8796 Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Rules and Regulations 

Subpart A—[Amended] 

■ 2. Add an authority citation to subpart 

A of part 1631 to read as follows: 

Authority: 5 U.S.C. 552. 

Subpart B—[Amended] 

■ 3. Add an authority citation to subpart 

B of part 1631 to read as follows: 

Authority: 5 U.S.C. 552. 

■ 4. Add subpart C to subpart 1631 to 

read as follows: 

Subpart C—Administrative Subpoenas 

Sec. 

1631.40 Subpoena authority. 

1631.41 Production of records. 

1631.42 Service. 

1631.43 Enforcement. 

Authority: 5 U.S.C. 8480. 

Subpart C—Administrative Subpoenas 

§ 1631.40 Subpoena authority. 

The Executive Director or General 

Counsel may issue subpoenas pursuant 

to 5 U.S.C. 8480. The General Counsel 

may delegate this authority to a Deputy 

General Counsel, Associate General 

Counsel, or Assistant General Counsel. 

§ 1631.41 Production of records. 

A subpoena may require the 

production of designated books, 

documents, records, electronically 

stored information, or tangible materials 

in the possession or control of the 

subpoenaed party when the individual 

signing the subpoena has determined 

that production is necessary to carry out 

any of the Agency’s functions. 

§ 1631.42 Service. 

(a) Return of service. Each subpoena 

shall be accompanied by a Return of 

Service certificate stating the date and 

manner of service and the names of the 

persons served. 

(b) Methods of service. Subpoenas 

shall be served by one of the following 

methods: 

(1) Certified or registered mail, return 

receipt requested to the principal place 

of business or the last known residential 

address of the subpoenaed party. 

(2) Fax or electronic transmission to 

the subpoenaed party or the subpoenaed 

party’s counsel, provided the 

subpoenaed party gives prior approval. 

(3) Personal delivery at the principal 

place of business or residence of the 

subpoenaed party during normal 

business hours. 

§ 1631.43 Enforcement. 

Upon the failure of any party to 

comply with a subpoena, the General 

Counsel shall request that the Attorney 

General seek enforcement of the 

subpoena in the appropriate United 

States district court. 

[FR Doc. 2010–3917 Filed 2–25–10; 8:45 am] 

BILLING CODE 6760–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9477] 

RIN 1545–BI14 

Use of Controlled Corporations To 

Avoid the Application of Section 304; 

Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correcting amendment. 

SUMMARY: This document contains 

corrections to final and temporary 

regulations (TD 9477) that were 

published in the Federal Register on 

Wednesday, December 30, 2009 (74 FR 

69021) regarding certain transactions 

that are subject to section 304 but that 

are entered into with a principal 

purpose of avoiding the application of 

section 304 to a corporation that is 

controlled by the issuing corporation in 

the transaction, or with a principal 

purpose of avoiding the application of 

section 304 to a corporation that 

controls the acquiring corporation in the 

transaction. 

DATES: These corrections are effective 

on February 26, 2010 and are applicable 

on or after December 29, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Sean W. Mullaney, (202) 622–3860 (not 

a toll free number). 

SUPPLEMENTARY INFORMATION: 

Background 

The final and temporary regulations 

(TD 9477) that are the subject of these 

corrections are under section 304 of the 

Internal Revenue Code. 

Need for Correction 

As published, the final and temporary 

regulations (TD 9477) contain an error 

that may prove to be misleading and are 

in need of clarification. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

■ Accordingly, 26 CFR part 1 is 

corrected by making the following 

correcting amendments: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.304–4T is amended 

by revising paragraph (e) to read as 

follows: 

§ 1.304–4T Special rule for the use of 

related corporations to avoid the 

application of section 304 (temporary). 

* * * * * 

(e) Expiration date. This section 

expires on or before December 28, 2012. 

Diane Williams, 

Federal Register Liaison, Publications and 

Regulations Branch, Legal Processing 

Division, Associate Chief Counsel (Procedure 

and Administration). 

[FR Doc. 2010–3927 Filed 2–25–10; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Parts 2560 and 2570 

RIN 1210–AB31 

Civil Penalties Under ERISA Section 

502(c)(8) 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Final rule. 

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)(8) of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act). Under 

the provision, 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 will affect multiemployer 

plans that are in either endangered or 

critical status. 

DATES: This final rule is effective on 

March 29, 2010. 

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: 


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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Rules and Regulations 8797 

1Pursuant 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. 

2Pursuant 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. 

3The 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, 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, and on 

October 5, 2009, issued Revenue Procedure 2009– 

43, 2009–40 I.R.B. 460, which sets forth additional 

circumstances in which the Service will 

automatically approve a request to revoke a section 

204 election. 4An 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. 5An 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. 

6 74 FR 45791. 

7The 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. 

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

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

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 

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). 

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 202(b)(3) of the PPA 

also added section 502(c)(8)(B) 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 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 are effective for plan years 

beginning on or after January 1, 2008. 

On September 4, 2009, the 

Department published in the Federal 

Register a proposed rule to implement 

section 502(c)(8) of ERISA and invited 

interested parties to comment.6 In 

response to the proposal, the 

Department received one written 

comment, a copy of which is available 

under the ‘‘public comments’’ section of 

the Department’s Web site at http:// 

www.dol.gov/ebsa. The commenter 

requested clarification regarding the 

joint and several liability provision, at 

paragraph (j) of the proposal. The 

commenter’s issue is discussed below, 

in the next section, in the context of 

paragraph (j). After careful 

consideration of the comment, the 

Department is publishing a final 

regulation, to be codified at 29 CFR 

2560.502c–8, without change. 

B. Overview of Final Rules 

1. Assessment of Civil Penalties for 

Certain Violations of Section 305 of 

ERISA—§ 2560.502c–8 

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 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 1990.7


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8798 Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Rules and Regulations 

8Unless otherwise specified the word ‘‘days’’ 

refers to calendar days. 

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 8 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 the plan sponsor for 

the filing of the statement (see 

§ 2560.502c 8(i)(2) (relating to Service of 

notices and filing of statements)). 

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 plan sponsor’s 

filing of the request for hearing and 

answer (see § 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 (§ 2560.502c–8(c)) and the 

Department’s notice of determination on 

a statement of reasonable cause 

(§ 2560.502c–8(g)). Paragraph (i)(1) 

provides that service by the Department 

shall be made by delivering a copy to 

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 made 

by certified mail, service is complete 

upon mailing, but five days are added 

to the time allowed the plan sponsor 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 plan sponsor’s 

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, as noted in the preamble 

to the proposed regulation, 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)(8) from plan assets would not 

constitute a reasonable expense of 

administering a plan for purposes of 

sections 403 and 404 of ERISA. 

One commenter requested 

clarification on whether it is the 

Department’s intention that the joint 

and several liability provision in 

paragraph (j)(1) is to apply to all trustees 

for a specified failure without regard to 

the relative degree of fault attributable 

to each trustee. Paragraph (j) of the final 

regulation is not intended to address 

fault allocations. As is ordinarily the 

case with joint and several liability 

provisions, each member of the board of 

trustees would be jointly and severally 

liable for any penalty assessment where 

the board of trustees, for whatever 

reason, failed to meet its statutory 

obligation under section 305 of ERISA 

to adopt an improvement or 

rehabilitation plan, or to meet an 

applicable benchmark. This is true 

whether a particular trustee or trustees 

voted for or against a rehabilitation or 

improvement plan, for example. 

Paragraph (k) of the regulation crossreferences section 2570.160 through 

section 2570.171 of this chapter for 

procedural rules relating to 

administrative hearings under section 

502(c)(8) of the Act. 

2. Procedures for Administrative Review 

of Assessment of Civil Penalties Under 

ERISA Section 502(c)(8)—§ 2570.160 et 

seq. 

This final regulation adds subpart I to 

part 2570 (section 2570.160 through 

section 2570.171) to establish 

procedures for hearings before an 

Administrative Law Judge (ALJ) with 

respect to assessment by the Department 

of a civil penalty under ERISA section 


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Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Rules and Regulations 8799 

502(c)(8), and for appealing an ALJ 

decision to the Secretary or her delegate. 

The rules in subpart I are essentially the 

same as the rules that were contained in 

paragraph (k) of proposed § 2560.502c– 

8. These rules were removed from 

paragraph (k) and relocated in subpart I 

of part 2570 of the CFR to avoid 

confusion and for conformity with other 

civil penalty regulations under 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. It has been determined that this 

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 § 2560.502c–8(j)(2) 

of this final rule. 

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 

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. 


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8800 Federal Register / Vol. 75, No. 38 / Friday, February 26, 2010 / Rules and Regulations 

List of Subjects 

29 CFR Part 2560 

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, Law enforcement, Pensions. 

■ Accordingly, 29 CFR Parts 2560 and 

2570 are 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 § 2560.502c–8 to read as 

follows: 

§ 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 

§ 2570.161(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 

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 § 2570.161(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 § 2570.161(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 § 2570.161(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 §§ 2570.160 through 

2570.171 of this chapter, and files an 

answer to the notice. The request for 

hearing and answer must be filed in 

accordance with § 2570.162 of this 

chapter and § 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. 


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(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 § 2570.161(g) of this chapter, 

shall be personally liable for the 

payment of such penalty. 

(k) Cross-reference. See §§ 2570.160 

through 2570.171 of this chapter for 

procedural rules relating to 

administrative hearings under section 

502(c)(8) of the Act. 

PART 2570—PROCEDURAL 

REGULATIONS UNDER THE 

EMPLOYEE RETIREMENT INCOME 

SECURITY ACT 

■ 3. The authority citation for Part 2570 

is revised to read as follows: 

Authority: 5 U.S.C. 8477, 29 U.S.C. 

1002(40), 1021, 1108, 1132, 1135; sec. 102, 

Reorganization Plan No. 4 of 1978, 43 FR 

47713, 3 CFR, 1978 Comp. p. 332, and E.O. 

12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 

275; Secretary of Labor’s Order 1–2003, 68 

FR 5374 (Feb. 3, 2003). 

Subpart I is also issued under 29 

U.S.C. 1132(c)(8). 

■ 4. Add a new Subpart I to Part 2570 

to read as follows: 

Subpart I—Procedures for the 

Assessment of Civil Penalties Under 

ERISA Section 502(c)(8) 

Sec. 

2570.160 Scope of rules. 

2570.161 Definitions. 

2570.162 Service: Copies of documents and 

pleadings. 

2570.163 Parties, how designated. 

2570.164 Consequences of default. 

2570.165 Consent order or settlement. 

2570.166 Scope of discovery. 

2570.167 Summary decision. 

2570.168 Decision of the administrative law 

judge. 

2570.169 Review by the Secretary. 

2570.170 Scope of review. 

2570.171 Procedures for review by the 

Secretary. 

Subpart I—Procedures for the 

Assessment of Civil Penalties Under 

ERISA Section 502(c)(8) 

§ 2570.160 Scope of rules. 

The rules of practice set forth in this 

subpart are applicable to ‘‘502(c)(8) civil 

penalty proceedings’’ (as defined in 

§ 2570.161(n) of this subpart) under 

section 502(c)(8) of the Employee 

Retirement Income Security Act of 1974, 

as amended (the Act). The rules of 

procedure for administrative hearings 

published by the Department’s Office of 

Administrative Law Judges at Part 18 of 

this title will apply to matters arising 

under ERISA section 502(c)(8) except as 

modified by this subpart. 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. 

§ 2570.161 Definitions. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of the definitions in § 18.2 of this 

title: 

(a) Adjudicatory proceeding means a 

judicial-type proceeding before an 

administrative law judge leading to the 

formulation of a final order; 

(b) Administrative law judge means an 

administrative law judge appointed 

pursuant to the provisions of 5 U.S.C. 

3105; 

(c) Answer means a written statement 

that is supported by reference to specific 

circumstances or facts surrounding the 

notice of determination issued pursuant 

to § 2560.502c–8(g) of this chapter; 

(d) Commencement of proceeding is 

the filing of an answer by the 

respondent; 

(e) Consent agreement means any 

written document containing a specified 

proposed remedy or other relief 

acceptable to the Department and 

consenting parties; 

(f) ERISA means the Employee 

Retirement Income Security Act of 1974, 

as amended; 

(g) Final order means the final 

decision or action of the Department of 

Labor concerning the assessment of a 

civil penalty under ERISA section 

502(c)(8) 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 reasonable cause described 

in § 2560.502c–8(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, by either 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)(8); 

(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 § 2560.502c–8(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)(8) civil penalty proceeding 

means an adjudicatory proceeding 

relating to the assessment of a civil 

penalty provided for in section 502(c)(8) 

of ERISA; 

(o) Respondent means the party 

against whom the Department is seeking 

to assess a civil sanction under ERISA 

section 502(c)(8); 

(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 Employee 

Benefits Security), administrator, 

commissioner, appellate body, board, or 

other official; and 

(q) Solicitor means the Solicitor of 

Labor or his or her delegate. 

§ 2570.162 Service: Copies of documents 

and pleadings. 

For 502(c)(8) penalty proceedings, 

this section shall apply in lieu of § 18.3 

of this title. 


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(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 of record. When a party is 

represented by an attorney, service shall 

be made upon the attorney. Service of 

any document upon any party may be 

made by personal delivery or by mailing 

a copy to the last known address. The 

Department shall be served by delivery 

to the Associate Solicitor, Plan Benefits 

Security Division, ERISA section 

502(c)(8) Proceeding, P.O. Box 1914, 

Washington, DC 20013. The person 

serving the document shall certify to the 

manner and date of service. 

(c) By the Office of Administrative 

Law Judges. Service of orders, decisions 

and all other documents shall be made 

by regular mail to the last known 

address. 

(d) Form of pleadings. (1) Every 

pleading shall contain information 

indicating the name of the Employee 

Benefits Security Administration 

(EBSA) 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 81⁄2 × 11-inch paper. 

(2) Illegible documents, whether 

handwritten, typewritten, photocopied, 

or otherwise, will not be accepted. 

Papers may be reproduced by any 

duplicating process provided all copies 

are clear and legible. 

§ 2570.163 Parties, how designated. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of § 18.10 of this title. 

(a) The term ‘‘party’’ wherever used in 

this subpart shall include any natural 

person, corporation, employee benefit 

plan, association, firm, partnership, 

trustee, receiver, agency, public or 

private organization, or government 

agency. A party against whom a civil 

penalty is sought shall be designated as 

‘‘respondent.’’ The Department shall be 

designated as the ‘‘complainant.’’ 

(b) Other persons or organizations 

shall be permitted to participate as 

parties only if the administrative law 

judge finds that the final decision could 

directly and adversely affect them or the 

class they represent, that they may 

contribute materially to the disposition 

of the proceedings and their interest is 

not adequately represented by existing 

parties, and that in the discretion of the 

administrative law judge the 

participation of such persons or 

organizations would be appropriate. 

(c) A person or organization not 

named as a respondent wishing to 

participate as a party under this section 

shall submit a petition to the 

administrative law judge within fifteen 

(15) days after the person or 

organization has knowledge of or should 

have known about the proceeding. The 

petition shall be filed with the 

administrative law judge and served on 

each person who or organization that 

has been made a party at the time of 

filing. Such petition shall concisely 

state: 

(1) Petitioner’s interest in the 

proceeding; 

(2) How his or her participation as a 

party will contribute materially to the 

disposition of the proceeding; 

(3) Who will appear for petitioner; 

(4) The issues on which petitioner 

wishes to participate; and 

(5) Whether petitioner intends to 

present witnesses. 

(d) Objections to the petition may be 

filed by a party within fifteen (15) days 

of the filing of the petition. If objections 

to the petition are filed, the 

administrative law judge shall then 

determine whether petitioner has the 

requisite interest to be a party in the 

proceedings, as defined in paragraph (b) 

of this section, and shall permit or deny 

participation accordingly. Where 

petitions to participate as parties are 

made by individuals or groups with 

common interests, the administrative 

law judge may request all such 

petitioners to designate a single 

representative, or he or she may 

recognize one or more of such 

petitioners. The administrative law 

judge shall give each such petitioner, as 

well as the parties, written notice of the 

decision on his or her petition. For each 

petition granted, the administrative law 

judge shall provide a brief statement of 

the basis of the decision. If the petition 

is denied, he or she shall briefly state 

the grounds for denial and shall then 

treat the petition as a request for 

participation as amicus curiae. 

§ 2570.164 Consequences of default. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of § 18.5(a) and (b) of this title. 

Failure of the respondent to file an 

answer to the notice of determination 

described in § 2560.502c–8(g) of this 

chapter within the 30 day period 

provided by § 2560.502c–8(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)(8) of the Act. Such notice 

shall then become the final order of the 

Secretary, within the meaning of 

§ 2570.161(g) of this subpart, forty-five 

(45) days from the date of service of the 

notice. 

§ 2570.165 Consent order or settlement. 

For 502(c)(8) civil penalty 

proceedings, the following shall apply 

in lieu of § 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 


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(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 

therefor, the administrative law judge 

shall issue a decision incorporating 

such findings and agreement within 30 

days of his receipt of such document. 

The decision of the administrative law 

judge shall incorporate all of the 

findings, terms, and conditions of the 

settlement agreement and consent order 

of the parties. Such decision shall 

become final agency action within the 

meaning of 5 U.S.C. 704. 

(e) Settlement without consent of all 

parties. In cases in which some, but not 

all, of the parties to a proceeding submit 

a consent agreement to the 

administrative law judge, the following 

procedure shall apply: 

(1) If all of the parties have not 

consented to the proposed settlement 

submitted to the administrative law 

judge, then such non-consenting parties 

must receive notice, and a copy, of the 

proposed settlement at the time it is 

submitted to the administrative law 

judge; 

(2) Any non-consenting party shall 

have fifteen (15) days to file any 

objections to the proposed settlement 

with the administrative law judge and 

all other parties; 

(3) If any party submits an objection 

to the proposed settlement, the 

administrative law judge shall decide 

within 30 days after receipt of such 

objections whether he shall sign or 

reject the proposed settlement. Where 

the record lacks substantial evidence 

upon which to base a decision or there 

is a genuine issue of material fact, then 

the administrative law judge may 

establish procedures for the purpose of 

receiving additional evidence upon 

which a decision on the contested 

issues may reasonably be based; 

(4) If there are no objections to the 

proposed settlement, or if the 

administrative law judge decides to sign 

the proposed settlement after reviewing 

any such objections, the administrative 

law judge shall incorporate the consent 

agreement into a decision meeting the 

requirements of paragraph (d) of this 

section. 

§ 2570.166 Scope of discovery. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of § 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. 

§ 2570.167 Summary decision. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of § 18.41 of this title. 

(a) No genuine issue of material fact. 

(1) Where no issue of a material fact is 

found to have been raised, the 

administrative law judge may issue a 

decision which, in the absence of an 

appeal pursuant to §§ 2570.169 through 

2570.171 of this subpart, shall become 

a final order. 

(2) A decision made under paragraph 

(a) of this section 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. 

§ 2570.168 Decision of the administrative 

law judge. 

For 502(c)(8) civil penalty 

proceedings, this section shall apply in 

lieu of § 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)(8) 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)(8) 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 §§ 2570.169 

through 2570.171 of this subpart. 


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§ 2570.169 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. 

§ 2570.170 Scope of review. 

The review of the Secretary shall not 

be a de novo proceeding but rather a 

review of the record established before 

the administrative law judge. There 

shall be no opportunity for oral 

argument. 

§ 2570.171 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 23rd day of 

February 2010. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

[FR Doc. 2010–4005 Filed 2–25–10; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket No. USCG–2010–0093] 

RIN 1625–AA00 

Safety Zone; NASSCO Launching of 

USNS Charles Drew, San Diego Bay, 

San Diego, CA. 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary final rule. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone on 

the navigable waters of the San Diego 

Bay in support of the NASSCO Ship 

Launching for the United States Naval 

Ship (USNS) Charles Drew. The safety 

zone is necessary to provide for the 

safety of vessels and users of the 

waterway. Persons and vessels are 

prohibited from entering into, transiting 

through, or anchoring within this safety 

zone unless authorized by the Captain 

of the Port (COTP) San Diego or his 

designated representative. 

DATES: This rule is effective from 6:30 

a.m. through 8:30 a.m. on February 27, 

2010. 

ADDRESSES: Documents indicated in this 

preamble as being available in the 

docket are part of docket USCG–2010– 

0093 and are available online by going 

to http://www.regulations.gov, inserting 

USCG–2010–0093 in the ‘‘Keyword’’ 

box, and then clicking ‘‘Search.’’ They 

are also available for inspection or 

copying at the Docket Management 

Facility (M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

rule, call or e-mail Petty Officer Corey 

McDonald, Waterways Management, 

U.S. Coast Guard Sector San Diego; 

telephone 619–278–7262, e-mail 

Corey.R.McDonald@uscg.mil. If you 

have questions on viewing the docket, 

call Renee V. Wright, Program Manager, 

Docket Operations, telephone 202–366– 

9826. 

SUPPLEMENTARY INFORMATION: 

Regulatory Information 

The Coast Guard is issuing this 

temporary final rule without prior 

notice and opportunity to comment 

pursuant to authority under section 4(a) 

of the Administrative Procedure Act 

(APA) (5 U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

notice of proposed rulemaking (NPRM) 

with respect to this rule because the 

event would occur before the 

rulemaking process was complete. As 

such, any delay in the regulation’s 

effective date would be contrary to the 

public interest, as immediate action is 

necessary to provide for the safety of 

vessels and users of the waterway. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making this rule effective less than 30 

days after publication in the Federal 

Register. The issuance of final approval 

was so recent that the rule will be made 

effective less than 30 days after 

publication. Any delay in the effective 

date of this rule will expose vessels and 

persons of the waterway to dangers 

posed by ship launchings. 

Background and Purpose 

The Coast Guard is establishing a 

temporary safety zone on the navigable 

waters of the San Diego Bay to 

contribute to the safety of the USNS 

Charles Drew and surrounding vessels 

as this ship launches from NASSCO 

shipyards. There will be three tugboats 

to take control of the vessel after the 

launch. This temporary safety zone is 

necessary to provide for the safety of the 

vessels and users of the waterway. 

Discussion of Rule 

The USNS Charles Drew will be 

launched from NASSCO shipyard into 

the San Diego Bay the morning of 

February 27, 2010. The safety zone is 

required because the vessel’s planned 

launch location is in the maritime 

navigation channel. The limits of the 

temporary safety zone include all 

navigable waters encompassed by the 

following coordinates: 

32°41.39′ N, 117°08.66′ W; 

32°41.24′ N, 117°09.05′ W; 

32°41.05′ N, 117°08.73′ W; 

32°41.20′ N, 117°08.34′ W; 

thence north along the shoreline to 

32°41.39′ N, 117°08.66′ W. 

The safety zone is necessary to 

provide for the safety of the vessels and 

users of the waterway. Persons and 

vessels are prohibited from entering 

into, transiting through, or anchoring 

within this safety zone unless 

authorized by the COTP San Diego or 

his designated representative. Vessels or 

persons violating this zone will be 


sroberts on DSKD5P82C1PROD with RULES