EBSA Final Rules

Civil Penalties Under ERISA Section 502(c)(4)   [1/2/2009]
[PDF]
FR Doc E8-31188
[Federal Register: January 2, 2009 (Volume 74, Number 1)]
[Rules and Regulations]               
[Page 17-21]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ja09-6]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2560

RIN 1210-AB24

 
Civil Penalties Under ERISA Section 502(c)(4)

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Final rule.

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SUMMARY: This document contains a final regulation that establishes 
procedures relating to the assessment of civil penalties by the 
Department of Labor under section 502(c)(4) of the Employee Retirement 
Income Security Act of 1974 (ERISA or the Act). The regulation is 
necessary to reflect recent amendments to section 502(c)(4) by the 
Pension Protection Act of 2006, under which the Secretary of Labor is 
granted authority to assess civil penalties not to exceed $1,000 per 
day for each violation of section 101(j), (k), or (l), or section 
514(e)(3) of ERISA. The regulation will affect employee benefit plans, 
plan administrators and sponsors, fiduciaries, as well as participants, 
beneficiaries, employee representatives, and certain employers.

DATES: This final rule is effective on March 3, 2008.

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

SUPPLEMENTARY INFORMATION:

A. Background

    On August 17, 2006, the Pension Protection Act of 2006 (PPA), 
Public Law 109-280, 120 Stat. 780, amended title I of ERISA by adding 
or revising a substantial number of substantive provisions. In 
conjunction with many of these new or revised provisions, the PPA also 
amended the civil enforcement provisions in ERISA to provide the 
Secretary of Labor with authority to assess civil monetary penalties 
for violations of the substantive provisions.
    Specifically, section 103(b)(1) of the PPA amended section 101 of 
ERISA by adding a new disclosure requirement under subsection (j), 
under which the plan administrator of a single-employer defined benefit 
pension plan must provide written notice of limitations on benefits and 
benefit accruals to participants and beneficiaries pursuant to section 
206(g) of ERISA (or the parallel Internal Revenue Code provision at 
section 436(b)).\1\ A notice of benefit limitations must be furnished 
within 30 days after a plan becomes subject to an ERISA section 206(g) 
funding-based restriction and at such other time as may be determined 
by the Secretary of the Treasury. Section 103(b)(2) of the PPA amended 
section 502(c)(4) of ERISA to provide the Secretary of Labor with the 
authority to assess a civil penalty of not more than $1,000 a day for 
each violation of ERISA section 101(j). The effective date of the 
provisions added by PPA section 103(b) is for plan years beginning on 
or after January 1, 2008.
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    \1\ Under section 101 of Reorganization Plan No. 4 of 1978 (43 
FR 47713), the Secretary of the Treasury has interpretive 
jurisdiction over section 206(g) of ERISA.
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    Section 502(a)(1) of the PPA amended section 101 of ERISA by adding 
subsection (k), under which the plan administrator of a multiemployer 
pension plan must, upon written request, furnish certain documents to 
any plan participant, beneficiary, employee representative, or any 
employer that has an obligation to contribute to the plan. Section 
502(a)(2) of the PPA amended section 502(c)(4) of ERISA to provide the 
Secretary of Labor with the authority to assess a civil penalty of not 
more than $1,000 a day for each violation of ERISA section 101(k). The 
effective date of the provisions added by PPA section 502(a) is for 
plan years beginning on or after January 1, 2008.
    Section 502(b)(1) of the PPA amended section 101 of ERISA by adding 
subsection (l), under which a plan sponsor or plan administrator of a 
multiemployer employee benefit plan must, upon written request, furnish 
to any employer with an obligation to contribute to such plan, notice 
of potential withdrawal liability. Section 502(b)(2) of the PPA amended 
section 502(c)(4) of ERISA to provide the Secretary of Labor with the 
authority to assess a civil penalty of not more than $1,000 a day for 
each violation of ERISA section 101(l). The effective date of the 
provisions added by PPA section 502(b) is for plan years beginning on 
or after January 1, 2008.
    Section 902(f)(1) of the PPA amended section 514 of ERISA by adding 
subsection (e)(3), under which the plan administrator of a plan with an 
automatic contribution arrangement shall provide to each participant, 
to whom the arrangement applies, notice of the participant's rights and 
obligations under such arrangement. Section 902(f)(2) of the PPA 
amended section 502(c)(4) of ERISA to provide the Secretary of Labor 
with the authority to assess a civil penalty of not more than $1,000 a 
day for each violation of ERISA section 514(e)(3). The effective date 
of the provisions added by PPA section 902(f) is August 17, 2006.
    On December 19, 2007, the Department published in the Federal 
Register a proposed rule to implement section 502(c)(4) of ERISA and 
invited interested parties to comment.\2\ In

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response to the proposal, the Department received two written comments 
representing plans and plan sponsors. Copies of the two comments are 
available under the ``Public Comments'' section of the Department's Web 
site at http://www.dol.gov/ebsa. After careful consideration of the 
issues raised in the written comments, the Department is publishing a 
final regulation, to be codified at 29 CFR 2560.502c-4, without change.
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    \2\ 72 FR 71842.
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    One commenter suggested that it may be premature to issue this 
civil penalty regulation in advance of substantive regulations under 
section 101(j), (k), or (l), or section 514(e)(3) of ERISA. As 
explained below, the civil penalty regulation being adopted herein is 
merely procedural in nature, i.e., it establishes the process by which 
the Department may assess civil penalties and the process by which the 
respondent may challenge that assessment. If the Department or the 
Secretary of the Treasury were to issue regulations under section 
101(j), (k), or (l), or section 514(e)(3) of ERISA, they would not 
likely have any impact on such procedures.\3\ Moreover, the Secretary's 
authority to assess civil penalties under this section is not 
conditioned on the existence of substantive regulations implementing 
section 101(j), (k), or (l), or section 514(e)(3) of ERISA. For these 
reasons, the Department does not believe it is premature to establish 
this civil penalty regulation at this time.
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    \3\ Pursuant to section 101(c)(1)(A)(ii) of the Worker, Retiree, 
and Employer Recovery Act of 2008, Pub. L. 110-458, the Secretary of 
the Treasury, in consultation with the Secretary of Labor, shall 
have the authority to prescribe rules applicable to the notices 
required under section 101(j) of ERISA.
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    The commenters also asked whether the notice requirement in section 
514(e)(3) of ERISA applies to plans with automatic contribution 
arrangements that are not intended to meet the requirements of the 
Department's regulation on qualified default investment alternatives, 
at 29 CFR 2550.404c-5. The notice requirement in section 514(e)(3) of 
ERISA applies only to automatic contribution arrangements described in 
section 514(e)(2) of ERISA. For purposes of section 514(e), section 
514(e)(2) of ERISA, in relevant part, defines an automatic contribution 
arrangement as an arrangement under which ``contributions are invested 
in accordance with regulations prescribed by the Secretary under 
section 404(c)(5).'' Accordingly, the notice requirement in section 
514(e)(3) of ERISA, as well as the related civil penalty provision in 
section 502(c)(4) of ERISA, extend only to automatic contribution 
arrangements described in Sec.  2550.404c-5(f)(1).

B. Overview of Section 2560.502c-4

    In general, the final regulation sets forth how the maximum penalty 
amounts are computed, identifies the circumstances under which a 
penalty may be assessed, sets forth certain procedural rules for 
service and filing, and provides a plan administrator a means to 
contest an assessment by the Department and to request an 
administrative hearing.
    Paragraph (a) of the regulation addresses the general application 
of section 502(c)(4) of ERISA, under which the plan administrator of an 
eligible plan shall be liable for civil penalties assessed by the 
Secretary of Labor in each case in which there is a failure or refusal, 
in whole or in part, to furnish the item(s) to each person entitled 
under the requirements of section 101(j), (k), or (l), or section 
514(e)(3) of ERISA, as applicable.
    Paragraph (b) of the regulation sets forth the amount of penalties 
that may be assessed under section 502(c)(4) of ERISA and provides that 
the penalty assessed under section 502(c)(4) for each separate 
violation is to be determined by the Department, taking into 
consideration the degree or willfulness of the failure or refusal. 
Paragraph (b) provides that the maximum amount assessed for each 
violation shall not exceed $1,000 per day per violation.\4\
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    \4\ The Federal Civil Penalties Inflation Adjustment Act of 1990 
(the 1990 Act), Public Law 101-410, 104 Stat. 890, as amended by the 
Debt Collection Improvement Act of 1996 (the Act), Public Law 104-
134, 110 Stat. 1321-373, generally provides that federal agencies 
adjust certain civil monetary penalties for inflation no later than 
180 days after the enactment of the Act, and at least once every 
four years thereafter, in accordance with the guidelines specified 
in the 1990 Act. The Act specifies that any such increase in a civil 
monetary penalty shall apply only to violations that occur after the 
date the increase takes effect.
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    Paragraph (c) of the regulation provides that, prior to assessing a 
penalty under ERISA section 502(c)(4), the Department shall provide the 
plan administrator with written notice of the Department's intent to 
assess a penalty, the amount of such penalty, the number of individuals 
(e.g., participants and beneficiaries) on which the penalty is based, 
the period to which the penalty applies, and the reason(s) for the 
penalty. The notice would indicate the specific provision violated 
(i.e., section 101(j), (k), or (l), or section 514(e)(3) of ERISA). The 
notice is to be served in accordance with paragraph (i) of the 
regulation (service of notice provision).
    Paragraph (d) of the regulation provides that the Department may 
determine not to assess a penalty, or to waive all or part of the 
penalty to be assessed, under ERISA section 502(c)(4), upon a showing 
by the administrator, under paragraph (e) of the regulation, of 
compliance with section 101(j), (k), or (l), or section 514(e)(3) of 
ERISA or that there were mitigating circumstances for noncompliance. 
Under paragraph (e) of the regulation, the administrator has 30 days 
from the date of the service of the notice issued under paragraph (c) 
of the regulation within which to file a statement making such a 
showing. When the Department serves the notice under paragraph (c) by 
certified mail, service is complete upon mailing but five (5) days are 
added to the time allowed for the filing of the statement (see Sec.  
2560.502c-4(i)(2)).
    Paragraph (f) of the regulation provides that a failure to file a 
timely statement under paragraph (e) shall be deemed to be a waiver of 
the right to appear and contest the facts alleged in the Department's 
notice of intent to assess a penalty for purposes of any adjudicatory 
proceeding involving the assessment of the penalty under section 
502(c)(4) of ERISA, and to be an admission of the facts alleged in the 
notice of intent to assess. Such notice then becomes a final order of 
the Secretary 45 days from the date of service of the notice.
    Paragraph (g)(1) of the regulation provides that, following a 
review of the facts alleged in the statement under paragraph (e), the 
Department shall notify the administrator of its intention to waive the 
penalty, in whole or in part, and/or assess a penalty. If it is the 
intention of the Department to assess a penalty, the notice shall 
indicate the amount of the penalty. Under paragraph (g)(2) of the 
regulation, this notice becomes a final order 45 days after the date of 
service of the notice, except as provided in paragraph (h).
    Paragraph (h) of the regulation provides that the notice described 
in paragraph (g) will become a final order of the Department unless, 
within 30 days of the date of service of the notice, the plan 
administrator or representative files a request for a hearing to 
contest the assessment in administrative proceedings set forth in 
regulations issued under part 2570 of title 29 of the Code of Federal 
Regulations and files an answer, in writing, opposing the sanction. 
When the Department serves the notice under paragraph (g) by mail, 
service is complete upon mailing, but five days are added to the time 
allowed for the filing of a request for hearing and

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answer if the notice was served by certified mail (see 2560.502c-
4(i)(2)).
    Paragraph (i)(1) of the regulation describes the rules relating to 
service of the Department's notice of penalty assessment (Sec. 
2560.502c-4(c)) and the Department's notice of determination on a 
statement of reasonable cause (Sec. 2560.502c-4(g)). Paragraph (i)(1) 
provides that service by the Department shall be made by delivering a 
copy to the administrator or representative thereof; by leaving a copy 
at the principal office, place of business, or residence of the 
administrator or representative thereof; or by mailing a copy to the 
last known address of the administrator or representative thereof. As 
noted above, paragraph (i)(2) of this section provides that when 
service of a notice under paragraph (c) or (g) is by certified mail, 
service is complete upon mailing, but five days are added to the time 
allowed for the filing of a statement or a request for hearing and 
answer, as applicable. Service by regular mail is complete upon receipt 
by the addressee.
    Paragraph (i)(3) of the regulation, which relates to the filing of 
statements of reasonable cause, provides that a statement of reasonable 
cause shall be considered filed (i) upon mailing if accomplished using 
United States Postal Service certified mail or express mail, (ii) upon 
receipt by the delivery service if accomplished using a ``designated 
private delivery service'' within the meaning of 26 U.S.C. 7502(f), 
(iii) upon transmittal if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment, or (iv) in the case of any other 
method of filing, upon receipt by the Department at the address 
provided in the notice. This provision does not apply to the filing of 
requests for hearing and answers with the Office of the Administrative 
Law Judge (OALJ) which are governed by the Department's OALJ rules in 
29 CFR 18.4.
    Paragraph (j) of the regulation clarifies the liability of the 
parties for penalties assessed under section 502(c)(4) of ERISA. 
Paragraph (j)(1) provides that, if more than one person is responsible 
as administrator for the failure to provide the required item(s), all 
such persons shall be jointly and severally liable for such failure. 
Paragraph (j)(2) provides that any person against whom a penalty is 
assessed under section 502(c)(4) of ERISA, pursuant to a final order, 
is personally liable for the payment of such penalty. Paragraph (j)(2) 
provides that liability for the payment of penalties assessed under 
section 502(c)(4) of ERISA is a personal liability of the person 
against whom the penalty is assessed and not a liability of the plan. 
It is the Department's view that payment of penalties assessed under 
ERISA section 502(c) from plan assets would not constitute a reasonable 
expense of administering a plan for purposes of sections 403 and 404 of 
ERISA. Consistent with section 101(l) of ERISA, for purposes of any 
civil penalty imposed under section 502(c)(4) of ERISA pursuant to the 
requirements of section 101(l) of ERISA, the term ``administrator'' 
shall include plan sponsor (within the meaning of section 3(16)(B) of 
the Act).
    Paragraph (k) of the regulation establishes procedures for hearings 
before an Administrative Law Judge (ALJ) with respect to assessment by 
the Department of a civil penalty under ERISA section 502(c)(4), and 
for appealing an ALJ decision to the Secretary or her delegate. The 
procedures are the same procedures that would apply in the case of a 
civil penalty assessment under section 502(c)(7) of ERISA.

C. Regulatory Impact Analysis

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735), the Department must 
determine whether a regulatory action is ``significant'' and therefore 
subject to review by the Office of Management and Budget (OMB). Section 
3(f) of the Executive 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. Pursuant to the terms of the 
Executive Order, it has been determined that this action is not 
``significant'' within the meaning of section 3(f) of the Executive 
Order and therefore is not subject to review by OMB.

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 that are likely 
to have a significant economic impact on a substantial number of small 
entities. For purposes of its analyses under the RFA, EBSA continues to 
consider a small entity to be an employee benefit plan with fewer than 
100 participants. The basis of this definition is found in section 
104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe 
simplified annual reporting for pension plans that cover fewer than 100 
participants.
    The terms of the statute pertaining to the assessment of civil 
penalties under section 502(c)(4) of ERISA do not vary relative to plan 
or plan administrator size. The operation of the statute will normally 
result in the assessment of lower penalties where small plans are 
involved, because penalty assessments are based, in part, on the number 
of plan participants. The opportunity for a plan administrator to 
present facts and circumstances related to a failure or refusal to 
provide appropriate disclosure that may be taken into consideration by 
the Department in assessing penalties under ERISA section 502(c)(4) may 
offer some degree of flexibility to small entities subject to penalty 
assessments. Penalty assessments will have no direct impact on small 
plans, because the plan administrator assessed a civil penalty is 
personally liable for the payment of that penalty pursuant to section 
2560.502c-4(j).
    The Department invited interested persons to submit comments on the 
impact of this rule on small entities and on any alternative approaches 
that may serve to minimize the impact on small plans or other entities 
while accomplishing the objectives of the statutory provisions when the 
notice of proposed rulemaking was published; however, no comments on 
these issues were received.

Paperwork Reduction Act

    The final regulation is not subject to the requirements of the 
Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3501 et seq.), 
because it does not contain a collection of information as defined in 
44 U.S.C. 3502(3). Information otherwise provided to the Secretary in 
connection with the administrative and procedural requirements of this 
final rule is excepted from coverage by PRA 95 pursuant to 44 U.S.C. 
3518(c)(1)(B), and related regulations at 5 CFR 1320.4(a)(2) and (c). 
These provisions generally

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except information provided as a result of an agency's civil or 
administrative action, investigation, or audit.

Congressional Review Act

    This final rule is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and will be transmitted to the Congress and 
the Comptroller General for review.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, this rule does not include 
any Federal mandate that may result in expenditures by State, local, or 
tribal governments, and does not impose an annual burden exceeding $100 
million, as adjusted for inflation, on the private sector.

Federalism Statement

    Executive Order 13132 (August 4, 1999) outlines fundamental 
principles of federalism and requires the adherence to specific 
criteria by federal agencies in the process of their formulation and 
implementation of policies that have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This final rule does not have federalism 
implications because it has no substantial direct effect on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. Section 514 of ERISA provides, with certain 
exceptions specifically enumerated, that the provisions of Titles I and 
IV of ERISA supersede any and all laws of the States as they relate to 
any employee benefit plan covered under ERISA. The requirements 
implemented in this final rule do not alter the fundamental reporting 
and disclosure, or administration and enforcement provisions of the 
statute with respect to employee benefit plans, and as such have no 
implications for the States or the relationship or distribution of 
power between the national government and the States.

List of Subjects in 29 CFR Part 2560

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


0
Accordingly, 29 CFR part 2560 is amended as follows:

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

0
1. The authority citation for part 2560 continues to read as follows:

    Authority: 29 U.S.C. 1132, 1135, and Secretary of Labor's Order 
1-2003, 68 FR 5374 (Feb. 3, 2003). Sec. 2560.503-1 also issued under 
29 U.S.C. 1133. Sections 2560.502c-7 and 2560.502c-4 also issued 
under Public Law 109-280, 120 Stat. 780.


0
2. Add Sec.  2560.502c-4 to read as follows:


Sec.  2560.502c-4  Civil penalties under section 502(c)(4).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(4) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the administrator (within the meaning of 
section 3(16)(A) of the Act) shall be liable for civil penalties 
assessed by the Secretary under section 502(c)(4) of the Act, for 
failure or refusal to furnish:
    (i) Notice of funding-based limits in accordance with section 
101(j) of the Act;
    (ii) Actuarial, financial or funding information in accordance with 
section 101(k) of the Act;
    (iii) Notice of potential withdrawal liability in accordance with 
section 101(l) of the Act; or
    (iv) Notice of rights and obligations under an automatic 
contribution arrangement in accordance with section 514(e)(3) of the 
Act.
    (2) For purposes of this section, a failure or refusal to furnish 
the items referred to in paragraph (a)(1) above shall mean a failure or 
refusal to furnish, in whole or in part, the items required under 
section 101(j), (k), or (l), or section 514(e)(3) of the Act at the 
relevant times and manners prescribed in such sections.
    (b) Amount assessed. (1) The amount assessed under section 
502(c)(4) of the Act for each separate violation shall be determined by 
the Department of Labor, taking into consideration the degree or 
willfulness of the failure or refusal to furnish the items referred to 
in paragraph (a) of this section. However, the amount assessed for each 
violation under section 502(c)(4) of the Act shall not exceed $1,000 a 
day (or such other maximum amount as may be established by regulation 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended), computed from the date of the administrator's 
failure or refusal to furnish the items referred to in paragraph (a) of 
this section.
    (2) For purposes of calculating the amount to be assessed under 
this section, a failure or refusal to furnish the item with respect to 
any person entitled to receive such item, shall be treated as a 
separate violation under section 101(j), (k), or (l), or section 
514(e)(3) of the Act, as applicable.
    (c) Notice of intent to assess a penalty. Prior to the assessment 
of any penalty under section 502(c)(4) of the Act, the Department shall 
provide to the administrator of the plan a written notice indicating 
the Department's intent to assess a penalty under section 502(c)(4) of 
the Act, the amount of such penalty, the number of individuals on which 
the penalty is based, the period to which the penalty applies, and the 
reason(s) for the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 
101(j), (k), or (l), or section 514(e)(3) of the Act, as applicable, or 
on a showing by such person of mitigating circumstances regarding the 
degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described 
in paragraph (i) of this section, to file a statement of reasonable 
cause explaining why the penalty, as calculated, should be reduced, or 
not be assessed, for the reasons set forth in paragraph (d) of this 
section. Such statement must be made in writing and set forth all the 
facts alleged as reasonable cause for the reduction or nonassessment of 
the penalty. The statement must contain a declaration by the 
administrator that the statement is made under the penalties of 
perjury.
    (f) Failure to file a statement of reasonable cause. Failure to 
file a statement of reasonable cause within the thirty (30) day period 
described in paragraph (e) of this section shall be deemed to 
constitute a waiver of the right to appear and contest the facts 
alleged in the notice of intent, and such failure shall be deemed an 
admission of the facts alleged in the notice for purposes of any 
proceeding involving the assessment of a civil penalty under section 
502(c)(4) of the Act. Such notice shall then become a final order of 
the Secretary, within the meaning of Sec.  2570.131(g) of this chapter, 
forty-five (45) days from the date of service of the notice.
    (g) Notice of determination on statement of reasonable cause. (1) 
The Department, following a review of all of

[[Page 21]]

the facts in a statement of reasonable cause alleged in support of 
nonassessment or a complete or partial waiver of the penalty, shall 
notify the administrator, in writing, of its determination on the 
statement of reasonable cause and its determination whether to waive 
the penalty in whole or in part, and/or assess a penalty. If it is the 
determination of the Department to assess a penalty, the notice shall 
indicate the amount of the penalty assessment, not to exceed the amount 
described in paragraph (c) of this section. This notice is a 
``pleading'' for purposes of Sec.  2570.131(m) of this chapter.
    (2) Except as provided in paragraph (h) of this section, a notice 
issued pursuant to paragraph (g)(1) of this section, indicating the 
Department's determination to assess a penalty, shall become a final 
order, within the meaning of Sec.  2570.131(g) of this chapter, forty-
five (45) days from the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning 
of Sec.  2570.131(g) of this chapter, if, within thirty (30) days from 
the date of the service of the notice, the administrator or a 
representative thereof files a request for a hearing under Sec. Sec.  
2570.130 through 2570.141 of this chapter, and files an answer to the 
notice. The request for hearing and answer must be filed in accordance 
with Sec.  2570.132 of this chapter and Sec.  18.4 of this title. The 
answer opposing the proposed sanction shall be in writing, and 
supported by reference to specific circumstances or facts surrounding 
the notice of determination issued pursuant to paragraph (g) of this 
section.
    (i) Service of notices and filing of statements. (1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By mailing a copy to the last known address of the 
administrator or representative thereof.
    (2) If service is accomplished by certified mail, service is 
complete upon mailing. If service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five days 
shall be added to the time allowed by these rules for the filing of a 
statement or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal 
Service certified mail or express mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (j) Liability. (1) If more than one person is responsible as 
administrator for the failure to furnish the items required under 
section 101(j), (k), or (l), or section 514(e)(3) of the Act, as 
applicable, all such persons shall be jointly and severally liable for 
such failure. For purposes of paragraph (a)(1)(iii) of this section, 
the term ``administrator'' shall include plan sponsor (within the 
meaning of section 3(16)(B) of the Act).
    (2) Any person, or persons under paragraph (j)(1) of this section, 
against whom a civil penalty has been assessed under section 502(c)(4) 
of the Act, pursuant to a final order within the meaning of Sec.  
2570.131(g) of this chapter shall be personally liable for the payment 
of such penalty.
    (k) Cross-references. (1) The procedural rules in Sec. Sec.  
2570.130 through 2570.141 of this chapter apply to administrative 
hearings under section 502(c)(4) of the Act.
    (2) When applying procedural rules in Sec. Sec.  2570.130 through 
2570.140:
    (i) Wherever the term ``502(c)(7)'' appears, such term shall mean 
``502(c)(4)'';
    (ii) Reference to Sec.  2560.502c-7(g) in 2570.131(c) shall be 
construed as reference to Sec.  2560.502c-4(g) of this chapter;
    (iii) Reference to Sec.  2560.502c-7(e) in Sec.  2570.131(g) shall 
be construed as reference to Sec.  2560.502c-4(e) of this chapter;
    (iv) Reference to Sec.  2560.502c-7(g) in Sec.  2570.131(m) shall 
be construed as reference to Sec.  2560.502c-4(g); and
    (v) Reference to Sec. Sec.  2560.502c-7(g) and 2560.502c-7(h) in 
Sec.  2570.134 shall be construed as reference to Sec. Sec.  2560.502c-
4(g) and 2560.502c-4(h), respectively.

    Signed at Washington, DC, this 24th day of December 2008.
Bradford P. Campbell,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. E8-31188 Filed 12-31-08; 8:45 am]

BILLING CODE 4510-29-P