service of notice under this section

shall be made by:

(i) Delivering a copy to the administrator or representative

thereof;

(ii) Leaving a copy at the principal office, place of business, or

residence of the administrator or representative thereof; or (iii)

Mailing a copy to the last known address of the administrator or

representative thereof.

(2) If service is accomplished by certified mail, service is

complete upon mailing. If done by regular mail, service is complete

upon receipt by the addressee.

(j) Liability. (1) If more than one person is responsible as

administrator for the failure to furnish the document or documents

requested under section 104(a)(6) and its implementing regulations

(Sec. 2520.104a-8 of this chapter), all such persons shall be jointly

and severally liable with respect to such failure.

(2) Any person, or persons under paragraph (j)(1), against whom a

civil penalty has been assessed under section 502(c)(6) pursuant to a

final order, within the meaning of Sec. 2570.111(g) of this chapter,

shall be personally liable for the payment of such penalty.

(k) Cross reference. See Secs. 2570.110 through 2570-121 of this

chapter for procedural rules relating to administrative hearings under

section 502(c)(6) of the Act.

PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT

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

Authority: 29 U.S.C. 1108 (a), 1132 (c), 1132 (i), 1135; 5

U.S.C. 8477 (c) (3); Reorganization Plan no. 4 of 1978; Secretary of

Labor's Order 1-87.

Subpart A is also issued under 29 U.S.C. 1132(c)(1).

Subpart F is also issued under sec. 4, Pub. L. 101-410, 104

Stat. 890 (28 U.S.C. 2461 note), as amended by sec. 31001(s)(1),

Pub. L. 104-134, 110 Stat. 1321-373.

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

Subpart F--Procedures for the Assessment of Civil Penalties Under ERISA

Section 502(c)(6)

Sec.

2570.110 Scope of rules.

2570.111 Definitions.

2570.112 Service: Copies of documents and pleadings.

2570.113 Parties, how designated.

2570.114 Consequences of default.

2570.115 Consent order or settlement.

2570.116 Scope of discovery.

2570.117 Summary Decisions.

2570.118 Decision of the administrative law judge.

2570.119 Review by the Secretary.

2570.120 Scope of review.

2570.121 Procedures for review by the Secretary.

Subpart F--Procedures for the Assessment of Civil Penalties Under

ERISA Section 502(c)(6)

Sec. 2570.110 Scope of rules.

The rules of practice set forth in this subpart are applicable to

``502(c)(6) civil penalty proceedings'' (as defined in Sec. 2570.111(n)

of this subpart) under section 502(c)(6) of the Employee Retirement

Income Security Act of 1974. The rules of procedure for administrative

hearings published by the Department's Office of Law Judges at part 18

of this title will apply to matters arising under ERISA section

502(c)(6) except as modified by this section. These proceedings shall

be conducted as expeditiously as possible, and the parties shall make

every effort to avoid delay at each stage of the proceedings.

Sec. 2570.111 Definitions.

For section 502(c)(6) civil penalty proceedings, this section shall

apply in lieu of the definitions in Sec. 18.2 of this title:

(a) Adjudicatory proceeding means a judicial-type proceeding before

an administrative law judge leading to the formulation of a final

order;

(b) Administrative law judge means an administrative law judge

appointed pursuant to the provisions of 5 U.S.C. 3105;

(c) Answer is defined for these proceedings as set forth in

Sec. 18.5(d)(1) of this title;

[[Page 42805]]

(d) Commencement of proceeding is the filing of an answer by the

respondent;

(e) Consent agreement means any written document containing a

specified proposed remedy or other relief acceptable to the Department

and consenting parties;

(f) ERISA means the Employee Retirement Income Security Act of

1974, as amended;

(g) Final order means the final decision or action of the

Department of Labor concerning the assessment of a civil penalty under

ERISA section 502(c)(6) against a particular party. Such final order

may result from a decision of an administrative law judge or the

Secretary, the failure of a party to file a statement of matters

reasonably beyond the control of the plan administrator described in

Sec. 2560.502c-6(e) of this chapter within the prescribed time limits,

or the failure of a party to invoke the procedures for hearings or

appeals under this title within the prescribed time limits. Such a

final order shall constitute final agency action within the meaning of

5 U.S.C. 704;

(h) Hearing means that part of a proceeding which involves the

submission of evidence, either by oral presentation or written

submission, to the administrative law judge;

(i) Order means the whole or any part of a final procedural or

substantive disposition of a matter under ERISA section 502(c)(6);

(j) Party includes a person or agency named or admitted as a party

to a proceeding;

(k) Person includes an individual, partnership, corporation,

employee benefit plan, association, exchange or other entity or

organization;

(l) Petition means a written request, made by a person or party,

for some affirmative action;

(m) Pleading means the notice as defined in Sec. 2560.502c-6(g) of

this chapter, the answer to the notice, any supplement or amendment

thereto, and any reply that may be permitted to any answer, supplement

or amendment;

(n) 502(c)(6) civil penalty proceeding means an adjudicatory

proceeding relating to the assessment of a civil penalty provided for

in section 502(c)(6) of ERISA;

(o) Respondent means the party against whom the Department is

seeking to assess a civil sanction under ERISA section 502(c)(6);

(p) Secretary means the Secretary of Labor and includes, pursuant

to any delegation of authority by the Secretary, any assistant

secretary (including the Assistant Secretary for Pension and Welfare

Benefits), administrator, commissioner, appellate body, board, or other

official; and

(q) Solicitor means the Solicitor of Labor or his or her delegate.

Sec. 2570.112 Service: Copies of documents and pleadings.

For 502(c)(6) penalty proceedings, this section shall apply in lieu

of Sec. 18.3 of this title.

(a) General. Copies of all documents shall be served on all parties

of record. All documents should clearly designate the docket number, if

any, and short title of all matters. All documents to be filed shall be

delivered or mailed to the Chief Docket Clerk, Office of Administrative

Law Judges, 800 K Street, NW, Suite 400, Washington, DC 20001-8002, or

to the OALJ Regional Office to which the proceeding may have been

transferred for hearing. Each document filed shall be clear and

legible.

(b) By parties. All motions, petitions, pleadings, briefs, or other

documents shall be filed with the Office of Administrative Law Judges

with a copy, including any attachments, to all other parties or record.

When a party is represented by an attorney, service shall be made upon

the attorney. Service of any document upon any party may be made by

personal delivery or by mailing a copy to the last known address. The

Department shall be served by delivery to the Associate Solicitor, Plan

Benefits Security Division, ERISA section 502(c)(6) Proceeding, PO Box

1914, Washington, DC 20013. The person serving the document shall

certify to the manner and date of service.

(c) By the Office of Administrative Law Judges. Service of orders,

decisions and all other documents shall be made by regular mail to the

last known address.

(d) Form of pleadings. (1) Every pleading shall contain information

indicating the name of the Pension and Welfare Benefits Administration

(PWBA) as the agency under which the proceeding is instituted, the

title of the proceeding, the docket number (if any) assigned by the

Office of Administrative Law Judges and a designation of the type of

pleading or paper (e.g., notice, motion to dismiss, etc.). The pleading

or paper shall be signed and shall contain the address and telephone

number of the party or person representing the party. Although there

are no formal specifications for documents, they should be typewritten

when possible on standard size 8\1/2\ x 11 inch paper.

(2) Illegible documents, whether handwritten, typewritten,

photocopies, or otherwise, will not be accepted. Papers may be

reproduced by any duplicating process provided all copies are clear and

legible.

Sec. 2570.113 Parties, how designated.

For 502(c)(6) civil penalty proceedings, this section shall apply

in lieu of Sec. 18.10 of this title.

(a) The term ``party'' wherever used in these rules shall include

any natural person, corporation, employee benefit plan, association,

firm, partnership, trustee, receiver, agency, public or private

organization, or government agency. A party against whom a civil

penalty is sought shall be designated as ``respondent.'' The Department

shall be designated as the ``complainant.''

(b) Other persons or organizations shall be permitted to

participate as parties only if the administrative law judge finds that

the final decision could directly and adversely affect them or the

class they represent, that they may contribute materially to the

disposition of the proceedings and their interest is not adequately

represented by existing parties, and that in the discretion of the

administrative law judge the participation of such persons or

organizations would be appropriate.

(c) A person or organization not named as a respondent wishing to

participate as a party under this section shall submit a petition to

the administrative law judge within fifteen (15) days after the person

or organization has knowledge of or should have known about the

proceeding. The petition shall be filed with the administrative law

judge and served on each person or organization who has been made a

party at the time of filing. Such petition shall concisely state:

(1) Petitioner's interest in the proceeding;

(2) How his or her participation as a party will contribute

materially to the disposition of the proceeding;

(3) Who will appear for petitioner;

(4) The issues on which petitioner wishes to participate; and

(5) Whether petitioner intends to present witnesses.

(d) Objections to the petition may be filed by a party within

fifteen (15) days of the filing of the petition. If objections to the

petition are filed, the administrative law judge shall then determine

whether petitioners have the requisite interest to be a party in the

proceedings, as defined in paragraph (b) of this section, and shall

permit or deny participation accordingly. Where petitions to

participate as parties are made by individuals or groups with common

interests, the administrative law judge may request all such

petitioners to designate a single representative, or he or she may

[[Page 42806]]

recognize one or more of such petitioners. The administrative law judge

shall give each such petitioner, as well as the parties, written notice

of the decision on his or her petition. For each petition granted, the

administrative law judge shall provide a brief statement of the basis

of the decision. If the petition is denied, he or she shall briefly

state the grounds for denial and shall then treat the petition as a

request for participation as amicus curiae.

Sec. 2570.114 Consequences of default.

For 502(c)(6) civil penalty proceedings, this section shall apply

in lieu of Sec. 18.5 (a) and (b) of this title. Failure of the

respondent to file an answer to the notice of determination described

in Sec. 2560.502c-6(g) of this chapter within the 30-day period

provided by Sec. 2560.502c-6(h) of this chapter shall be deemed to

constitute a waiver of his or her right to appear and contest the

allegations of the notice of determination, and such failure shall be

deemed to be an admission of the facts as alleged in the notice for

purposes of any proceeding involving the assessment of a civil penalty

under section 502(c)(6) of the Act. Such notice shall then become the

final order of the Secretary.

Sec. 2570.115 Consent order or settlement.

For 502(c)(6) civil penalty proceedings, the following shall apply

in lieu of Sec. 18.9 of this title.

(a) General. At any time after the commencement of a proceeding,

but at least five (5) days prior to the date set for hearing, the

parties jointly may move to defer the hearing for a reasonable time to

permit negotiation of a settlement or an agreement containing findings

and an order disposing of the whole or any part of the proceeding. The

allowance of such a deferral and the duration thereof shall be in the

discretion of the administrative law judge, after consideration of such

factors as the nature of the proceeding, the requirements of the public

interest, the representations of the parties and the probability of

reaching an agreement which will result in a just disposition of the

issues involved.

(b) Content. Any agreement containing consent findings and an order

disposing of a proceeding or any part thereof shall also provide:

(1) That the order shall have the same force and effect as an order

made after full hearing;

(2) That the entire record on which any order may be based shall

consist solely of the notice and the agreement;

(3) A waiver of any further procedural steps before the

administrative law judge;

(4) A waiver of any right to challenge or contest the validity of

the order and decision entered into in accordance with the agreement;

and

(5) That the order and decision of the administrative law judge

shall be final agency action.

(c) Submission. On or before the expiration of the time granted for

negotiations, but, in any case, at least five (5) days prior to the

date set for hearing, the parties or their authorized representative or

their counsel may:

(1) Submit the proposed agreement containing consent findings and

an order to the administrative law judge; or

(2) Notify the administrative law judge that the parties have

reached a full settlement and have agreed to dismissal of the action

subject to compliance with the terms of the settlement; or

(3) Inform the administrative law judge that agreement cannot be

reached.

(d) Disposition. In the event a settlement agreement containing

consent findings and an order is submitted within the time allowed

therefore, the administrative law judge shall issue a decision

incorporating such findings and agreement within thirty (30) days of

his receipt of such document. The decision of the administrative law

judge shall incorporate all of the findings, terms, and conditions of

the settlement agreement and consent order of the parties. Such

decision shall become final agency action within the meaning of 5

U.S.C. 704.

(e) Settlement without consent of all parties. In cases in which

some, but not all, of the parties to a proceeding submit a consent

agreement to the administrative law judge, the following procedure

shall apply:

(1) If all of the parties have not consented to the proposed

settlement submitted to the administrative law judge, then such non-

consenting parties must receive notice, and a copy, of the proposed

settlement at the time it is submitted to the administrative law judge;

(2) Any non-consenting party shall have fifteen (15) days to file

any objections to the proposed settlement with the administrative law

judge and all other parties;

(3) If any party submits an objection to the proposed settlement,

the administrative law judge shall decide within thirty (30) days after

receipt of such objections whether he shall sign or reject the proposed

settlement. Where the record lacks substantial evidence upon which to

base a decision or there is a genuine issue of material fact, then the

administrative law judge may establish procedures for the purpose of

receiving additional evidence upon which a decision on the contested

issues may reasonably be based;

(4) If there are no objections to the proposed settlement, or if

the administrative law judge decides to sign the proposed settlement

after reviewing any such objections, the administrative law judge shall

incorporate the consent agreement into a decision meeting the

requirements of paragraph (d) of this section.

Sec. 2570.116 Scope of discovery.

For 502(c)(6) civil penalty proceedings, this section shall apply

in lieu of Sec. 18.14 of this title.

(a) A party may file a motion to conduct discovery with the

administrative law judge. The motion for discovery shall be granted by

the administrative law judge only upon a showing of good cause. In

order to establish ``good cause'' for the purposes of this section, a

party must show that the discovery requested relates to a genuine issue

as to a material fact that is relevant to the proceeding. The order of

the administrative law judge shall expressly limit the scope and terms

of discovery to that for which ``good cause'' has been shown, as

provided in this paragraph.

(b) A party may obtain discovery of documents and tangible things

otherwise discoverable under paragraph (a) of this section and prepared

in anticipation of or for the hearing by or for another party's

representative (including his or her attorney, consultant, surety,

indemnitor, insurer, or agent) only upon showing that the party seeking

discovery has substantial need of the materials or information in the

preparation of his or her case and that he or she is unable without

undue hardship to obtain the substantial equivalent of the materials or

information by other means. In ordering discovery of such materials

when the required showing has been made, the administrative law judge

shall protect against disclosure of the mental impressions,

conclusions, opinions, or legal theories of an attorney or other

representatives of a party concerning the proceeding.

Sec. 2570.117 Summary decision.

For 502(c)(6) civil penalty proceedings, this section shall apply

in lieu of Sec. 18.41 of this title.

(a) No genuine issue of material fact. (1) Where no issue of a

material fact is found to have been raised, the administrative law

judge may issue a

[[Page 42807]]

decision which, in the absence of an appeal pursuant to Secs. 2570.119

through 2570.121 of this subpart, shall become a final order.

(2) A decision made under this paragraph shall include a statement

of:

(i) Findings of fact and conclusions of law, and the reasons

therefor, on all issues presented; and

(ii) Any terms and conditions of the rule or order.

(3) A copy of any decision under this paragraph shall be served on

each party.

(b) Hearings on issues of fact. Where a genuine question of a

material fact is raised, the administrative law judge shall, and in any

other case may, set the case for an evidentiary hearing.

Sec. 2570.118 Decision of the administrative law judge.

For section 502(c)(6) civil penalty proceedings, this section shall

apply in lieu of Sec. 18.57 of this title.

(a) Proposed findings of fact, conclusions, and order. Within

twenty (20) days of the filing of the transcript of the testimony, or

such additional time as the administrative law judge may allow, each

party may file with the administrative law judge, subject to the

judge's discretion, proposed findings of fact, conclusions of law, and

order together with a supporting brief expressing the reasons for such

proposals. Such proposals and briefs shall be served on all parties,

and shall refer to all portions of the record and to all authorities

relied upon in support of each proposal.

(b) Decision of the administrative law judge. Within a reasonable

time after the time allowed for the filing of the proposed findings of

fact, conclusions of law, and order, or within thirty (30) days after

receipt of an agreement containing consent findings and order disposing

of the disputed matter in whole, the administrative law judge shall

make his or her decision. The decision of the administrative law judge

shall include findings of fact and conclusions of law with reasons

therefor upon each material issue of fact or law presented on the

record. The decision of the administrative law judge shall be based

upon the whole record. In a contested case in which the Department and

the Respondent have presented their positions to the administrative law

judge pursuant to the procedures for 502(c)(6) civil penalty

proceedings as set forth in this subpart, the penalty (if any) which

may be included in the decision of the administrative law judge shall

be limited to the penalty expressly provided for in section 502(c)(6)

of ERISA. It shall be supported by reliable and probative evidence. The

decision of the administrative law judge shall become final agency

action within the meaning of 5 U.S.C. 704 unless an appeal is made

pursuant to the procedures set forth in Secs. 2570.119 through

2570.121.

Sec. 2570.119 Review by the Secretary.

(a) The Secretary may review a decision of an administrative law

judge. Such a review may occur only when a party files a notice of

appeal from a decision of an administrative law judge within twenty

(20) days of the issuance of such decision. In all other cases, the

decision of the administrative law judge shall become final agency

action within the meaning of 5 U.S.C. 704.

(b) A notice of appeal to the Secretary shall state with

specificity the issue(s) in the decision of the administrative law

judge on which the party is seeking review. Such notice of appeal must

be served on all parties of record.

(c) Upon receipt of a notice of appeal, the Secretary shall request

the Chief Administrative Law Judge to submit to him or her a copy of

the entire record before the administrative law judge.

Sec. 2570.120 Scope of review.

The review of the Secretary shall not be de novo proceeding but

rather a review of the record established before the administrative law

judge. There shall be no opportunity for oral argument.

Sec. 2570.121 Procedures for review by the Secretary.

(a) Upon receipt of the notice of appeal, the Secretary shall

establish a briefing schedule which shall be served on all parties of

record. Upon motion of one or more of the parties, the Secretary may,

in his or her discretion, permit the submission of reply briefs.

(b) The Secretary shall issue a decision as promptly as possible

after receipt of the briefs of the parties. The Secretary may affirm,

modify, or set aside, in whole or in part, the decision on appeal and

shall issue a statement of reasons and bases for the action(s) taken.

Such decision by the Secretary shall be final agency action within the

meaning of 5 U.S.C. 704.

Signed at Washington, DC, this 28th day of July 1999.

Richard M. McGahey,

Assistant Secretary, Pension and Welfare Benefits Administration,

Department of Labor.

[FR Doc. 99-19861 Filed 8-4-99; 8:45 am]

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