EBSA Proposed Rules

Civil Penalties Under ERISA Section 502(c)(8)   [9/4/2009]
[PDF]
FR Doc E9-21343
[Federal Register: September 4, 2009 (Volume 74, Number 171)]
[Proposed Rules]               
[Page 45791-45795]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04se09-22]                         

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2560

RIN 1210-AB31

 
Civil Penalties Under ERISA Section 502(c)(8)

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Proposed regulation.

-----------------------------------------------------------------------

SUMMARY: This document contains a proposed regulation that, upon 
adoption, would establish procedures relating to the assessment of 
civil penalties by the Department of Labor under section 502(c)(8) of 
the Employee Retirement Income Security Act of 1974 (ERISA or the Act). 
Under section 502(c)(8) of ERISA, which was added by the Pension 
Protection Act of 2006, the Secretary of Labor is granted authority to 
assess civil penalties not to exceed $1,100 per day against any plan 
sponsor of a multiemployer plan for certain violations of section 305 
of ERISA. The regulation would affect multiemployer plans that are in 
either endangered or critical status.

DATES: Written comments on the proposed regulation should be received 
by the Department of Labor no later than November 3, 2009.

ADDRESSES: You may submit comments, identified by RIN 1210-AB31, by one 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: e-ORI@dol.gov. Include RIN 1210-AB31 in the 
subject line of the message.
     Mail: Office of Regulations and Interpretations, Employee 
Benefits Security Administration, Room N-5655, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Washington, DC 20210, Attention: 
Civil Penalties Under 502(c)(8).
    Instructions: All submissions received must include the agency name 
and Regulatory Information Number (RIN) for this rulemaking. Comments 
received will be posted without change to  http://www.regulations.gov 
and http://www.dol.gov/ebsa, and made available for public inspection 
at the Public Disclosure Room, N-1513, Employee Benefits Security 
Administration, 200 Constitution Avenue, NW., Washington, DC 20210, 
including any personal information provided. Persons submitting 
comments electronically are encouraged not to submit paper copies.

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

SUPPLEMENTARY INFORMATION:

A. Background

    Section 202 and section 212 of the Pension Protection Act of 2006 
(PPA), Public Law 109-280, respectively, amended ERISA by adding 
section 305 and amended the Internal Revenue Code (Code) by adding 
section 432, to provide additional rules for multiemployer defined 
benefit pension plans in endangered status or critical status. All 
references in this document to section 305 of ERISA should be read to 
include section 432 of the Code.\1\
---------------------------------------------------------------------------

    \1\ Pursuant to Reorganization Plan No. 4 of 1978, 43 FR 47713 
(Oct. 17, 1978), the Department of the Treasury has interpretive 
authority over the minimum funding rules of Title I of ERISA, 
including section 305 of ERISA.
---------------------------------------------------------------------------

    In general, section 305(b)(3)(A) of ERISA provides that not later 
than the 90th day of each plan year, the actuary of a multiemployer 
defined benefit pension plan shall certify to the Secretary of the 
Treasury and to the plan sponsor--(i) Whether or not the plan is in 
endangered status for such plan year and whether or not the plan is or 
will be in critical status for such plan year, and (ii) in the case of 
a plan which is in a funding improvement or rehabilitation period, 
whether or not the plan is making the scheduled progress in meeting the 
requirements of its funding improvement or rehabilitation plan.
    Section 305(b)(3)(D)(i) of ERISA provides that, in any case in 
which it is certified under section 305(b)(3)(A) that a multiemployer 
plan is or will be in endangered or critical status for a plan year, 
the plan sponsor shall, not later than 30 days after the date of the 
certification, provide notification of the endangered or critical 
status to participants and beneficiaries, the bargaining parties, the 
Pension Benefit Guaranty Corporation, and the Secretary of Labor.\2\
---------------------------------------------------------------------------

    \2\ Pursuant to section 305(b)(3)(D)(iii) of ERISA, the 
Department of Labor issued proposed 29 CFR 2540.305-1, which 
includes a model notice for plans in critical status. See 73 FR 
15688 (Mar. 25, 2008). However, section 102(b)(1)(C) of the Worker, 
Retiree, and Employer Recovery Act of 2008, Public Law 110-458, 
signed into law on December 23, 2008, transferred the Secretary of 
Labor's obligation to prescribe a model notice to the Secretary of 
the Treasury, in consultation with the Secretary of Labor.
---------------------------------------------------------------------------

    Section 305(c)(1)(A) and section 305(e)(1)(A) provide that in the 
first year that a plan is certified to be in endangered or critical 
status, the plan sponsor generally has a 240-day period

[[Page 45792]]

from the required date of the certification to adopt a funding 
improvement plan (in the case of a plan that is in endangered status) 
or a rehabilitation plan (in the case of a plan that is in critical 
status).\3\ Section 305(c)(1) also requires multiemployer plans in 
endangered status to meet ``applicable benchmarks'' as defined under 
ERISA section 305(c)(3), as modified by ERISA section 305(c)(5).
---------------------------------------------------------------------------

    \3\ The Worker, Retiree, and Employer Recovery Act of 2008, 
Public Law 110-458 (WRERA), permits multiemployer plans to delay 
temporarily their endangered or critical status under section 305 of 
ERISA. Section 204 of WRERA provides that a multiemployer plan may, 
for its first plan year beginning during the period from October 1, 
2008, through September 30, 2009, elect to keep its status for the 
plan year preceding such plan year for purposes of section 305 of 
ERISA and section 432 of the Code. For example, a plan that was not 
in endangered status for 2008 may elect to keep that non-endangered 
status for 2009 even if it is in fact in endangered status. On March 
27, 2009, the Internal Revenue Service issued Notice 2009-31, 2009-
16 I.R.B. 856, providing guidance to multiemployer plans relating to 
such elections, and on April 30, 2009, issued Notice 2009-42, 2009-
20 I.R.B. 1011, modifying Notice 2009-31 to provide an extension of 
the election period and relief for plans needing arbitration on the 
election.
---------------------------------------------------------------------------

    Section 202(b)(3) of the PPA added section 502(c)(8)(A) to ERISA 
which gives the Secretary of Labor the authority to assess a civil 
penalty of not more than $1,100 a day against the plan sponsor for each 
violation by such sponsor of the requirement under section 305 to adopt 
by the deadline established in that section a funding improvement plan 
or rehabilitation plan with respect to a multiemployer plan which is in 
endangered or critical status.\4\ Section 502(c)(8)(B) of ERISA 
provides the Secretary of Labor with the authority to assess a civil 
penalty of not more than $1,100 a day against the plan sponsor of a 
plan in endangered status, which is not in seriously endangered status, 
that fails to meet the applicable benchmarks under section 305 by the 
end of the funding improvement period with respect to the plan.\5\ 
These provisions added by the PPA section 202(b)(3) are effective for 
plan years beginning on or after January 1, 2008.
---------------------------------------------------------------------------

    \4\ An excise tax under Code section 4971(g)(4) generally 
applies, in addition to any penalty under ERISA section 502(c)(8), 
in the case of a failure to adopt a rehabilitation plan with respect 
to a multiemployer plan in critical status.
    \5\ An excise tax under Code section 4971(g)(3) generally 
applies in the case of a failure by a multiemployer plan in 
seriously endangered status to meet the applicable benchmarks by the 
end of the funding improvement period or a failure of a plan in 
critical status to meet the requirements applicable to such plans 
under section 432(e) of the Code.
---------------------------------------------------------------------------

B. Overview of Proposed 29 CFR 2560.502c-8

    In general, this proposed 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 by the Department and filing by a plan sponsor, and provides a 
plan sponsor a means to contest an assessment by the Department by 
requesting an administrative hearing.
    Paragraph (a) of the regulation addresses the general application 
of section 502(c)(8) of ERISA, under which the plan sponsor of an 
eligible plan shall be liable for civil penalties assessed by the 
Secretary of Labor in each case in which there are certain violations 
of section 305 of ERISA.
    Paragraph (b) of the regulation sets forth the amount of penalties 
that may be assessed under section 502(c)(8) of ERISA and provides that 
the penalty assessed under section 502(c)(8) for each separate 
violation is to be determined by the Department, taking into 
consideration the degree or willfulness of the violation. Paragraph (b) 
provides that the maximum amount assessed for each violation shall not 
exceed $1,100 a day per violation or such other maximum amount as may 
be established by regulation pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990.\6\
---------------------------------------------------------------------------

    \6\ 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 1996 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 1996 Act, and at 
least once every four years thereafter, in accordance with the 
guidelines specified in the 1990 Act. The 1996 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.
---------------------------------------------------------------------------

    Paragraph (c) of the regulation provides that, prior to assessing a 
penalty under ERISA section 502(c)(8), the Department shall provide the 
plan sponsor with written notice of the Department's intent to assess a 
penalty, the amount of such penalty, the period to which the penalty 
applies, and the reason(s) for the penalty. The notice would indicate 
the specific provision violated. 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 
decide not to assess a penalty, or to waive all or part of the penalty 
to be assessed, under ERISA section 502(c)(8), upon a showing by the 
plan sponsor, under paragraph (e) of the regulation, of compliance with 
section 305 of ERISA or that there were mitigating circumstances for 
noncompliance.
    Under paragraph (e) of the regulation, the plan sponsor has 30 days 
from the date of 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-
8(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)(8) 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 plan sponsor of its determination 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. 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 sponsor 
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 certified mail, 
service is complete upon mailing but five (5) days are added to the 
time allowed for the filing of the request for hearing and answer (see 
Sec.  2560.502c-8(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-8(c)) and the Department's notice of determination on a 
statement of reasonable cause (Sec.  2560.502c-8(g)). Paragraph (i)(1) 
provides that service by the Department shall be made by delivering a 
copy to

[[Page 45793]]

the plan sponsor or representative thereof; by leaving a copy at the 
principal office, place of business, or residence of the plan sponsor 
or representative thereof; or by mailing a copy to the last known 
address of the plan sponsor 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)(8) of ERISA. 
Paragraph (j)(1) provides that, if more than one person is responsible 
as plan sponsor for the failure to adopt a funding improvement or 
rehabilitation plan, or to meet the applicable benchmarks, as required 
by section 305 of ERISA, all such persons shall be jointly and 
severally liable for such failure. Thus, the entire joint board of 
trustees would be jointly and severally liable for any such failure. 
Paragraph (j)(2) provides that any person against whom a penalty is 
assessed under section 502(c)(8) of ERISA, pursuant to a final order, 
is personally liable for the payment of such penalty, and that such 
liability is 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.
    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)(8), and 
for appealing an ALJ decision to the Secretary or her delegate. The 
procedures are the same procedures as would apply in the case of a 
civil penalty assessment under section 502(c)(7) of ERISA.

C. Effective Date

    The Department proposes to make this regulation effective 60 days 
after the date of publication of the final rule in the Federal 
Register.

D. 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. It has been determined that this 
proposed rule relating to the assessment of civil monetary penalties 
under section 502(c)(8) of the Act is not significant under section 
3(f)(4) of the Executive Order; and, therefore, it is not subject to 
OMB review.

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. Unless an agency certifies that a rule is not likely to have 
a significant economic impact on a substantial number of small 
entities, section 603 of RFA requires that the agency present a 
regulatory flexibility analysis at the time of the publication of the 
final rule 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 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. By this standard, data from the EBSA Private Pension 
Bulletin for 2006 show that only 46 multiemployer defined benefit 
pension plans or 3% of all multiemployer defined benefit pension plans 
are small entities. This number represents .1% of all small defined 
benefit pension plans. The Department does not consider this to be a 
substantial number of small entities. Therefore, pursuant to section 
605(b) of RFA, the Department hereby certifies that the rule is not 
likely to have a significant economic impact on a substantial number of 
small entities.
    The terms of the statute pertaining to the assessment of civil 
penalties under section 502(c)(8) of ERISA do not vary relative to plan 
or plan sponsor size. The opportunity for a plan sponsor to present 
facts and circumstances related to a failure or refusal to comply with 
section 305 of the Act that may be taken into consideration by the 
Department in reducing or not assessing penalties under ERISA section 
502(c)(8) 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 sponsor assessed a civil 
penalty is personally liable for the payment of that penalty pursuant 
to Sec.  2560.502c-8(j)(2).
    The Department invites interested persons to submit comments on the 
impact of this proposed 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.

Paperwork Reduction Act

    The proposal 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

[[Page 45794]]

administrative and procedural requirements of this proposed 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 except information provided as a result of an agency's civil 
or administrative action, investigation, or audit.

Congressional Review Act

    This proposed 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, upon finalization, 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 proposed 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 proposed 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 2560

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

    Accordingly, 29 CFR part 2560 is proposed to be amended as follows:

PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT

    1. The authority citation for part 2560 is revised 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. Sec. 2560.502c-7 also issued under 29 U.S.C 
1132(c)(7). Sec. 2560.502c-4 also issued under 29 U.S.C. 1132(c)(4). 
Sec. 2560.502c-8 also issued under 29 U.S.C. 1132(c)(8).

    2. Add Sec.  2560.502c-8 to read as follows:


Sec.  2560.502c-8  Civil penalties under section 502(c)(8).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(8) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the plan sponsor (within the meaning of 
section 3(16)(B)(iii) of the Act) shall be liable for civil penalties 
assessed by the Secretary under section 502(c)(8) of the Act, for:
    (i) Each violation by such sponsor of the requirement under section 
305 of the Act to adopt by the deadline established in that section a 
funding improvement plan or rehabilitation plan with respect to a 
multiemployer plan which is in endangered or critical status; or
    (ii) In the case of a plan in endangered status which is not in 
seriously endangered status, a failure by the plan to meet the 
applicable benchmarks under section 305 by the end of the funding 
improvement period with respect to the plan.
    (2) For purposes of this section, violations or failures referred 
to in paragraph (a)(1) of this section shall mean a failure or refusal, 
in whole or in part, to adopt a funding improvement or rehabilitation 
plan, or to meet the applicable benchmarks, at the relevant times and 
manners prescribed in section 305 of the Act.
    (b) Amount assessed. The amount assessed under section 502(c)(8) 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 comply with the specific 
requirements referred to in paragraph (a) of this section. However, the 
amount assessed for each violation under section 502(c)(8) of the Act 
shall not exceed $1,100 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 plan sponsor's failure or refusal to comply with the specific 
requirements referred to in paragraph (a) of this section.
    (c) Notice of intent to assess a penalty. Prior to the assessment 
of any penalty under section 502(c)(8) of the Act, the Department shall 
provide to the plan sponsor of the plan a written notice indicating the 
Department's intent to assess a penalty under section 502(c)(8) of the 
Act, the amount of such penalty, 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 plan sponsor complied with the requirements of section 305 of 
the Act, or on a showing by the plan sponsor 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 plan sponsor 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 plan 
sponsor 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)(8) 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

[[Page 45795]]

Department, following a review of all of 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 plan sponsor, 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 plan sponsor 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 plan sponsor or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the plan sponsor or representative thereof; or
    (iii) By mailing a copy to the last known address of the plan 
sponsor 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 plan 
sponsor for violations referred to in paragraph (a) of this section, 
all such persons shall be jointly and severally liable for such 
violations.
    (2) Any person, or persons under paragraph (j)(1) of this section, 
against whom a civil penalty has been assessed under section 502(c)(8) 
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)(8) 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)(8)'';
    (ii) Reference to Sec.  2560.502c-7(g) in 2570.131(c) shall be 
construed as reference to Sec.  2560.502c-8(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-8(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-8(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-
8(g) and 2560.502c-8(h), respectively.

    Signed at Washington, DC, this 28th day of August 2009.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. E9-21343 Filed 9-3-09; 8:45 am]

BILLING CODE 4510-29-P