Employee Benefits Security Admin., Labor Pt. 2570

PART 2570—PROCEDURAL REGULA- 2570.52 Effective date. TIONS UNDER THE EMPLOYEE RE- Subpart C—Procedures for the Assessment TIREMENT INCOME SECURITY of Civil Penalties Under ERISA Section ACT 502(c)(2) 2570.60 Scope of rules. Subpart A—Procedures for the Assessment 2570.61 Definitions. of Civil Sanctions Under ERISA Section 2570.62 Service: Copies of documents and 502(i) pleadings. 2570.63 Parties, how designated. Sec. 2570.64 Consequences of default. 2570.1 Scope of rules. 2570.65 Consent order or settlement. 2570.2 Definitions. 2570.66 Scope of discovery. 2570.3 Service: Copies of documents and 2570.67 Summary decision. pleadings. 2570.68 Decision of the administrative law 2570.4 Parties. judge. 2570.5 Consequences of default. 2570.69 Review by the Secretary. 2570.6 Consent order or settlement. 2570.70 Scope of review. 2570.7 Scope of discovery. 2570.71 Procedures for review by the Sec- 2570.8 Summary decision. retary. 2570.9 Decision of the administrative law judge. Subpart D—Procedure for the Assessment 2570.10 Review by the Secretary. of Civil Penalties Under ERISA Section 2570.11 Scope of review. 502(l) 2570.12 Procedures for review by the Sec- 2570.80 Scope of rules. retary. 2570.81 In general. 2570.82 Definitions. Subpart B—Procedures Governing the Fil- 2570.83 Assessment of civil penalty. ing and Processing of Prohibited Trans- 2570.84 Payment of civil penalty. action Exemption Applications 2570.85 Waiver or reduction of civil penalty. 2570.86 Reduction of penalty by other pen- 2570.30 Scope of rules. alty assessments. 2570.31 Definitions. 2570.87 Revision of assessment. 2570.32 Persons who may apply for exemp- 2570.88 Effective date. tions. 2570.33 Applications the Department will Subpart E—Procedures for the Assessment not ordinarily consider. of Civil Penalties Under ERISA Section 2570.34 Information to be included in every 502(c)(5) exemption application. 2570.35 Information to be included in appli- 2570.90 Scope of Rules. cations for individual exemptions only. 2570.91 Definitions. 2570.36 Where to file an application. 2570.92 Service: Copies of documents and 2570.37 Duty to amend and supplement ex- pleadings. emption applications. 2570.93 Parties, how designated. 2570.38 Tentative denial letters. 2570.94 Consequences of default. 2570.39 Opportunities to submit additional 2570.95 Consent order or settlement. information. 2570.96 Scope of discovery. 2570.40 Conferences. 2570.97 Summary decision. 2570.41 Final denial letters. 2570.98 Decision of the administrative law 2570.42 Notice of proposed exemption. judge. 2570.99 Review by the Secretary. 2570.43 Notification of interested persons by 2570.100 Scope of review. applicant. 2570.101 Procedures for review by the Sec- 2570.44 Withdrawal of exemption applica- retary. tions. 2570.45 Requests for reconsideration. Subpart F—Procedures for the Assessment 2570.46 Hearings in opposition to exemp- of Civil Penalties Under ERISA Section tions from restrictions on fiduciary self- dealing. 502(c)(6) 2570.47 Other hearings. 2570.110 Scope of rules. 2570.48 Decision to grant exemptions. 2570.111 Definitions. 2570.49 Limits on the effect of exemptions. 2570.112 Service: Copies of documents and 2570.50 Revocation or modification of ex- pleadings. emptions. 2570.113 Parties, how designated. 2570.51 Public inspection and copies. 2570.114 Consequences of default.

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2570.115 Consent order or settlement. tion Plan No. 4 of 1978, 5 U.S.C. App at 672 2570.116 Scope of discovery. (2006); Secretary of Labor’s Order 3–2010, 75 2570.117 Summary decision. FR 55354 (September 10, 2010) 2570.118 Decision of the administrative law Subpart I is also issued under 29 U.S.C. judge. 1132(c)(8). 2570.119 Review by the Secretary. SOURCE: 53 FR 37476, Sept. 26, 1988, unless 2570.120 Scope of review. otherwise noted. 2570.121 Procedures for review by the Sec- retary. Subpart A—Procedures for the As- Subpart G—Procedures for the Assessment sessment of Civil Sanctions of Civil Penalties under ERISA Section Under ERISA Section 502(i) 502(c)(7) § 2570.1 Scope of rules. 2570.130 Scope of rules. 2570.131 Definitions. The rules of practice set forth in this 2570.132 Service: Copies of documents and part are applicable to ‘‘prohibited pleadings. transaction penalty proceedings’’ (as 2570.133 Parties, how designated. defined in § 2570.2(o) of this part) under 2570.134 Consequences of default. section 502(i) of the Employee Retire- 2570.135 Consent order or settlement. ment Income Security Act of 1974. The 2570.136 Scope of discovery. 2570.137 Summary decision. rules of procedure for administrative 2570.138 Decision of the administrative law hearings published by the Depart- judge. ment’s Office of Administrative Law 2570.139 Review by the Secretary. Judges at part 18 of this title will apply 2570.140 Scope of review. to matters arising under ERISA sec- 2570.141 Procedures for review by the Sec- tion 502(i) except as modified by this retary. section. These proceedings shall be conducted as expeditiously as possible, Subpart H—Procedures for Issuance of and the parties shall make every effort Findings Under ERISA Sec. 3(40) to avoid delay at each stage of the pro- 2570.150 Scope of rules. ceedings. 2570.151 In general. 2570.152 Definitions. § 2570.2 Definitions. 2570.153 Parties. For prohibited transaction penalty 2570.154 Filing and contents of petition. 2570.155 Service. proceedings, this section shall apply in 2570.156 Expedited proceedings. lieu of the definitions in § 18.2 of this 2570.157 Allocation of burden of proof. title: 2570.158 Decision of the Administrative Law (a) Adjudicatory proceeding means a Judge. judicial-type proceeding leading to the 2570.159 Review by the Secretary. formulation of a final order; (b) Administrative law judge means an Subpart I—Procedures for the Assessment administrative law judge appointed of Civil Penalties Under ERISA Section pursuant to the provisions of 5 U.S.C. 502(c)(8) 3105; 2570.160 Scope of rules. (c) Answer is defined for these pro- 2570.161 Definitions. ceedings as set forth in § 18.5(d)(2) of 2570.162 Service: Copies of documents and this title; pleadings. (d) Commencement of proceeding is the 2570.163 Parties, how designated. filing of an answer by the respondent; 2570.164 Consequences of default. (e) Consent agreement means any writ- 2570.165 Consent order or settlement. ten document containing a specified 2570.166 Scope of discovery. 2570.167 Summary decision. proposed remedy or other relief accept- 2570.168 Decision of the administrative law able to the Department and consenting judge. parties; 2570.169 Review by the Secretary. (f) ERISA means the Employee Re- 2570.170 Scope of review. tirement Income Security Act of 1974, 2570.171 Procedures for review by the Sec- as amended; retary. (g) Final order means the final deci- AUTHORITY: 5 U.S.C. 8477; 29 U.S.C. 1002(40), sion or action of the Department of 1021, 1108, 1132, and 1135; sec. 102, Reorganiza- Labor concerning the assessment of a

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civil sanction under ERISA section § 2570.3 Service: Copies of documents 502(i) against a particular party. Such and pleadings. final order may result from a decision For prohibited transaction penalty of an administrative law judge or the proceedings, this section shall apply in Secretary, or the failure of a party to lieu of § 18.3 of this title. invoke the procedures for hearings or (a) General. Copies of all documents appeals under this title. Such a final shall be served on all parties of record. order shall constitute final agency ac- All documents should clearly designate tion within the meaning of 5 U.S.C. 704; the docket number, if any, and short (h) Hearing means that part of a pro- title of all matters. All documents ceeding which involves the submission shall be delivered or mailed to the of evidence, either by oral presentation Chief Docket Clerk, Office of Adminis- or written submission, to the adminis- trative Law Judges, 800 K Street, NW., trative law judge; Suite 400, Washington, DC 20001–8002, or (i) Notice means any document, how- to the OALJ regional Office to which ever designated, issued by the Depart- the proceedings may have been trans- ment of Labor which initiates an adju- ferred for hearing. Each document filed dicatory proceeding under ERISA sec- shall be clear and legible. tion 502(i); (b) By parties. All motions, petitions, (j) Order means the whole or any part pleadings, briefs or other documents shall be filed with the Office of Admin- of a final procedural or substantive dis- istrative Law Judges with a copy in- position of a matter under ERISA sec- cluding any attachments to all other tion 502(i); parties of record. When a party is rep- (k) Party includes a person or agency resented by an attorney, service shall named or admitted as a party to a pro- be made upon the attorney. Service of ceeding; any document upon any party may be (l) Person includes an individual, made by personal delivery or by mail- partnership, corporation, employee ing a copy to the last known address. benefit plan, association, exchange or The Department shall be served by de- other entity or organization; livery to the Associate Solicitor, Plan (m) Petition means a written request, Benefits Security Division, ERISA Sec- made by a person or party, for some af- tion 502(i) Proceeding, P.O. Box 1914, firmative action; Washington, DC 20013. The person serv- (n) Pleading means the notice, the an- ing the document shall certify to the swer to the notice, any supplement or manner and date of service. amendment thereto, and any reply that (c) By the Office of Administrative Law may be permitted to any answer, sup- Judges. Service of orders, decisions and plement or amendment; all other documents, except notices, (o) Prohibited transaction penalty pro- shall be made by regular mail to the last known address. ceeding means a proceeding relating to the assessment of the civil penalty pro- (d) Service of notices. (1) Service of no- tices shall be made either: vided for in section 502(i) of ERISA; (i) By delivering a copy to the indi- (p) Respondent means the party vidual, any partner, any officer of a against whom the Department is seek- corporation, or any attorney of record; ing to assess a civil sanction under (ii) By leaving a copy at the principal ERISA section 502(i); office, place of business, or residence of (q) Secretary means the Secretary of such individual, partner, officer or at- Labor and includes, pursuant to any torney; or delegation of authority by the Sec- (iii) By mailing a copy to the last retary, any assistant secretary (includ- known address of such individual, part- ing the Assistant Secretary for Em- ner, officer or attorney. ployee Benefits Security), adminis- (2) If service is accomplished by cer- trator, commissioner, appellate body, tified mail, service is complete upon board, or other official; mailing. If done by regular mail, serv- (r) Solicitor means the Solicitor of ice is complete upon receipt by the ad- Labor or his or her delegate. dressee.

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(e) Form of pleadings. (1) Every plead- trative law judge within fifteen (15) ing shall contain information indi- days after the person or organization cating the name of the Employee Bene- has knowledge of or should have known fits Security Administration (EBSA) as about the proceeding. The petition the agency under which the proceeding shall be filed with the administrative is instituted, the title of the pro- law judge and served on each person or ceeding, the docket number (if any) as- organization who has been made a signed by the Office of Administrative party at the time of filing. Such peti- Law Judges and a designation of the tion shall concisely state: type of pleading or paper (e.g., notice, (1) Petitioner’s interest in the pro- motion to dismiss, etc.). The pleading ceeding; or paper shall be signed and shall con- (2) How his or her participation as a tain the address and telephone number party will contribute materially to the of the party or person representing the disposition of the proceeding; party. Although there are no formal specifications for documents, they (3) Who will appear for petitioner; should be typewritten when possible on (4) The issues on which petitioner wishes to participate; and standard size 81⁄2 × 11 inch paper. (2) Illegible documents, whether (5) Whether petitioner intends to handwritten, typewritten, photocopied, present witnesses. or otherwise, will not be accepted. Pa- (d) Objections to the petition may be pers may be reproduced by any dupli- filed by a party within fifteen (15) days cating process provided all copies are of the filing of the petition. If objec- clear and legible. tions to the petition are filed, the ad- ministrative law judge shall then de- [53 FR 37476, Sept. 26, 1988, as amended at 65 FR 7191, Feb. 11, 2000; 68 FR 17508, Apr. 9, termine whether petitioners have the 2003] requisite interest to be a party in the proceedings, as defined in paragraph (b) § 2570.4 Parties. of this section, and shall permit or For prohibited transaction penalty deny participation accordingly. Where proceedings, this section shall apply in petitions to participate as parties are lieu of § 18.10 of this title. made by individuals or groups with (a) The term party wherever used in common interests, the administrative these rules shall include any natural law judge may request all such person, corporation, employee benefit petititioners to designate a single rep- plan, association, firm, partnership, resentative, or he or she may recognize trustee, receiver, agency, public or pri- one or more of such petitioners. The vate organization, or government agen- administrative law judge shall give cy. A party against whom a civil sanc- each such petitioner as well as the par- tion is sought shall be designated as ties, written notice of the decision on ‘‘respondent.’’ The Department shall be his or her petition. For each petition designated as the ‘‘complainant.’’ granted, the administrative law judge (b) Other persons or organizations shall provide a brief statement of the shall be permitted to participate as basis of the decision. If the petition is parties only if the administrative law denied, he or she shall briefly state the judge finds that the final decision grounds for denial and shall then treat could directly and adversely affect the petition as a request for participa- them or the class they represent, that tion as amicus curiae. they may contribute materially to the disposition of the proceedings and their § 2570.5 Consequences of default. interest is not adequately represented For prohibited transaction penalty by existing parties, and that in the dis- proceedings, this section shall apply in cretion of the administrative law judge lieu of § 18.5(b) of this title. Failure of the participation of such persons or or- the respondent to file an answer within ganizations would be appropriate. the 30 day time period provided in § 18.5 (c) A person or organization not of this title shall be deemed to con- named as a respondent wishing to par- stitute a waiver of his right to appear ticipate as a party under this section and contest the allegations of the no- shall submit a petition to the adminis- tice, and such failure shall be deemed

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to be an admission of the facts as al- (1) Submit the proposed agreement leged in the notice for purposes of the containing consent findings and an prohibited transaction penalty pro- order to the administrative law judge; ceeding. Such notice shall then become or the final order of the Secretary, except (2) Notify the administrative law that the administrative law judge may judge that the parties have reached a set aside a default entered under this full settlement and have agreed to dis- provision where there is proof of defec- missal of the action subject to compli- tive notice. ance with the terms of the settlement; or § 2570.6 Consent order or settlement. (3) Inform the administrative law For prohibited transaction penalty judge that agreement cannot be proceedings, the following shall apply reached. in lieu of § 18.9 of this title. (d) Disposition. In the event a settle- (a) General. At any time after the ment agreement containing consent commencement of a proceeding, but at findings and an order is submitted least five (5) days prior to the date set within the time allowed therefor, the for hearing, the parties jointly may administrative law judge shall issue a move to defer the hearing for a reason- decision incorporating such findings able time to permit negotiation of a and agreement within thirty (30) days settlement or an agreement containing of his receipt of such document. The findings and an order disposing of the decision of the administrative law whole or any part of the proceeding. judge shall incorporate all of the find- The allowance of such deferment and ings, terms, and conditions of the set- the duration thereof shall be in the dis- tlement agreement and consent order cretion of the administrative law of the parties. Such decision shall be- judge, after consideration of such fac- come final agency action within the tors as the nature of the proceeding, meaning of 5 U.S.C. 704. the requirements of the public interest, (e) Settlement without consent of all the representations of the parties and the probability of reaching an agree- parties. In cases in which some, but not ment which will result in a just dis- all, of the parties to a proceeding sub- position of the issues involved. mit a consent agreement to the admin- (b) Content. Any agreement con- istrative law judge, the following pro- taining consent findings and an order cedure shall apply: disposing of a proceeding or any part (1) If all of the parties have not con- thereof shall also provide: sented to the proposed settlement sub- (1) That the order shall have the mitted to the administrative law judge, same force and effect as an order made then such non-consenting parties must after full hearing; receive notice, and a copy, of the pro- (2) That the entire record on which posed settlement at the time it is sub- any order may be based shall consist mitted to the administrative law judge; solely of the notice and the agreement; (2) Any non-consenting party shall (3) A waiver of any further proce- have fifteen (15) days to file any objec- dural steps before the administrative tions to the proposed settlement with law judge; the administrative law judge and all (4) A waiver of any right to challenge other parties; or contest the validity of the order and (3) If any party submits an objection decision entered into in accordance to the proposed settlement, the admin- with the agreement; and istrative law judge shall decide within (5) That the order and decision of the thirty (30) days after receipt of such administrative law judge shall be final objections whether he shall sign or re- agency action. ject the proposed settlement. Where (c) Submission. On or before the expi- the record lacks substantial evidence ration of the time granted for negotia- upon which to base a decision or there tions, but, in any case, at least five (5) is a genuine issue of material fact, then days prior to the date set for hearing, the administrative law judge may es- the parties or their authorized rep- tablish procedures for the purpose of resentative or their counsel may: receiving additional evidence upon

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which a decision on the contested § 2570.8 Summary decision. issues may reasonably be based; For prohibited transaction penalty (4) If there are no objections to the proceedings, this section shall apply in proposed settlement, or if the adminis- lieu of § 18.41 of this title. trative law judge decides to sign the (a) No genuine issue of material fact. (1) proposed settlement after reviewing Where no genuine issue of a material any such objections, the administra- fact is found to have been raised, the tive law judge shall incorporate the administrative law judge may issue a consent agreement into a decision decision which, in the absence of an ap- meeting the requirements of paragraph peal pursuant to §§ 2570.10–2570.12 of this (d) of this section. part, shall become a final order. (2) A decision made under this para- § 2570.7 Scope of discovery. graph shall include a statement of: (i) Findings of fact and conclusions of For prohibited transaction penalty law, and the reasons therefor, on all proceedings, this section shall apply in issues presented; and lieu of § 18.14 of this title. (ii) Any terms and conditions of the (a) A party may file a motion to con- rule or order. duct discovery with the administrative (3) A copy of any decision under this law judge. The motion for discovery paragraph shall be served on each shall be granted by the administrative party. law judge only upon a showing of good (b) Hearings on issue of fact. Where a cause. In order to establish ‘‘good genuine question of material fact is cause’’ for the purposes of this section, raised, the administrative law judge a party must show that the discovery shall, and in any other case may, set requested relates to a genuine issue as the case for an evidentiary hearing. to a material fact that is relevant to § 2570.9 Decision of the administrative the proceeding. The order of the admin- law judge. istrative law judge shall expressly For prohibited transaction penalty limit the scope and terms of discovery proceedings, this section shall apply in to that for which ‘‘good cause’’ has lieu of § 18.57 of this title been shown, as provided in this para- (a) Proposed findings of fact, conclu- graph. sions, and order. Within twenty (20) (b) A party may obtain discovery of days of the filing of the transcript of documents and tangible things other- the testimony or such additional time wise discoverable under paragraph (a) as the administrative law judge may of this section and prepared in antici- allow, each party may file with the ad- pation of or for the hearing by or for ministrative law judge, subject to the another party’s representative (includ- judge’s discretion, proposed findings of ing his or her attorney, consultant, fact, conclusions of law, and order to- surety, indemnitor, insurer, or agent) gether with a supporting brief express- only upon a showing that the party ing the reasons for such proposals. seeking discovery has substantial need Such proposals and brief shall be of the materials or information in the served on all parties, and shall refer to preparation of his or her case and that all portions of the record and to all au- he or she is unable without undue hard- thorities relied upon in support of each ship to obtain the substantial equiva- proposal. lent of the materials or information by (b) Decision of the administrative law other means. In ordering discovery of judge. Within a reasonable time after such materials when the required the time allowed for the filing of the proposed findings of fact, conclusions showing has been made, the adminis- of law, and order, or within thirty (30) trative law judge shall protect against days after receipt of an agreement con- disclosure of the mental impressions, taining consent findings and order dis- conclusions, opinions, or legal theories posing of the disputed matter in whole, of an attorney or other representative the administrative law judge shall of a party concerning the proceeding. make his or her decision. The decision of the administrative law judge shall

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include findings of fact and conclusions § 2570.12 Procedures for review by the of law with reasons therefor upon each Secretary. material issue of fact of law presented (a) Upon receipt of a notice of appeal, on the record. The decision of the ad- the Secretary shall establish a briefing ministrative law judge shall be based schedule which shall be served on all upon the whole record. In a contested parties of record. Upon motion of one case in which the Department and the or more of the parties, the Secretary Respondent have presented their posi- may, in his discretion, permit the sub- tions to the administrative law judge mission of reply briefs. pursuant to the procedures for prohib- (b) The Secretary shall issue a deci- ited transaction penalty proceedings as sion as promptly as possible after re- set forth in this part, the penalty (if ceipt of the briefs of the parties. The any) which may be included in the de- Secretary may affirm, modify, or set cision of the administrative law judge aside, in whole or in part, the decision on appeal and shall issue a statement shall be limited to the sanction ex- of reasons and bases for the action(s) pressly provided for in section 502(i) of taken. Such decision by the Secretary ERISA. It shall be supported by reli- shall be final agency action within the able and probative evidence. The deci- meaning of 5 U.S.C. 704. sion of the administrative law judge shall become final agency action with- Subpart B—Procedures Governing in the meaning of 5 U.S.C. 704 unless an the Filing and Processing of appeal is made pursuant to the proce- dures set forth in §§ 2570.10 through Prohibited Transaction Exemp- 2570.12. tion Applications

§ 2570.10 Review by the Secretary. SOURCE: 76 FR 66644, Oct. 27, 2011, unless otherwise noted. (a) The Secretary may review a deci- sion of an administrative law judge. § 2570.30 Scope of rules. Such a review may occur only when a (a) The rules of procedure set forth in party files a notice of appeal from a de- this subpart apply to prohibited trans- cision of an administrative law judge action exemptions issued by the De- within twenty (20) days of the issuance partment under the authority of: of such decision. In all other cases, the (1) Section 408(a) of the Employee Re- decision of the administrative law tirement Income Security Act of 1974 judge shall become final agency action (ERISA); within the meaning of 5 U.S.C. 704. (2) Section 4975(c)(2) of the Internal (b) A notice of appeal to the Sec- Revenue Code of 1986 (the Code); 1 or retary shall state with specificity the (3) The Federal Employees’ Retire- issue(s) in the decision of the adminis- ment System Act of 1986 (FERSA) (5 trative law judge on which the party is U.S.C. 8477(c)(3)). seeking review. Such notice of appeal (b) Under these rules of procedure, must be served on all parties of record. the Department may conditionally or unconditionally exempt any fiduciary (c) Upon receipt of a notice of appeal, or transaction, or class of fiduciaries or the Secretary shall request the Chief transactions, from all or part of the re- Administrative Law Judge to submit strictions imposed by section 406 of to him a copy of the entire record be- ERISA and the corresponding restric- fore the administrative law judge. tions of the Code and FERSA. While administrative exemptions granted § 2570.11 Scope of review.

The review of the Secretary shall not 1 Section 102 of Presidential Reorganization be a de novo proceeding but rather a re- Plan No. 4 of 1978 (3 CFR part 332 (1978), re- view of the record established before printed in 5 U.S.C. app. at 672 (2006), and in 92 the administrative law judge. There Stat. 3790 (1978)), effective December 31, 1978, shall be no opportunity for oral argu- generally transferred the authority of the Secretary of the Treasury to issue adminis- ment. trative exemptions under section 4975(c)(2) of the Code to the Department of Labor.

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under these rules are ordinarily pro- filed solely under section 408(a) of spective in nature, an applicant may ERISA or solely under section 4975(c)(2) also obtain retroactive relief for past of the Code as an exemption request prohibited transactions if certain safe- filed under both section 408(a) and sec- guards described in this subpart were tion 4975(c)(2) if it relates to a trans- in place at the time the transaction action that would be prohibited both was consummated. by ERISA and the corresponding provi- (c) These rules govern the filing and sions of the Code. processing of applications for both in- dividual and class exemptions that the § 2570.31 Definitions. Department may propose and grant For purposes of these procedures, the pursuant to the authorities cited in following definitions apply: paragraph (a) of this section. The De- (a) An affiliate of a person means— partment may also propose and grant (1) Any person directly or indirectly exemptions on its own motion, in through one or more intermediaries, which case the procedures relating to controlling, controlled by, or under publication of notices, hearings, eval- common control with the person. For uation and public inspection of the ad- purposes of this paragraph, the term ministrative record, and modification ‘‘control’’ means the power to exercise or revocation of previously granted ex- a controlling influence over the man- emptions will apply. agement or policies of a person other (d) The issuance of an administrative than an individual; exemption by the Department under (2) Any director of, relative of, or these procedural rules does not relieve partner in, any such person; a fiduciary or other party in interest or (3) Any corporation, partnership, disqualified person with respect to a trust, or unincorporated enterprise of plan from the obligation to comply which such person is an officer, direc- with certain other provisions of tor, or a 5 percent or more partner or ERISA, the Code, or FERSA, including owner; or any prohibited transaction provisions (4) Any employee or officer of the to which the exemption does not apply, person who— and the general fiduciary responsi- (i) Is highly compensated (as defined bility provisions of ERISA which re- in section 4975(e)(2)(H) of the Code), or quire, among other things, that a fidu- (ii) Has direct or indirect authority, ciary discharge his or her duties re- responsibility, or control regarding the specting the plan solely in the inter- custody, management, or disposition of ests of the participants and bene- plan assets involved in the subject ex- ficiaries of the plan and in a prudent emption transaction. fashion; nor does it affect the require- (b) A class exemption is an administra- ment of section 401(a) of the Code that tive exemption, granted under section the plan must operate for the exclusive 408(a) of ERISA, section 4975(c)(2) of benefit of the employees of the em- the Code, and/or 5 U.S.C. 8477(c)(3), ployer maintaining the plan and their which applies to any transaction and beneficiaries. party in interest within the class of (e) The Department will not propose transactions and parties in interest or issue exemptions upon oral request specified in the exemption when the alone, nor will the Department grant conditions of the exemption are satis- exemptions orally. An applicant for an fied. administrative exemption may request (c) Department means the U.S. De- and receive oral advice from Depart- partment of Labor and includes the ment employees in preparing an ex- Secretary of Labor or his or her dele- emption application. However, such ad- gate exercising authority with respect vice does not constitute part of the ad- to prohibited transaction exemptions ministrative record and is not binding to which this subpart applies. on the Department in its processing of (d) Exemption transaction means the an exemption application or in its ex- transaction or transactions for which amination or audit of a plan. an exemption is requested. (f) The Department will generally (e) An individual exemption is an ad- treat any exemption application that is ministrative exemption, granted under

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section 408(a) of ERISA, section though the presumption does not apply 4975(c)(2) of the Code, and/or 5 U.S.C. when the aforementioned percentage 8477(c)(3), which applies only to the exceeds 2%, an appraiser nonetheless specific parties in interest and trans- may be considered independent based actions named or otherwise defined in upon other facts and circumstances the exemption. provided that it receives or is projected (f) A party in interest means a person to receive revenues that are not more described in section 3(14) of ERISA or 5 than 5% within the current federal in- U.S.C. 8477(a)(4) and includes a disquali- come tax year from parties in interest fied person, as defined in section (and their affiliates) to the transaction 4975(e)(2) of the Code. based upon its prior income tax year. (g) Pooled fund means an account or (j) A qualified independent fiduciary is fund for the collective investment of any individual or entity with appro- the assets of two or more unrelated priate training, experience, and facili- plans, including (but not limited to) a ties to act on behalf of the plan regard- pooled separate account maintained by ing the exemption transaction in ac- an insurance company and a common cordance with the fiduciary duties and or collective trust fund maintained by responsibilities prescribed by ERISA, a bank or similar financial institution. that is independent of and unrelated to (h) A qualified appraisal report is any any party in interest engaging in the appraisal report that satisfies all of the exemption transaction and its affili- requirements set forth in this subpart ates; in general, the determination as at § 2570.34(c)(4). to the independence of a fiduciary is (i) A qualified independent appraiser is any individual or entity with appro- made by the Department on the basis priate training, experience, and facili- of all relevant facts and circumstances. ties to provide a qualified appraisal re- In making this determination, the De- port on behalf of the plan regarding the partment generally will take into ac- particular asset or property appraised count the amount of both the fidu- in the report, that is independent of ciary’s revenues and projected revenues and unrelated to any party in interest for the current federal income tax year engaging in the exemption transaction (including amounts received for pre- and its affiliates; in general, the deter- paring fiduciary reports) that will be mination as to the independence of the derived from the party in interest or appraiser is made by the Department its affiliates relative to the fiduciary’s on the basis of all relevant facts and revenues from all sources for the prior circumstances. In making this deter- federal income tax year. Absent facts mination, the Department generally and circumstances demonstrating a will take into account the amount of lack of independence, the Department both the appraiser’s revenues and pro- will operate according to the presump- jected revenues for the current federal tion that such fiduciary will be inde- income tax year (including amounts re- pendent if the revenues it receives or is ceived for preparing the appraisal re- projected to receive, within the current port) that will be derived from the federal income tax year, from parties party in interest or its affiliates rel- in interest (and their affiliates) to the ative to the appraiser’s revenues from transaction are not more than 2% of all sources for the prior federal income such fiduciary’s annual revenues based tax year. Absent facts and cir- upon its prior income tax year. Al- cumstances demonstrating a lack of though the presumption does not apply independence, the Department will op- when the aforementioned percentage erate according to the presumption exceeds 2%, a fiduciary nonetheless that such appraiser will be independent may be considered independent based if the revenues it receives or is pro- upon other facts and circumstances jected to receive, within the current provided that it receives or is projected federal income tax year, from parties to receive revenues that are not more in interest (and their affiliates) to the than 5% within the current federal in- transaction are not more than 2% of come tax year from parties in interest such appraiser’s annual revenues based (and their affiliates) to the transaction upon its prior income tax year. Al- based upon its prior income tax year.

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§ 2570.32 Persons who may apply for fendant in an action by the Depart- exemptions. ment or the Internal Revenue Service (a) The Department will initiate ex- to enforce the above-mentioned provi- emption proceedings upon the applica- sions of ERISA or FERSA. tion of: (b) An application for an individual (1) Any party in interest to a plan exemption relating to a specific trans- who is or may be a party to the exemp- action or transactions ordinarily will tion transaction; not be considered if the Department (2) Any plan which is a party to the has under consideration a class exemp- exemption transaction; or tion relating to the same type of trans- (3) In the case of an application for action or transactions. Notwith- an exemption covering a class of par- standing the foregoing, the Depart- ties in interest or a class of trans- ment may consider such an application actions, in addition to any person de- if the issuance of the final class exemp- scribed in paragraphs (a)(1) and (2) of tion may not be imminent, and the De- this section, an association or organi- partment determines that time con- zation representing parties in interest who may be parties to the exemption straints necessitate consideration of transaction. the transaction on an individual basis. (b) An application by or for a person (c) The administrative record of an described in paragraph (a) of this sec- exemption application includes the ini- tion, may be submitted by the appli- tial exemption application and any cant or by an authorized representa- supporting information provided by the tive. An application submitted by a applicant (as well as any comments representative of the applicant must and testimony received by the Depart- include proof of authority in the form ment in connection with an applica- of: tion). If an applicant designates as con- (1) A power of attorney; or fidential any information required by (2) A written certification from the these regulations or requested by the applicant that the representative is au- Department, the Department will de- thorized to file the application. termine whether the information is (c) If the authorized representative of material to the exemption determina- an applicant submits an application for tion. If it determines the information an exemption to the Department to- to be material, the Department will gether with proof of authority to file not process the application unless the the application as required by para- applicant withdraws the claim of con- graph (b) of this section, the Depart- fidentiality. ment will direct all correspondence and inquiries concerning the application to (d) If for any reason the Department the representative unless requested to decides not to consider an exemption do otherwise by the applicant. application, it will inform the appli- cant in writing of that decision and of § 2570.33 Applications the Department the reasons therefore. will not ordinarily consider. (a) The Department ordinarily will § 2570.34 Information to be included in not consider: every exemption application. (1) An application that fails to in- (a) All applications for exemptions clude all the information required by must contain the following informa- §§ 2570.34 and 2570.35 of this subpart or tion: otherwise fails to conform to the re- (1) The name(s) of the applicant(s); quirements of these procedures; or (2) A detailed description of the ex- (2) An application involving a trans- emption transaction including identi- action or transactions which are the fication of all the parties in interest in- subject of an investigation for possible volved, a description of any larger inte- violations of part 1 or 4 of subtitle B of Title I of ERISA or section 8477 or 8478 grated transaction of which the exemp- of FERSA or an application involving a tion transaction is a part, and a chro- party in interest who is the subject of nology of the events leading up to the such an investigation or who is a de- transaction;

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(3) The identity of any representa- (A) A copy of the request or the date tives for the affected plan(s) and par- on which it was submitted together ties in interest and what individuals or with the Department’s correspondence entities they represent; control number as indicated in the ac- (4) The reasons a plan would have for knowledgment letter; and entering into the exemption trans- (B) An explanation of the effect of action; the issuance of an advisory opinion (5) The prohibited transaction provi- upon the exemption transaction. sions from which exemptive relief is re- (4) If the application is to be signed quested and the reason why the trans- by anyone other than an individual action would violate each such provi- party in interest seeking exemptive re- sion; lief on his or her own behalf, a state- (6) Whether the exemption trans- ment which— action is customary for the industry or (i) Identifies the individual signing class involved; the application and his or her position (7) Whether the exemption trans- or title; and action is or has been the subject of an (ii) Explains briefly the basis of his investigation or enforcement action by or her familiarity with the matters dis- the Department or by the Internal Rev- cussed in the application. enue Service; and (5)(i) A declaration in the following (8) The hardship or economic loss, if form: any, which would result to the person Under penalty of perjury, I declare that I or persons on behalf of whom the ex- am familiar with the matters discussed in emption is sought, to affected plans, this application and, to the best of my and to their participants and bene- knowledge and belief, the representations ficiaries from denial of the exemption. made in this application are true and cor- (b) All applications for exemption rect. must also contain the following: (ii) This declaration must be dated (1) A statement explaining why the and signed by: requested exemption would be— (A) The applicant, in its individual (i) Administratively feasible; capacity, in the case of an individual (ii) In the interests of affected plans party in interest seeking exemptive re- and their participants and bene- lief on his or her own behalf; ficiaries; and (B) A corporate officer or partner (iii) Protective of the rights of par- where the applicant is a corporation or ticipants and beneficiaries of affected partnership; plans. (C) A designated officer or official (2) With respect to the notification of where the applicant is an association, interested persons required by § 2570.43: organization or other unincorporated (i) A description of the interested enterprise; or persons to whom the applicant intends (D) The plan fiduciary that has the to provide notice; authority, responsibility, and control (ii) The manner in which the appli- with respect to the exemption trans- cant will provide such notice; and action where the applicant is a plan. (iii) An estimate of the time the ap- (c) Specialized statements, as appli- plicant will need to furnish notice to cable, from a qualified independent ap- all interested persons following publi- praiser acting solely on behalf of the cation of a notice of the proposed ex- plan, such as appraisal reports or anal- emption in the FEDERAL REGISTER. yses of market conditions, submitted (3) If an advisory opinion has been re- to support an application for exemp- quested by any party to the exemption tion must be accompanied by a state- transaction from the Department with ment of consent from such appraiser respect to any issue relating to the ex- acknowledging that the statement is emption transaction— being submitted to the Department as (i) A copy of the letter concluding part of an application for exemption. the Department’s action on the advi- Such statements must also contain the sory opinion request; or following written information: (ii) If the Department has not yet (1) A copy of the qualified inde- concluded its action on the request: pendent appraiser’s engagement letter

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with the plan describing the specific the transaction or its affiliates; in gen- duties the appraiser shall undertake; eral, such percentage shall be com- (2) A summary of the qualified inde- puted by comparing, in fractional form: pendent appraiser’s qualifications to (i) The amount of the appraiser’s pro- serve in such capacity; jected revenues from the current fed- (3) A detailed description of any rela- eral income tax year (including tionship that the qualified independent amounts received from preparing the appraiser has had or may have with appraisal report) that will be derived any party in interest engaging in the from the party in interest or its affili- transaction with the plan, or its affili- ates (expressed as a numerator); and ates, that may influence the appraiser; (ii) The appraiser’s revenues from all (4) A written appraisal report pre- pared by the qualified independent ap- sources for the prior federal income tax praiser, acting solely on behalf of the year (expressed as a denominator). plan, rather than, for example, on be- (d) For those exemption transactions half of the plan sponsor, which satisfies requiring the retention of a qualified the following requirements: independent fiduciary to represent the (i) The report must describe the interests of the plan, a statement must method(s) used in determining the fair be submitted by such fiduciary that market value of the subject asset(s) contains the following written infor- and an explanation of why such method mation: best reflects the fair market value of (1) A signed and dated declaration the asset(s); under penalty of perjury that, to the (ii) The report must take into ac- best of the qualified independent fidu- count any special benefit that the ciary’s knowledge and belief, all of the party in interest or its affiliate(s) may representations made in such state- derive from control of the asset(s), ment are true and correct; such as from owning an adjacent parcel (2) A copy of the qualified inde- of real property or gaining voting con- pendent fiduciary’s engagement letter trol over a company; and with the plan describing the fiduciary’s (iii) The report must be current and specific duties; not more than one year old from the date of the transaction, and there must (3) An explanation for the conclusion be a written update by the qualified that the fiduciary is a qualified inde- independent appraiser affirming the ac- pendent fiduciary, which also must in- curacy of the appraisal as of the date of clude a summary of that person’s the transaction. If the appraisal report qualifications to serve in such capac- is a year old or more, a new appraisal ity, as well as a description of any shall be submitted to the Department prior experience by that person or by the applicant. other demonstrated characteristics of (5) If the subject of the appraisal re- the fiduciary (such as special areas of port is real property, the qualified expertise) that render that person or independent appraiser shall submit a entity suitable to perform its duties on written representation that he or she is behalf of the plan with respect to the a member of a professional organiza- exemption transaction; tion of appraisers that can sanction its (4) A detailed description of any rela- members for misconduct; tionship that the qualified independent (6) If the subject of the appraisal re- fiduciary has had or may have with the port is an asset other than real prop- party in interest engaging in the trans- erty, the qualified independent ap- action with the plan or its affiliates; praiser shall submit a written rep- (5) An acknowledgement by the resentation describing the appraiser’s qualified independent fiduciary that it prior experience in valuing assets of the same type; and understands its duties and responsibil- (7) The qualified independent ap- ities under ERISA in acting as a fidu- praiser shall submit a written rep- ciary on behalf of the plan rather than, resentation disclosing the percentage for example, acting on behalf of the of its current revenue that is derived plan sponsor; from any party in interest involved in

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(6) The qualified independent fidu- contain the following written informa- ciary’s opinion on whether the pro- tion: posed transaction would be in the in- (1) A copy of the expert’s engagement terests of the plan and of its partici- letter with the plan describing the spe- pants and beneficiaries, and protective cific duties the expert will undertake; of the rights of participants and bene- (2) A summary of the expert’s quali- ficiaries of such plan, along with a fications to serve in such capacity; and statement of the reasons on which the (3) A detailed description of any rela- opinion is based; tionship that the expert has had or (7) Where the proposed transaction is may have with any party in interest continuing in nature, a declaration by engaging in the transaction with the the qualified independent fiduciary plan, or its affiliates, that may influ- that it is authorized to take all appro- ence the actions of the expert. priate actions to safeguard the inter- (f) An application for exemption may ests of the plan, and shall, during the also include a draft of the requested ex- pendency of the transaction: emption which describes the trans- (i) Monitor the transaction on behalf action and parties in interest for which of the plan on a continuing basis; exemptive relief is sought and the spe- (ii) Ensure that the transaction re- cific conditions under which the ex- mains in the interests of the plan and, emption would apply. if not, take any appropriate actions available under the particular cir- § 2570.35 Information to be included in cumstances; and applications for individual exemp- (iii) Enforce compliance with all con- tions only. ditions and obligations imposed on any party dealing with the plan with re- (a) Except as provided in paragraph spect to the transaction; and (c) of this section, every application for (8) The qualified independent fidu- an individual exemption must include, ciary shall submit a written represen- in addition to the information specified tation disclosing the percentage of in § 2570.34 of this subpart, the fol- such fiduciary’s current revenue that is lowing information: derived from any party in interest in- (1) The name, address, telephone volved in the transaction or its affili- number, and type of plan or plans to ates; in general, such percentage shall which the requested exemption applies; be computed by comparing, in frac- (2) The Employer Identification tional form: Number (EIN) and the plan number (i) The amount of the fiduciary’s pro- (PN) used by such plan or plans in all jected revenues from the current fed- reporting and disclosure required by eral income tax year that will be de- the Department; rived from the party in interest or its (3) Whether any plan or trust affected affiliates (expressed as a numerator); by the requested exemption has ever and been found by the Department, the In- (ii) The fiduciary’s revenues from all ternal Revenue Service, or by a court sources (excluding fixed, non-discre- to have violated the exclusive benefit tionary retirement income) for the rule of section 401(a) of the Code, sec- prior federal income tax year (ex- tion 4975(c)(1) of the Code, section 406 pressed as a denominator). or 407(a) of ERISA, or 5 U.S.C. (e) Specialized statements, as appli- 8477(c)(3), including a description of the cable, from other third-party experts, circumstances surrounding such viola- including but not limited to econo- tion; mists or market specialists, submitted (4) Whether any relief under section on behalf of the plan to support an ap- 408(a) of ERISA, section 4975(c)(2) of plication for exemption must be ac- the Code, or 5 U.S.C. 8477(c)(3) has been companied by a statement of consent requested by, or provided to, the appli- from such expert acknowledging that cant or any of the parties on behalf of the statement prepared on behalf of the whom the exemption is sought and, if plan is being submitted to the Depart- so, the exemption application number ment as part of an application for ex- or the prohibited transaction exemp- emption. Such statements must also tion number;

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(5) Whether the applicant or any of Savings Fund. If so, the applicant must the parties in interest involved in the provide a brief statement describing exemption transaction is currently, or the investigation, examination, litiga- has been within the last five years, a tion or controversy. The Department defendant in any lawsuit or criminal reserves the right to require the pro- action concerning such person’s con- duction of additional information or duct as a fiduciary or party in interest documentation concerning any of the with respect to any plan (other than a above matters. In this regard, a denial lawsuit with respect to a routine claim of the exemption application will re- for benefits), and a description of the sult from a failure to provide addi- circumstances of such lawsuit or crimi- tional information requested by the nal action; Department. (6) Whether the applicant (including (8) Whether any plan affected by the any person described in requested exemption has experienced a § 2570.34(b)(5)(ii)) or any of the parties reportable event under section 4043 of in interest involved in the exemption ERISA, and, if so, a description of the transaction has, within the last 13 circumstances of any such reportable years, been either convicted or released event; from imprisonment, whichever is later, (9) Whether a notice of intent to ter- as a result of: any felony involving minate has been filed under section abuse or misuse of such person’s posi- 4041 of ERISA respecting any plan af- tion or employment with an employee fected by the requested exemption, benefit plan or a labor organization; and, if so, a description of the cir- any felony arising out of the conduct of cumstances for the issuance of such no- the business of a broker, dealer, invest- tice; ment adviser, bank, insurance com- (10) Names, addresses, and taxpayer pany or fiduciary; income tax evasion; identifying numbers of all parties in in- any felony involving the larceny, theft, terest involved in the subject trans- robbery, extortion, forgery, counter- action; feiting, fraudulent concealment, em- (11) The estimated number of partici- bezzlement, fraudulent conversion, or pants and beneficiaries in each plan af- misappropriation of funds or securities; fected by the requested exemption as of conspiracy or attempt to commit any the date of the application; such crimes or a crime of which any of (12) The percentage of the fair mar- the foregoing crimes is an element; or ket value of the total assets of each af- any other crime described in section fected plan that is involved in the ex- 411 of ERISA, and a description of the emption transaction; circumstances of any such conviction. For purposes of this section, a person (13) Whether the exemption trans- shall be deemed to have been ‘‘con- action has been consummated or will victed’’ from the date of the judgment be consummated only if the exemption of the trial court, regardless of whether is granted; that judgment remains under appeal; (14) If the exemption transaction has (7) Whether, within the last five already been consummated: years, any plan affected by the exemp- (i) The circumstances which resulted tion transaction, or any party in inter- in plan fiduciaries causing the plan(s) est involved in the exemption trans- to engage in the transaction before ob- action, has been under investigation or taining an exemption from the Depart- examination by, or has been engaged in ment; litigation or a continuing controversy (ii) Whether the transaction has been with, the Department, the Internal terminated; Revenue Service, the Justice Depart- (iii) Whether the transaction has ment, the Pension Benefit Guaranty been corrected as defined in Code sec- Corporation, or the Federal Retirement tion 4975(f)(5); Thrift Investment Board involving (iv) Whether Form 5330, Return of compliance with provisions of ERISA, Excise Taxes Related to Employee Ben- provisions of the Code relating to em- efit Plans, has been filed with the In- ployee benefit plans, or provisions of ternal Revenue Service with respect to FERSA relating to the Federal Thrift the transaction; and

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(v) Whether any excise taxes due ments bearing on the exemption trans- under section 4975(a) and (b) of the action; Code, or any civil penalties due under (2) A discussion of the facts relevant section 502(i) or (l) of ERISA by reason to the exemption transaction that are of the transaction have been paid. If so, reflected in these documents and an the applicant should submit docu- analysis of their bearing on the re- mentation (e.g., a canceled check) dem- quested exemption; onstrating that the excise taxes or (3) A copy of the most recent finan- civil penalties were paid. cial statements of each plan affected (15) The name of every person who by the requested exemption; and has investment discretion over any (4) A net worth statement with re- plan assets involved in the exemption spect to any party in interest that is transaction and the relationship of providing a personal guarantee with re- each such person to the parties in in- spect to the exemption transaction. terest involved in the exemption trans- (c) Special rule for applications for action and the affiliates of such parties individual exemption involving pooled in interest; funds: (16) Whether or not the assets of the (1) The information required by para- affected plan(s) are invested in loans to graphs (a)(8) through (12) of this sec- any party in interest involved in the tion is not required to be furnished in exemption transaction, in property an application for individual exemp- leased to any such party in interest, or tion involving one or more pooled in securities issued by any such party funds; in interest, and, if such investments (2) The information required by para- exist, a statement for each of these graphs (a)(1) through (7) and (a)(13) three types of investments which indi- through (19) of this section and by cates: paragraphs (b)(1) through (3) of this (i) The type of investment to which section must be furnished in reference the statement pertains; to the pooled fund, rather than to the (ii) The aggregate fair market value plans participating therein. (For pur- of all investments of this type as re- poses of this paragraph, the informa- flected in the plan’s most recent an- tion required by paragraph (a)(16) of nual report; this section relates solely to other (iii) The approximate percentage of pooled fund transactions with, and in- the fair market value of the plan’s vestments in, parties in interest in- total assets as shown in such annual volved in the exemption transaction report that is represented by all invest- which are also sponsors of plans which ments of this type; and invest in the pooled fund.); (iv) The statutory or administrative (3) The following information must exemption covering these investments, also be furnished— if any. (i) The estimated number of plans (17) The approximate aggregate fair that are participating (or will partici- market value of the total assets of pate) in the pooled fund; and each affected plan; (ii) The minimum and maximum lim- (18) The person(s) who will bear the its imposed by the pooled fund (if any) costs of the exemption application and on the portion of the total assets of of notifying interested persons; and each plan that may be invested in the (19) Whether an independent fidu- pooled fund. ciary is or will be involved in the ex- (4) Additional requirements for appli- emption transaction and, if so, the cations for individual exemption in- names of the persons who will bear the volving pooled funds in which certain cost of the fee payable to such fidu- plans participate. ciary. (i) This paragraph applies to any ap- (b) Each application for an individual plication for an individual exemption exemption must also include: involving one or more pooled funds in (1) True copies of all contracts, deeds, which any plan participating therein— agreements, and instruments, as well (A) Invests an amount which exceeds as relevant portions of plan documents, 20% of the total assets of the pooled trust agreements, and any other docu- fund, or

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(B) Covers employees of: making a finding that an applicant (1) The party sponsoring or maintain- acted in good faith include the fol- ing the pooled fund, or any affiliate of lowing: such party, or (i) The participation of an inde- (2) Any fiduciary with investment pendent fiduciary acting on behalf of discretion over the pooled fund’s as- the plan who is qualified to negotiate, sets, or any affiliate of such fiduciary. approve and monitor the transaction; (ii) The exemption application must (ii) The existence of a contempora- include, with respect to each plan de- neous appraisal by a qualified inde- scribed in paragraph (c)(4)(i) of this pendent appraiser or reference to an section, the information required by objective third party source, such as a paragraphs (a)(1) through (3), (a)(5) stock or bond index; through (7), (a)(10), (a)(12) through (16), (iii) The existence of a bidding proc- and (a)(18) and (19), of this section. The ess or evidence of comparable fair mar- information required by this paragraph ket transactions with unrelated third must be furnished in reference to the parties; plan’s investment in the pooled fund (iv) That the applicant has submitted (e.g., the names, addresses and tax- an accurate and complete application payer identifying numbers of all fidu- for exemption containing documenta- ciaries responsible for the plan’s in- tion of all necessary and relevant facts vestment in the pooled fund (§ 2570.35(a) and representations upon which the ap- (10)), the percentage of the assets of the plicant relied. In this regard, addi- plan invested in the pooled fund tional weight will be given to facts and (§ 2570.35(a)(12)), whether the plan’s in- representations which are prepared and vestment in the pooled fund has been certified by a source independent of the consummated or will be consummated applicant; only if the exemption is granted (v) That the applicant has submitted (§ 2570.35(a)(13)), etc.). evidence that the plan fiduciary did (iii) The information required by not engage in an act or transaction paragraph (c)(4) of this section is in ad- knowing that such act or transaction dition to the information required by was prohibited under section 406 of paragraphs (c)(2) and (3) of this section ERISA and/or section 4975 of the Code. relating to information furnished by In this regard, the Department will ac- reference to the pooled fund. cord appropriate weight to the submis- (5) The special rule and the addi- sion of a contemporaneous, reasoned tional requirements described in para- legal opinion of counsel, upon which graphs (c)(1) through (4) of this section the plan fiduciary relied in good faith do not apply to an individual exemp- before entering the act or transaction; tion request solely for the investment (vi) That the applicant has submitted by a plan in a pooled fund. Such an ap- a statement of the circumstances plication must provide the information which prompted the submission of the required by paragraphs (a) and (b) of application for exemption and the steps this section. taken by the applicant with regard to (d) Retroactive exemptions: the transaction upon discovery of the (1) Generally, the Department will fa- violation; vorably consider requests for retro- (vii) That the applicant has sub- active relief, in all exemption applica- mitted a statement, prepared and cer- tions, only where the safeguards nec- tified by an independent person famil- essary for the grant of a prospective iar with the types of transactions for exemption were in place at the time at which relief is requested, dem- which the parties entered into the onstrating that the terms and condi- transaction. An applicant for a retro- tions of the transaction (including, in active exemption must have acted in the case of an investment, the return good faith by taking reasonable and ap- in fact realized by the plan) were at propriate steps to protect the plan least as favorable to the plan as that from abuse and unnecessary risk at the obtainable in a similar transaction time of the transaction. with an unrelated party; and (2) Among the factors that the De- (viii) Such other undertakings and partment would take into account in assurances with respect to the plan and

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its participants that may be offered by tify the Department in writing if it the applicant which are relevant to the learns that a material fact or represen- criteria under section 408(a) of ERISA tation has been omitted from the ex- and section 4975(c)(2) of the Code. emption application. (3) The Department, as a general (b) If, at any time during the pend- matter, will not favorably consider re- ency of an exemption application, the quests for retroactive exemptions applicant or any other party in inter- where transactions or conduct with re- est who would participate in the ex- spect to which an exemption is re- emption transaction becomes the sub- quested resulted in a loss to the plan. ject of an investigation or enforcement In addition, the Department will not action by the Department, the Internal favorably consider requests for exemp- Revenue Service, the Justice Depart- tions where the transactions are incon- ment, the Pension Benefit Guaranty sistent with the general fiduciary re- sponsibility provisions of sections 403 Corporation, or the Federal Retirement or 404 of ERISA or the exclusive benefit Thrift Investment Board involving requirements of section 401(a) of the compliance with provisions of ERISA, Code. provisions of the Code relating to em- ployee benefit plans, or provisions of § 2570.36 Where to file an application. FERSA relating to the Federal Thrift The Department’s prohibited trans- Savings Fund, the applicant must action exemption program is adminis- promptly notify the Department. tered by the Employee Benefits Secu- (c) The Department may require an rity Administration (EBSA). Any ex- applicant to provide documentation it emption application governed by these considers necessary to verify any state- procedures may be mailed via first- ments contained in the application or class mail to: Employee Benefits Secu- in supporting materials or documents. rity Administration, Office of Exemp- tion Determinations, U.S. Department § 2570.38 Tentative denial letters. of Labor, Room N–5700, 200 Constitu- (a) If, after reviewing an exemption tion Avenue NW., Washington, DC file, the Department tentatively con- 20210. Alternatively, applications may cludes that it will not propose or grant be emailed to the Department at e- the exemption, it will notify the appli- [email protected] or transmitted via fac- cant in writing. At the same time, the simile at (202) 219–0204. Notwith- Department will provide a brief state- standing the foregoing methods of ment of the reasons for its tentative transmission, applicants are also re- denial. quired to submit one paper copy of the exemption application for the Depart- (b) An applicant will have 20 days ment’s file. from the date of a tentative denial let- ter to request a conference under § 2570.37 Duty to amend and supple- § 2570.40 of this subpart and/or to notify ment exemption applications. the Department of its intent to submit (a) While an exemption application is additional information under § 2570.39 pending final action with the Depart- of this subpart. If the Department does ment, an applicant must promptly no- not receive a request for a conference tify the Department in writing if he or or a notification of intent to submit she discovers that any material fact or additional information within that representation contained in the appli- time, it will issue a final denial letter cation or in any documents or testi- pursuant to § 2570.41. mony provided in support of the appli- (c) The Department need not issue a cation is inaccurate, if any such fact or tentative denial letter to an applicant representation changes during this pe- before issuing a final denial letter riod, or if, during the pendency of the where the Department has conducted a application, anything occurs that may hearing on the exemption pursuant to affect the continuing accuracy of any either § 2570.46 or § 2570.47. such fact or representation. In addi- tion, an applicant must promptly no-

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§ 2570.39 Opportunities to submit addi- submit within the 40-day period de- tional information. scribed in paragraph (b) of this section, (a) An applicant may notify the De- or within any additional period granted partment of its intent to submit addi- pursuant to paragraph (c) of this sec- tional information supporting an ex- tion; emption application either by tele- (2) The applicant did not request a phone or by letter sent to the address conference pursuant to § 2570.38(b) of furnished in the applicant’s tentative this subpart; and denial letter, or electronically to the (3) The applicant has not withdrawn email address provided in the tentative the application as permitted by para- denial letter. At the same time, the ap- graph (d) of this section. plicant should indicate generally the type of information that will be sub- § 2570.40 Conferences. mitted. (a) Any conference between the De- (b) The additional information an ap- partment and an applicant pertaining plicant intends to provide in support of to a requested exemption will be held the application must be in writing and in Washington, DC, except that a tele- be received by the Department within phone conference will be held at the 40 days from the date of the tentative applicant’s request. denial letter. All such information (b) An applicant is entitled to only must be accompanied by a declaration one conference with respect to any ex- under penalty of perjury attesting to emption application. An applicant will the truth and correctness of the infor- not be entitled to a conference, how- mation provided, which is dated and ever, where the Department has held a signed by a person qualified under hearing on the exemption under either § 2570.34(b)(5) of this subpart to sign § 2570.46 or § 2570.47 of this subpart. such a declaration. (c) Insofar as possible, conferences (c) If, for reasons beyond its control, will be scheduled as joint conferences an applicant is unable to submit all the with all applicants present where: additional information he or she in- (1) More than one applicant has re- tends to provide in support of his appli- quested an exemption with respect to cation within the 40-day period de- the same or similar types of trans- scribed in paragraph (b) of this section, actions; he or she may request an extension of (2) The Department is considering time to furnish the information. Such the applications together as a request requests must be made before the expi- for a class exemption; ration of the 40-day period and will be (3) The Department contemplates not granted only in unusual circumstances granting the exemption; and and for a limited period as determined, (4) More than one applicant has re- respectively, by the Department in its quested a conference. sole discretion. (d) In instances where the applicant (d) If an applicant is unable to sub- has requested a conference pursuant to mit all of the additional information § 2570.38(b) and also has submitted addi- he or she intends to provide within the tional information pursuant to 40-day period specified in paragraph (b) § 2570.39, the Department will schedule of this section, or within any addi- a conference under this section for a tional period granted pursuant to para- date and time that occurs within 20 graph (c) of this section, the applicant days after the date on which the De- may withdraw the exemption applica- partment has provided either oral or tion before expiration of the applicable written notification to the applicant time period and reinstate it later pur- that, after reviewing the additional in- suant to § 2570.44. formation, it is still not prepared to (e) The Department will issue, with- propose the requested exemption. If, out further notice, a final denial letter for reasons beyond its control, the ap- denying the requested exemption pur- plicant cannot attend a conference suant to § 2570.41 where— within the 20-day limit described in (1) The Department has not received this paragraph, the applicant may re- the additional information that the ap- quest an extension of time for the plicant stated his or her intention to scheduling of a conference, provided

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that such request is made before the pursuant to this section, the applicant expiration of the 20-day limit. The De- will be deemed to have waived its right partment will only grant such an ex- to a conference. tension in unusual circumstances and (h) Within 20 days after the date of for a brief period as determined, re- any conference held under this section, spectively, by the Department in its the applicant may submit to the De- sole discretion. partment (electronically or in paper (e) In instances where the applicant form) any additional written data, ar- has requested a conference pursuant to guments, or precedents discussed at § 2570.38(b) but has not expressed an in- the conference but not previously or tent to submit additional information adequately presented in writing. If, for in support of the exemption application reasons beyond its control, the appli- as provided in § 2570.39, the Department cant is unable to submit the additional will schedule a conference under this information within this 20-day limit, section for a date and time that occurs the applicant may request an extension within 40 days after the date of the of time to furnish the information, pro- issuance of the tentative denial letter vided that such request is made before described in § 2570.38(a). If, for reasons the expiration of the 20-day limit de- beyond its control, the applicant can- scribed in this paragraph. The Depart- not attend a conference within the 40- ment will only grant such an extension day limit described in this paragraph, in unusual circumstances and for a the applicant may request an extension brief period as determined, respec- of time for the scheduling of a con- tively, by the Department in its sole ference, provided that such request is discretion. made before the expiration of the 40- day limit. The Department will only § 2570.41 Final denial letters. grant such an extension in unusual cir- The Department will issue a final de- cumstances and for a brief period as de- nial letter denying a requested exemp- termined, respectively, by the Depart- tion where: ment in its sole discretion. (a) The conditions for issuing a final (f) In instances where the applicant denial letter specified in § 2570.38(b) or has requested a conference pursuant to § 2570.39(e) of this subpart are satisfied; § 2570.38(b) of this subpart, has notified (b) After issuing a tentative denial the Department of its intent to submit letter under § 2570.38 of this subpart and additional information pursuant to considering the entire record in the § 2570.39, and has failed to furnish such case, including all written information information within 40 days from the submitted pursuant to §§ 2570.39 and date of the tentative denial letter, the 2570.40 of this subpart, the Department Department will schedule a conference decides not to propose an exemption or under this section for a date and time to withdraw an exemption already pro- that occurs within 60 days after the posed; or date of the issuance of the tentative (c) After proposing an exemption and denial letter described in § 2570.38(a). If, conducting a hearing on the exemption for reasons beyond its control, the ap- under either § 2570.46 or § 2570.47 of this plicant cannot attend a conference subpart and after considering the en- within the 60-day limit described in tire record in the case, including the this paragraph, the applicant may re- record of the hearing, the Department quest an extension of time for the decides to withdraw the proposed ex- scheduling of a conference, provided emption. that such request is made before the expiration of the 60-day limit. The De- § 2570.42 Notice of proposed exemp- partment will only grant such an ex- tion. tension in unusual circumstances and If the Department tentatively de- for a brief period as determined, re- cides that an administrative exemption spectively, by the Department in its is warranted, it will publish a notice of sole discretion. a proposed exemption in the FEDERAL (g) If the applicant fails to either REGISTER. In addition to providing no- timely schedule or appear for a con- tice of the pendency of the exemption ference agreed to by the Department before the Department, the notice will:

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(a) Explain the exemption trans- posed Exemption. As a person who may be action and summarize the information affected by this exemption, you have the and reasons in support of proposing the right to comment on the proposed exemption exemption; by [date].3 [If you may be adversely affected (b) Describe the scope of relief and by the grant of the exemption, you also have any conditions of the proposed exemp- the right to request a hearing on the exemp- tion by [date].] 4 tion; All comments and/or requests for a hearing (c) Inform interested persons of their should be addressed to the Office of Exemp- right to submit comments to the De- tion Determinations, Employee Benefits Se- partment (either electronically or in curity Administration, Room lll,5 U.S. writing) relating to the proposed ex- Department of Labor, 200 Constitution Ave- emption and establish a deadline for nue NW., Washington, DC 20210, ATTEN- receipt of such comments; and TION: Application No.lll.6 Comments and (d) Where the proposed exemption in- hearing requests may also be transmitted to cludes relief from the prohibitions of the Department electronically at e- section 406(b) of ERISA, section [email protected] or at http://www.regulations.gov 4975(c)(1)(E) or (F) of the Code, or sec- (follow instructions for submission), and tion 8477(c)(2) of FERSA, inform inter- should prominently reference the application ested persons of their right to request number listed above. In addition, comments a hearing under § 2570.46 of this subpart and hearing requests may be transmitted to and establish a deadline for receipt of the Department via facsimile at (202) 219– 0204. Individuals submitting comments or re- requests for such hearings. quests for a hearing on this matter are ad- § 2570.43 Notification of interested vised not to disclose sensitive personal data, persons by applicant. such as social security numbers. The Department will make no final deci- (a) If a notice of proposed exemption sion on the proposed exemption until it re- is published in the FEDERAL REGISTER views the comments received in response to in accordance with § 2570.42 of this sub- the enclosed notice. If the Department de- part, the applicant must notify inter- cides to hold a hearing on the exemption re- ested persons of the pendency of the ex- quest before making its final decision, you emption in the manner and within the will be notified of the time and place of the time period specified in the applica- hearing. tion. If the Department determines (b) The method used by an applicant that this notification would be inad- to furnish notice to interested persons equate, the applicant must obtain the must be reasonably calculated to en- Department’s consent as to the manner sure that interested persons actually and time period of providing the notice receive the notice. In all cases, per- to interested persons. Any such notifi- sonal delivery and delivery by first- cation must include: class mail will be considered reason- (1) A copy of the notice of proposed able methods of furnishing notice. If exemption as published in the FEDERAL the applicant elects to furnish notice REGISTER; and (2) A supplemental statement in the electronically, he or she must provide following form: 3 The applicant will write in this space the You are hereby notified that the United date of the last day of the time period speci- States Department of Labor is considering fied in the notice of proposed exemption. granting an exemption from the prohibited 4 To be added in the case of an exemption transaction restrictions of the Employee Re- that provides relief from section 406(b) of tirement Income Security Act of 1974, the In- ERISA or corresponding sections of the Code ternal Revenue Code of 1986, or the Federal or FERSA. Employees’ Retirement System Act of 1986. 5 The applicant will fill in the room number The exemption under consideration is sum- of the Office of Exemptions Determinations. marized in the enclosed [Summary of Pro- As of the date of this final regulation, the posed Exemption, and described in greater room number of the Office of Exemption De- 2 detail in the accompanying] Notice of Pro- terminations is N–5700. 6 The applicant will fill in the exemption 2 To be added in instances where the De- application number, which is stated in the partment requires the applicant to furnish a notice of proposed exemption, as well as in Summary of Proposed Exemption to inter- all correspondence from the Department to ested persons as described in § 2570.43(d). the applicant regarding the application.

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satisfactory proof of electronic deliv- § 2570.44 Withdrawal of exemption ap- ery to the entire class of interested plications. persons. (a) An applicant may withdraw an (c) After furnishing the notification application for an exemption at any described in paragraph (a) of this sec- time by oral or written (including elec- tion, an applicant must provide the De- tronic) notice to the Department. A partment with a written statement withdrawn application generally shall confirming that notice was furnished not prejudice any subsequent applica- in accordance with the foregoing re- tions for an exemption submitted by an quirements of this section. This state- applicant. ment must be accompanied by a dec- (b) Upon receiving an applicant’s no- laration under penalty of perjury at- tice of withdrawal regarding an appli- testing to the truth of the information cation for an individual exemption, the provided in the statement and signed Department will confirm by letter the by a person qualified under applicant’s withdrawal of the applica- § 2570.34(b)(5) of this subpart to sign tion and will terminate all proceedings such a declaration. No exemption will relating to the application. If a notice be granted until such a statement and of proposed exemption has been pub- its accompanying declaration have lished in the FEDERAL REGISTER, the been furnished to the Department. Department will publish a notice with- (d) In addition to the provision of no- drawing the proposed exemption. tification required by paragraph (a) of (c) Upon receiving an applicant’s no- this section, the Department, in its dis- tice of withdrawal regarding an appli- cretion, may also require an applicant cation for a class exemption or for an to furnish interested persons with a individual exemption that is being con- brief summary of the proposed exemp- sidered with other applications as a re- tion (Summary of Proposed Exemp- quest for a class exemption, the De- tion), written in a manner calculated partment will inform any other appli- to be understood by the average recipi- cants for the exemption of the with- ent, which objectively describes: drawal. The Department will continue (1) The exemption transaction and to process other applications for the the parties in interest thereto; same exemption. If all applicants for a (2) Why such transaction would vio- particular class exemption withdraw late the prohibited transaction provi- their applications, the Department sions of ERISA, the Code, and/or may either terminate all proceedings FERSA from which relief is sought; relating to the exemption or propose (3) The reasons why the plan seeks to the exemption on its own motion. engage in the transaction; and (d) If, following the withdrawal of an (4) The conditions and safeguards exemption application, an applicant proposed to protect the plan and its decides to reapply for the same exemp- participants and beneficiaries from po- tion, he or she may contact the Depart- tential abuse or unnecessary risk of ment in writing (including electroni- loss in the event the Department cally) to request that the application grants the exemption. be reinstated. The applicant should (e) Applicants who are required to refer to the application number as- provide interested persons with the signed to the original application. If, at Summary of Proposed Exemption de- the time the original application was scribed in paragraph (d) of this section withdrawn, any additional information shall furnish the Department with a to be submitted to the Department copy of such summary for review and under § 2570.39 was outstanding, that in- approval prior to its distribution to in- formation must accompany the request terested persons. Such applicants shall for reinstatement of the application. also provide confirmation to the De- However, the applicant need not resub- partment that the Summary of Pro- mit information previously furnished posed Exemption was furnished to in- to the Department in connection with terested persons as part of the written a withdrawn application unless rein- statement and declaration required of statement of the application is re- exemption applicants by paragraph (c) quested more than two years after the of this section. date of its withdrawal.

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(e) Any request for reinstatement of emption is unwarranted, it will issue a a withdrawn application submitted, in letter affirming its final denial. accordance with paragraph (d) of this section, will be granted by the Depart- § 2570.46 Hearings in opposition to ex- ment, and the Department will take emptions from restrictions on fidu- whatever steps remained at the time ciary self-dealing. the application was withdrawn to proc- (a) Any interested person who may be ess the application. adversely affected by an exemption which the Department proposes to § 2570.45 Requests for reconsideration. grant from the restrictions of section 406(b) of ERISA, section 4975(c)(1)(E) or (a) The Department will entertain (F) of the Code, or section 8477(c)(2) of one request for reconsideration of an FERSA may request a hearing before exemption application that has been fi- the Department within the period of nally denied pursuant to § 2570.41 if the time specified in the FEDERAL REG- applicant presents in support of the ap- ISTER notice of the proposed exemp- plication significant new facts or argu- tion. Any such request must state: ments, which, for good reason, could (1) The name, address, telephone not have been submitted for the De- number, and email address of the per- partment’s consideration during its son making the request; initial review of the exemption applica- (2) The nature of the person’s inter- tion. est in the exemption and the manner in (b) A request for reconsideration of a which the person would be adversely previously denied application must be affected by the exemption; and made within 180 days after the issuance (3) A statement of the issues to be ad- of the final denial letter and must be dressed and a general description of the accompanied by a copy of the Depart- evidence to be presented at the hear- ment’s final letter denying the exemp- ing. tion and a statement setting forth the (b) The Department will grant a re- new information and/or arguments that quest for a hearing made in accordance provide the basis for reconsideration. with paragraph (a) of this section (c) A request for reconsideration where a hearing is necessary to fully must also be accompanied by a declara- explore material factual issues identi- tion under penalty of perjury attesting fied by the person requesting the hear- to the truth of the new information ing. A notice of such hearing shall be provided, which is signed by a person published by the Department in the qualified under § 2570.34(b)(5) to sign FEDERAL REGISTER. The Department such a declaration. may decline to hold a hearing where: (d) If, after reviewing a request for (1) The request for the hearing does reconsideration, the Department de- not meet the requirements of para- cides that the facts and arguments pre- graph (a) of this section; sented do not warrant reversal of its (2) The only issues identified for ex- original decision to deny the exemp- ploration at the hearing are matters of tion, it will send a letter to the appli- law; or cant reaffirming that decision. (3) The factual issues identified can (e) If, after reviewing a request for be fully explored through the submis- reconsideration, the Department de- sion of evidence in written (including cides, based on the new facts and argu- electronic) form. ments submitted, to reconsider its (c) An applicant for an exemption final denial letter, it will notify the ap- must notify interested persons in the plicant of its intent to reconsider the event that the Department schedules a application in light of the new infor- hearing on the exemption. Such notifi- mation presented. The Department will cation must be given in the form, time, then take whatever steps remained at and manner prescribed by the Depart- the time it issued its final denial letter ment. Ordinarily, however, adequate to process the exemption application. notification can be given by providing (f) If, at any point during its subse- to interested persons a copy of the no- quent processing of the application, the tice of hearing published by the De- Department decides again that the ex- partment in the FEDERAL REGISTER

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within 10 days of its publication, using (b) In each instance where the De- any of the methods approved in partment determines to grant an ex- § 2570.43(b). emption, it shall publish a notice in (d) After furnishing the notice re- the FEDERAL REGISTER which summa- quired by paragraph (c) of this section, rizes the transaction or transactions an applicant must submit a statement for which exemptive relief has been confirming that notice was given in the granted and specifies the conditions form, manner, and time prescribed. under which such exemptive relief is This statement must be accompanied available. by a declaration under penalty of per- jury attesting to the truth of the infor- § 2570.49 Limits on the effect of exemp- tions. mation provided in the statement, which is signed by a person qualified (a) An exemption does not take effect under § 2570.34(b)(5) to sign such a dec- with respect to the exemption trans- laration. action unless the material facts and representations contained in the appli- § 2570.47 Other hearings. cation and in any materials and docu- ments submitted in support of the ap- (a) In its discretion, the Department plication were true and complete. may schedule a hearing on its own mo- (b) An exemption is effective only for tion where it determines that issues the period of time specified and only relevant to the exemption can be most under the conditions set forth in the fully or expeditiously explored at a exemption. hearing. A notice of such hearing shall (c) Only the specific parties to whom be published by the Department in the an exemption grants relief may rely on FEDERAL REGISTER. the exemption. If the notice granting (b) An applicant for an exemption an exemption does not limit exemptive must notify interested persons of any relief to specific parties, all parties to hearing on an exemption scheduled by the exemption transaction may rely on the Department in the manner de- the exemption. scribed in § 2570.46(c). In addition, the (d) For transactions that are con- applicant must submit a statement tinuing in nature, an exemption ceases subscribed as true under penalty of per- to be effective if, during the continu- jury like that required in § 2570.46(d). ation of the transaction, there are ma- terial changes to the original facts and § 2570.48 Decision to grant exemp- tions. representations underlying such ex- emption or if one or more of the ex- (a) The Department may not grant emption’s conditions cease to be met. an exemption under section 408(a) of (e) The determination as to whether, ERISA, section 4975(c)(2) of the Code, under the totality of the facts and cir- or 5 U.S.C. 8477(c)(3) unless, following cumstances, a particular statement evaluation of the facts and representa- contained in (or omitted from) an ex- tions comprising the administrative emption application constitutes a ma- record of the proposed exemption (in- terial fact or representation is made by cluding any comments received in re- the Department. sponse to a notice of proposed exemp- tion and the record of any hearing held § 2570.50 Revocation or modification in connection with the proposed ex- of exemptions. emption), it finds that the exemption (a) If, after an exemption takes ef- is: fect, changes in circumstances, includ- (1) Administratively feasible; ing changes in law or policy, occur (2) In the interests of the plan (or the which call into question the continuing Thrift Savings Fund in the case of validity of the Department’s original FERSA) and of its participants and findings concerning the exemption, the beneficiaries; and Department may take steps to revoke (3) Protective of the rights of partici- or modify the exemption. pants and beneficiaries of such plan (or (b) Before revoking or modifying an the Thrift Savings Fund in the case of exemption, the Department will pub- FERSA). lish a notice of its proposed action in

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the FEDERAL REGISTER and provide in- tion 502(c)(2) of the Employee Retire- terested persons with an opportunity ment Income Security Act of 1974. The to comment on the proposed revocation rules of procedure for administrative or modification. Prior to the publica- hearings published by the Depart- tion of such notice, the applicant will ment’s Office of Law Judges at part 18 be notified of the Department’s pro- of this title will apply to matters aris- posed action and the reasons therefore. ing under ERISA section 502(c)(2) ex- Subsequent to the publication of the cept as modified by this section. These notice, the applicant will have the op- proceedings shall be conducted as expe- portunity to comment on the proposed ditiously as possible, and the parties revocation or modification. shall make every effort to avoid delay (c) Ordinarily the revocation or at each stage of the proceedings. modification of an exemption will have prospective effect only. § 2570.61 Definitions. For 502(c)(2) civil penalty pro- § 2570.51 Public inspection and copies. ceedings, this section shall apply in (a) The administrative record of each lieu of the definitions in § 18.2 of this exemption will be open to public in- title: spection and copying at the EBSA Pub- (a) Adjudicatory proceeding means a lic Disclosure Room, U.S. Department judicial-type proceeding before an ad- of Labor, 200 Constitution Avenue NW., ministrative law judge leading to the Washington, DC 20210. formulation of a final order; (b) Upon request, the staff of the (b) Administrative law ludge means an Public Disclosure Room will furnish administrative law judge appointed photocopies of an administrative pursuant to the provisions of 5 U.S.C. record, or any specified portion of that 3105; record, for a specified charge per page. (c) Answer means a written state- ment that is supported by reference to § 2570.52 Effective date. specific circumstances or facts sur- This subpart B is effective with re- rounding the notice of determination spect to all exemptions filed with or issued pursuant to § 2560.502c–2(g) of initiated by the Department under sec- this chapter. tion 408(a) of ERISA, section 4975(c)(2) (d) Commencement of proceeding is the of the Code, and/or 5 U.S.C. 8477(c)(3) at filing of an answer by the respondent; any time on or after December 27, 2011. (e) Consent agreement means any writ- Applications for exemptions under sec- ten document containing a specified tion 408(a) of ERISA, section 4975(c)(2) proposed remedy or other relief accept- of the Code, and/or 5 U.S.C. 8477(c)(3) able to the Department and consenting filed on or after September 10, 1990, but parties; before December 27, 2011 are governed (f) ERISA means the Employee Re- by part 2570 of chapter XXV of title 29 tirement Income Security Act of 1974, of the Code of Federal Regulations as amended; (title 29 CFR part 2570 as revised July (g) Final Order means the final deci- 1, 1991). sion or action of the Department of Labor concerning the assessment of a Subpart C—Procedures for the As- civil penalty under ERISA section 502(c)(2) against a particular party. sessment of Civil Penalties Such final order may result from a de- Under ERISA Section cision of an administrative law judge 502(c)(2) or the Secretary, the failure of a party to file a statement of reasonable cause SOURCE: 54 FR 26897, June 26, 1989, unless described in § 2560.502c–2(e) within the otherwise noted. prescribed time limits, or the failure of a party to invoke the procedures for § 2570.60 Scope of rules. hearings or appeals under this title The rules of practice set forth in this within the prescribed time limits. Such subpart are applicable to ‘‘502(c)(2) a final order shall constitute final civil penalty proceedings’’ (as defined agency action within the meaning of 5 in § 2570.61(n) of this subpart) under sec- U.S.C. 704;

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(h) Hearing means that part of a pro- ministrative Law Judges, 800 K Street, ceeding which involves the submission NW., Suite 400, Washington, DC 20001- of evidence, either by oral presentation 8002, or to the OALJ Regional Office to or written submission, to the adminis- which the proceeding may have been trative law judge; transferred for hearing. Each document (i) Order means the whole or any part filed shall be clear and legible. of a final procedural or substantive dis- (b) By parties. All motions petitions, position of a matter under ERISA sec- pleadings, briefs, or other documents tion 502(c)(2); shall be filed with the Office of Admin- (j) Party includes a person or agency istrative Law Judges with a copy, in- named or admitted as a party to a pro- cluding any attachments, to all other ceeding; parties or record. When a party is rep- (k) Person includes an individual, resented by an attorney, service shall partnership, corporation, employee be made upon the attorney. Service of benefit plan, association, exchange or any document upon any party may be other entity or organization; made by personal delivery or by mail- (l) Petition means a written request, ing a copy to the last known address. made by a person or party, for some af- The Department shall be served by de- firmative action; livery to the Associate Solicitor, Plan (m) Pleading means the notice as de- Benefits Security Division, ERISA sec- fined in § 2560.502c–2(g), the answer to tion 502(c)(2) Proceeding, P.O. Box 1914, the notice, any supplement or amend- Washington, DC 20013. The person serv- ment thereto, and any reply that may ing the document shall certify to the be permitted to any answer, supple- manner and date of service. ment or amendment; (c) By the Office of Administrative Law (n) 502(c)(2) civil penalty proceeding Judges. Service of orders, decisions and means an adjudicatory proceeding re- all other documents shall be made by lating to the assessment of a civil pen- regular mail to the last known address. alty provided for in section 502(c)(2) of (d) Form of pleadings. (1) Every plead- ERISA; ing shall contain information indi- (o) Respondent means the party cating the name of the Employee Bene- against whom the Department is seek- fits Security Administration (EBSA) as ing to assess a civil sanction under the agency under which the proceeding ERISA section 502(c)(2); is instituted, the title of the pro- (p) Secretary means the Secretary of ceeding, the docket number (if any) as- Labor and includes, pursuant to any signed by the Office of Administrative delegation of authority by the Sec- Law Judges and a designation of the retary, any assistant secretary (includ- type of pleading or paper (e.g., notice, ing the Assistant Secretary for Em- motion to dismiss, etc.). The pleading ployee Benefits Security), adminis- or paper shall be signed and shall con- trator, commissioner, appellate body, tain the address and telephone number board, or other official; and of the party or person representing the (q) Solicitor means the Solicitor of party. Although there are no formal Labor or his or her delegate. specifications for documents, they should be typewritten when possible on [54 FR 26897, June 26, 1989, as amended at 68 standard size 81⁄2 × 11 inch paper. FR 3737, Jan. 24, 2003] (2) Illegible documents, whether § 2570.62 Service: Copies of documents handwritten, typewritten, photocopies, and pleadings. or otherwise, will not be accepted. Pa- For 502(c)(2) penalty proceedings, this pers may be reproduced by any dupli- section shall apply in lieu of § 18.3 of cating process provided all copies are this title. clear and legible. (a) General. Copies of all documents [54 FR 26897, June 26, 1989, as amended at 56 shall be served on all parties of record. FR 54708, Oct. 22, 1991] All documents should clearly designate the docket number, if any, and short § 2570.63 Parties, how designated. title of all matters. All documents to For 502(c)(2) civil penalty pro- be filed shall be delivered or mailed to ceedings, this section shall apply in the Chief Docket Clerk, Office of Ad- lieu of § 18.10 of this title.

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(a) The term ‘‘party’’ wherever used law judge may request all such peti- in these rules shall include any natural tioners to designate a single represent- person, corporation, employee benefit ative, or he or she may recognize one plan, association, firm, partnership, or more of such petitioners. The ad- trustee, receiver, agency, public or pri- ministrative law judge shall give each vate organization, or government agen- such petitioner as well as the parties, cy. A party against whom a civil pen- written notice of the decision on his or alty is sought shall be designated as her petition. For each petition granted, ‘‘respondent.’’ The Department shall be the administrative law judge shall pro- designated as the ‘‘complainant.’’ vide a brief statement of the basis of (b) Other persons or organizations the decision. If the petition is denied, shall be permitted to participate as he or she shall briefly state the parties only if the administrative law grounds for denial and shall then treat judge finds that the final decision the petition as a request for participa- could directly and adversely affect tion as amicus curiae. them or the class they represent, that they may contribute materially to the § 2570.64 Consequences of default. disposition of the proceedings and their For 502(c)(2) civil penalty pro- interest is not adequately represented ceedings, this section shall apply in by existing parties, and that in the dis- lieu of § 18.5(a) and (b) of this title. cretion of the administrative law judge Failure of the respondent to file an an- the participation of such persons or or- swer to the notice of determination de- ganizations would be appropriate. scribed in § 2560.502c–2(g) of this chapter (c) A person or organization not within the 30 day period provided by named as a respondent wishing to par- § 2560.502c–2(h) of this chapter shall be ticipate as a party under this section deemed to constitute a waiver of his or shall submit a petition to the adminis- her right to appear and contest the al- trative law judge within fifteen (15) legations of the notice of determina- days after the person or organization tion, and such failure shall be deemed has knowledge of or should have known to be an admission of the facts as al- about the proceeding. The petition leged in the notice for purposes of any shall be filed with the administrative proceeding involving the assessment of law judge and served on each person or a civil penalty under section 502(c)(2) of organization who has been made a the Act. Such notice shall then become party at the time of filing. Such peti- the final order of the Secretary, within tion shall concisely state: the meaning of § 2570.61(g) of this sub- (1) Petitioner’s interest in the pro- part, forty-five (45) days from the date ceeding; of service of the notice. (2) How his or her participation as a [68 FR 3737, Jan. 24, 2003] party will contribute materially to the disposition of the proceeding; § 2570.65 Consent order or settlement. (3) Who will appear for petitioner; For 502(c)(2) civil penalty pro- (4) The issues on which petitioner ceedings, the following shall apply in wishes to participate; and lieu of § 18.9 of this title. (5) Whether petitioner intends to (a) General. At any time after the present witnesses. commencement of a proceeding, but at (d) Objections to the petition may be least five (5) days prior to the date set filed by a party within fifteen (15) days for hearing, the parties jointly may of the filing of the petition. If objec- move to defer the hearing for a reason- tions to the petition are filed, the ad- able time to permit negotiation of a ministrative law judge shall then de- settlement or an agreement containing termine whether petitioners have the findings and an order disposing of the requisite interest to be a party in the whole or any part of the proceeding. proceedings, as defined in paragraph (b) The allowance of such and the duration of this section, and shall permit or thereof shall be in the discretion of the deny participation accordingly. Where administrative law judge, after consid- petitions to participate as parties are eration of such factors as the nature of made by individuals or groups with the proceeding, the requirements of the common interests, the administrative public interest, the representations of

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the parties and the probability of (e) Settlement without consent of all reaching an agreement which will re- parties. In cases in which some, but not sult in a just disposition of the issues all, of the parties to a proceeding sub- involved. mit a consent agreement to the admin- (b) Content. Any agreement con- istrative law judge, the following pro- taining consent findings and an order cedure shall apply: disposing of a proceeding or any part (1) If all of the parties have not con- thereof shall also provide: sented to the proposed settlement sub- (1) That the order shall have the mitted to the administrative law judge, same force and effect as an order made then such non-consenting parties must after full hearing; receive notice, and a copy, of the pro- (2) That the entire record on which posed settlement at the time it is sub- any order may be based shall consist mitted to the administrative law judge; solely of the notice and the agreement; (2) Any non-consenting party shall (3) A waiver of any further proce- have fifteen (15) days to file any objec- dural steps before the administrative tions to the proposed settlement with law judge; the administrative law judge and all other parties; (4) A waiver of any right to challenge (3) If any party submits an objection or contest the validity of the order and to the proposed settlement, the admin- decision entered into in accordance istrative law judge shall decide within with the agreement; and thirty (30) days after receipt of such (5) That the order and decision of the objections whether he shall sign or re- administrative law judge shall be final ject the proposed settlement. Where agency action. the record lacks substantial evidence (c) Submission. On or before the expi- upon which to base a decision or there ration of the time granted for negotia- is a genuine issue of material fact, then tions, but, in any case, at least five (5) the administrative law judge may es- days prior to the date set for hearing, tablish procedures for the purpose of the parties or their authorized rep- receiving additional evidence upon resentative or their counsel may: which a decision on the contested (1) Submit the proposed agreement issues may reasonably be based; containing consent findings and an (4) If there are no objections to the order to the administrative law judge; proposed settlement, or if the adminis- or trative law judge decides to sign the (2) Notify the administrative law proposed settlement after reviewing judge that the parties have reached a any such objections, the administra- full settlement and have agreed to dis- tive law judge shall incorporate the missal of the action subject to compli- consent agreement into a decision ance with the terms of the settlement; meeting the requirements of paragraph or (d) of this section. (3) Inform the administrative law judge that agreement cannot be § 2570.66 Scope of discovery. reached. For 502(c)(2) civil penalty pro- (d) Disposition. In the event a settle- ceedings, this section shall apply in ment agreement containing consent lieu of § 18.14 of this title. findings and an order is submitted (a) A party may file a motion to con- within the time allowed therefore, the duct discovery with the administrative administrative law judge shall issue a law judge. The motion for discovery decision incorporating such findings shall be granted by the administrative and agreement within thirty (30) days law judge only upon a showing of good of his receipt of such document. The cause. In order to establish ‘‘good decision of the administrative law cause’’ for the purposes of this section, judge shall incorporate all of the find- a party must show that the discovery ings, terms, and conditions of the set- requested relates to a genuine issue as tlement agreement and consent order to a material fact that is relevant to of the parties. Such decision shall be- the proceeding. The order of the admin- come final agency action within the istrative law judge shall expressly meaning of 5 U.S.C. 704. limit the scope and terms of discovery

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to that for which ‘‘good cause’’ has § 2570.68 Decision of the administra- been shown, as provided in this para- tive law judge. graph. For 502(c)(2) civil penalty pro- (b) A party may obtain discovery of ceedings, this section shall apply in documents and tangible things other- lieu of § 18.57 of this title. wise discoverable under paragraph (a) (a) Proposed findings of fact, conclu- of this section and prepared in antici- sions, and order. Within twenty (20) pation of or for the hearing by or for days of the filing of the transcript of another party’s representative (includ- the testimony of such additional time ing his or her attorney, consultant, as the administrative law judge may surety, indemnitor, insurer, or agent) allow, each party may file with the ad- only upon showing that the party seek- ministrative law judge, subject to the ing discovery has substantial need of judge’s discretion, proposed findings of fact, conclusions of law, and order to- the materials or information in the gether with a supporting brief express- preparation of his or her case and that ing the reasons for such proposals. he or she is unable without undue hard- Such proposals and briefs shall be ship to obtain the substantial equiva- served on all parties, and shall refer to lent of the materials or information by all portions of the record and to all au- other means. In ordering discovery of thorities relied upon in support of each such materials when the required proposal. showing has been made, the adminis- (b) Decision of the administative law trative law judge shall protect against judge. Within a reasonable time after disclosure of the mental impressions, the time allowed for the filing of the conclusions, opinions, or legal theories proposed findings of fact, conclusions of an attorney or other representatives of law, and order, or within thirty (30) of a party concerning the proceeding. days after receipt of an agreement con- taining consent findings and order dis- § 2570.67 Summary decision. posing of the disputed matter in whole, the administrative law judge shall For 502(c)(2) civil penalty pro- make his or her decision. The decision ceedings, this section shall apply in of the administrative law judge shall lieu of § 18.41 of this title. include findings of fact and conclusions (a) No genuine issue of material of fact. of law with reasons therefor upon each (1) Where no issue of a material of fact material issue of fact or law presented is found to have been raised, the ad- on the record. The decision of the ad- ministrative law judge may issue a de- ministrative law judge shall be based cision which, in the absence of an ap- upon the whole record. In a contested peal pursuant to §§ 2570.69 through case in which the Department and the 2570.71 of this subpart, shall become a Respondent have presented their posi- final order. tions to the administrative law judge (2) A decision made under this para- pursuant to the procedures for 502(c)(2) graph shall include a statement of: civil penalty proceedings as set forth in (i) Findings of fact and conclusions of this subpart, the penalty (if any) which law, and the reasons therefor, on all may be included in the decision of the issues presented; and administrative law judge shall be lim- (ii) Any terms and conditions of the ited to the penalty expressly provided for in section 502(c)(2) of ERISA. It rule or order. shall be supported by reliable and pro- (3) A copy of any decision under this bative evidence. The decision of the ad- paragraph shall be served on each ministrative law judge shall become party. final agency action within the meaning (b) Hearings on issues of fact. Where a of 5 U.S.C. 704 unless an appeal is made genuine question of material of fact is pursuant to the procedures set forth in raised, the administrative law judge §§ 2570.69 through 2570.71. shall, and in any other case may, set the case for an evidentiary hearing. § 2570.69 Review by the Secretary. (a) The Secretary may review a deci- sion of an administrative law judge.

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Such a review may occur only when a § 2570.80 Scope of rules. party files a notice of appeal from a de- The rules of practice set forth in this cision of an administrative law judge subpart are applicable to ‘‘502(l) civil within twenty (20) days of the issuance penalty proceedings’’ (as defined in of such decision. In all other cases, the § 2570.82 of this subpart) under section decision of the administrative law 502(l) of the Employee Retirement In- judge shall become final agency action come Security Act of 1974 (ERISA or within the meaning of 5 U.S.C. 704. the Act). Refer to 29 CFR 2560.502–1 for (b) A notice of appeal to the Sec- the definition of the relevant terms of retary shall state with specificity the ERISA section 502(l). issue(s) in the decision of the adminis- trative law judge on which the party is § 2570.81 In general. seeking review. Such notice of appeal Section 502(l) of the Employee Re- must be served on all parties of record. tirement Income Security Act of 1974 (c) Upon receipt of a notice of appeal, (ERISA or the Act) requires the Sec- the Secretary shall request the Chief retary of Labor to assess a civil pen- Administrative Law Judge to submit alty against a fiduciary who breaches a to him or her a copy of the entire fiduciary responsibility under, or com- record before the administrative law mits any other violation of, part 4 of judge. title I of ERISA or any other person who knowingly participates in such § 2570.70 Scope of review. breach or violation. The penalty under section 502(l) is equal to 20 percent of The review of the Secretary shall not the ‘‘applicable recovery amount’’ paid be de novo proceeding but rather a re- pursuant to any settlement agreement view of the record established before with the Secretary or ordered by a the administrative law judge. There court to be paid in a judicial pro- shall be no opportunity for oral argu- ceeding instituted by the Secretary ment. under section 502 (a)(2) or (a)(5). The Secretary may, in the Secretary’s sole § 2570.71 Procedures for review by the discretion, waive or reduce the penalty Secretary. if the Secretary determines in writing (a) Upon receipt of the notice of ap- that: peal, the Secretary shall establish a (a) The fiduciary or other person briefing schedule which shall be served acted reasonably and in good faith, or on all parties of record. Upon motion of (b) It is reasonable to expect that the one or more of the parties, the Sec- fiduciary or other person will not be retary may, in his or her discretion, able to restore all losses to the plan or permit the submission of reply briefs. any participant or beneficiary of such (b) The Secretary shall issue a deci- plan without severe financial hardship sion as promptly as possible after re- unless such waiver or reduction is granted. ceipt of the briefs of the parties. The Secretary may affirm, modify, or set The penalty imposed on a fiduciary or aside, in whole or in part, the decision other person with respect to any trans- on appeal and shall issue a statement action shall be reduced by the amount of reasons and bases for the action(s) of any penalty or tax imposed on such fiduciary or other person with respect taken. Such decision by the Secretary to such transaction under section 502(i) shall be final agency action within the or section 4975 of the Internal Revenue meaning of 5 U.S.C. 704. Code of 1986 (the Code). Subpart D—Procedure for the As- § 2570.82 Definitions. sessment of Civil Penalties For purposes of this section: Under ERISA Section 502(l) (a) 502(l) civil penalty proceedings means an adjudicatory proceeding re- lating to the assessment of a civil pen- SOURCE: 55 FR 25286, June 20, 1990, unless otherwise noted. alty provided in section 502(l) of ERISA;

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(b) Notice of assessment means any (3) By mailing a copy to the last document, however designated, issued known address of such individual, part- by the Secretary which contains a ner, officer, trustee, or attorney. specified assessment, in monetary If service is accomplished by certified terms, of a civil penalty under ERISA mail, service is complete upon mailing. section 502(l). A ‘‘notice of assessment’’ If done by regular mail, service is com- will contain a brief factual description plete upon receipt by the addressee. of the violation for which the assess- ment is being made, the identity of the § 2570.84 Payment of civil penalty. person being assessed, and the amount (a) The civil penalty must be paid of the assessment and the basis for as- within 60 days of service of the notice sessing that particular person that par- of assessment. ticular penalty amount; (b) At any time prior to the expira- (c) Person includes an individual, tion of the payment period for the as- partnership, corporation, employee sessed penalty, any person who has benefit plan, association, exchange or committed, or knowingly participated other entity or organization; in, a breach or violation, or has been (d) Petition means a written request, alleged by the Secretary to have so made by a person, for a waiver or re- committed or participated, may sub- duction of the civil penalty described mit a written request for a conference herein; and with the Secretary to discuss the cal- (e) Secretary means the Secretary of culation of the assessed penalty. A per- Labor and includes, pursuant to any son will be entitled under this section delegation of authority by the Sec- to one such conference per assessment. retary, the Assistant Secretary for Em- If such written request is submitted ployee Benefits Security, Regional Di- during the 60 day payment period de- rectors for Employee Benefits Secu- scribed in subparagraph (a), such a re- rity, or Deputy Regional Directors for quest will not toll the running of that Employee Benefits Security. payment period. [55 FR 25286, June 20, 1990, as amended at 68 (c) The notice of assessment will be- FR 16400, Apr. 3, 2003] come a final order (within the meaning of 5 U.S.C. 704) on the first day fol- § 2570.83 Assessment of civil penalty. lowing the 60 day payment period, sub- (a) Except as described in §§ 2570.85 ject to any tolling caused by a petition and 2570.86 of this part, subsequent to to waive or reduce described in § 2570.85. the payment of the applicable recovery amount pursuant to either a settle- § 2570.85 Waiver or reduction of civil ment agreement or a court order, the penalty. Secretary shall serve on the person lia- (a) At any time prior to the expira- ble for making such payment a notice tion of the payment period for the as- of assessment of civil penalty equal to sessed penalty, any person who has 20 percent of the applicable recovery committed, or knowingly participated amount. in, a breach or violation, or has been (b) Service of such notice shall be alleged by the Secretary to have so made either: committed or participated, may peti- (1) By delivering a copy to the person tion the Secretary to waive or reduce being assessed; if the person is an indi- the penalty under this section on the vidual, to the individual; if the person basis that: is a partnership, to any partner; if the (1) The person acted reasonably and person is a corporation, association, in good faith in engaging in the breach exchange, or other entity or organiza- or violation; or tion, to any officer of such entity; if (2) The person will not be able to re- the person is an employee benefit plan, store all losses to the plan or partici- to a trustee of such plan; or to any at- pant or beneficiary of such plan with- torney representing any such person; out severe financial hardship unless (2) By leaving a copy at the principal such waiver or reduction is granted. office, place of business, or residence of (b) All petitions for waiver or reduc- such individual, partner, officer, trust- tion shall be in writing and contain the ee, or attorney; or following information:

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(1) The name of the petitioner(s); provide proof to the Department of the (2) A detailed description of the payment of the penalty or tax and the breach or violation which is the subject amount of that payment. Submissions of the penalty; of proof of other penalty or tax assess- (3) A detailed recitation of the facts ments will not toll the 60 day payment which support one, or both, of the bases period, if previously initiated. for waiver or reduction described in § 2570.85(a) of this part, accompanied by § 2570.87 Revision of assessment. underlying documentation supporting If, based on the procedures described such factual allegations; in § 2570.84, 2570.85, or 2570.86, the as- (4) A declaration, signed and dated by sessed penalty amount is revised, the the petitioner(s), in the following form: person being assessed will receive a re- Under penalty of perjury, I declare that, to vised notice of assessment and will be the best of my knowledge and belief, the rep- obligated to pay the revised assessed resentations made in this petition are true penalty within the relevant 60 day pay- and correct. ment period (as determined by the ap- (c) If a petition for waiver or reduc- plicable procedure in § 2570.84, 2570.85, tion is submitted during the 60 day or 2570.86), and, if necessary, any excess payment period described in § 2570.84(a) penalty payment will be refunded as of this part, the payment period for the soon as administratively feasible. The penalty in question will be tolled pend- revised notice of assessment will re- ing Departmental consideration of the voke any previously issued notice of petition. During such consideration, assessment with regard to the trans- the applicant is entitled to one con- action in question and will become a ference with the Secretary, but the final order (within the meaning of 5 Secretary, in his or her sole discretion, U.S.C. 704) the later of the first day fol- may schedule or hold additional con- lowing the 60 day payment period or ferences with the petitioner concerning the date of its service on the person the factual allegations contained in the being assessed, pursuant to the service petition. procedures described in § 2570.83(b). (d) Based solely on his or her discre- tion, the Secretary will determine § 2570.88 Effective date. whether to grant such a waiver or re- duction. Pursuant to the procedure de- This section is effective June 20, 1990, scribed in § 2570.83(b), the petitioner and shall apply to assessments under will be served with a written deter- section 502(l) made by the Secretary mination informing him or her of the after June 20, 1990, based on any breach Secretary’s decision. Such written de- or violation occurring on or after De- termination shall briefly state the cember 19, 1989. grounds for the Secretary’s decision, and shall be final and non-reviewable. Subpart E—Procedures for the As- In the case of a determination not to sessment of Civil Penalties waive, the payment period for the pen- Under ERISA Section alty in question, if previously initi- 502(c)(5) ated, will resume as of the date of serv- ice of the Secretary’s written deter- mination. SOURCE: 68 FR 17508, Apr. 9, 2003, unless otherwise noted. § 2570.86 Reduction of penalty by other penalty assessments. § 2570.90 Scope of rules. The penalty assessed on a person pur- The rules of practice set forth in this suant to this section with respect to subpart are applicable to ‘‘502(c)(5) any transaction shall be reduced by the civil penalty proceedings’’ (as defined amount of any penalty or tax imposed in 2570.91(n)) under section 502(c)(5) of on such person with respect to such the Employee Retirement Income Se- transaction under ERISA section 502(i) curity Act of 1974. The rules of proce- and section 4975 of the Code. Prior to a dure for administrative hearings pub- reduction of penalty under this para- lished by the Department’s Office of graph, the person being assessed must Administrative Law Judges in subpart

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A of 29 CFR part 18 will apply to mat- or written submission, to the adminis- ters arising under ERISA section trative law judge; 502(c)(5) except as described by this sec- (i) Order means the whole or any part tion. These proceedings shall be con- of a final procedural or substantive dis- ducted as expeditiously as possible, and position of a matter under ERISA sec- the parties shall make every effort to tion 502(c)(5); avoid delay at each stage of the pro- (j) Party includes a person or agency ceedings. named or admitted as a party to a pro- ceeding; § 2570.91 Definitions. (k) Person includes an individual, For 502(c)(5) civil penalty pro- partnership, corporation, employee ceedings, this section shall apply in benefit plan, association, exchange, or lieu of the definitions in § 18.2 of this other entity or organization; title. (l) Petition means a written request, (a) Adjudicatory proceeding means a made by a person or party, for some af- judicial-type proceeding before an ad- firmative action; ministrative law judge leading to the (m) Pleading means the notice as de- formulation of a final order; fined in 29 CFR 2560.502c–5(g), the an- swer to the notice, any supplement or (b) Administrative law judge means an amendment thereto, and any reply that administrative law judge appointed may be permitted to any answer, sup- pursuant to the provisions of 5 U.S.C. plement or amendment; 3105; (n) 502(c)(5) civil penalty proceeding (c) means a written state- Answer means an adjudicatory proceeding re- ment that is supported by reference to lating to the assessment of a civil pen- specific circumstances or facts sur- alty provided for in section 502(c)(5) of rounding the notice of determination ERISA; issued pursuant to 29 CFR 2560.502c– (o) Respondent means the party 5(g); against whom the Department is seek- (d) Commencement of proceeding is the ing to assess a civil sanction under filing of an answer by the respondent; ERISA section 502(c)(5); (e) Consent agreement means any writ- (p) Secretary means the Secretary of ten document containing a specified Labor and includes, pursuant to any proposed remedy or other relief accept- delegation of authority by the Sec- able to the Department and consenting retary, any assistant secretary (includ- parties; ing the Assistant Secretary for Em- (f) ERISA means the Employee Re- ployee Benefits Security), adminis- tirement Income Security Act of 1974, trator, commissioner, appellate body, as amended; board, or other official of the Depart- (g) Final order means the final deci- ment of Labor; and sion or action of the Department of (q) Solicitor means the Solicitor of Labor concerning the assessment of a Labor or his or her delegate. civil penalty under ERISA section 502(c)(5) against a particular party. § 2570.92 Service: Copies of documents Such final order may result from a de- and pleadings. cision of an administrative law judge For 502(c)(5) penalty proceedings, this or the Secretary, the failure of a party section shall apply in lieu of 29 CFR to file a statement of reasonable cause 18.3. described in 29 CFR 2560.502c–5(e) with- (a) In general. Copies of all documents in the prescribed time limits, or the shall be served on all parties of record. failure of a party to invoke the proce- All documents should clearly designate dures for hearings or appeals under this the docket number, if any, and short title within the prescribed time limits. title of all matters. All documents to Such a final order shall constitute final be filed shall be delivered or mailed to agency action within the meaning of 5 the Chief Docket Clerk, Office of Ad- U.S.C. 704; ministrative Law Judges (OALJ), 800 K (h) Hearing means that part of a pro- Street, NW., Suite 400, Washington, DC ceeding which involves the submission 20001–8002, or to the OALJ Regional Of- of evidence, either by oral presentation fice to which the proceeding may have

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been transferred for hearing. Each doc- cy. A party against whom a civil pen- ument filed shall be clear and legible. alty is sought shall be designated as (b) By parties. All motions, petitions, ‘‘respondent.’’ The Department shall be pleadings, briefs, or other documents designated as the ‘‘complainant.’’ shall be filed with the Office of Admin- (b) Other persons or organizations istrative Law Judges with a copy, in- shall be permitted to participate as cluding any attachments, to all other parties only if the administrative law parties of record. When a party is rep- judge finds that the final decision resented by an attorney, service shall could directly and adversely affect be made upon the attorney. Service of them or the class they represent, that any document upon any party may be they may contribute materially to the made by personal delivery or by mail- disposition of the proceedings and their ing a copy to the last known address. interest is not adequately represented The Department shall be served by de- by existing parties, and that in the dis- livery to the Associate Solicitor, Plan cretion of the administrative law judge Benefits Security Division, ERISA Sec- the participation of such persons or or- tion 502(c)(5) Proceeding, P.O. Box 1914, ganizations would be appropriate. Washington, DC 20013. The person serv- (c) A person or organization not ing the document shall certify to the named as a respondent wishing to par- manner and date of service. ticipate as a party under this section (c) By the Office of Administrative Law shall submit a petition to the adminis- Judges. Service of orders, decisions and trative law judge within fifteen (15) all other documents shall be made by days after the person or organization regular mail to the last known address. has knowledge of or should have known (d) Form of pleadings—(1) Every plead- about the proceeding. The petition ing shall contain information indi- shall be filed with the administrative cating the name of the Employee Bene- law judge and served on each person or fits Security Administration (EBSA) as organization who has been made a the agency under which the proceeding party at the time of filing. Such peti- is instituted, the title of the pro- tion shall concisely state: ceeding, the docket number (if any) as- (1) Petitioner’s interest in the pro- signed by the Office of Administrative ceeding; Law Judges and a designation of the (2) How his or her participation as a type of pleading or paper (e.g., notice, party will contribute materially to the motion to dismiss, etc.). The pleading disposition of the proceeding; or paper shall be signed and shall con- (3) Who will appear for petitioner; tain the address and telephone number (4) The issues on which petitioner of the party or person representing the wishes to participate; and party. Although there are no formal (5) Whether petitioner intends to specifications for documents, they present witnesses. should be typewritten when possible on (d) Objections to the petition may be standard size 81⁄2 × 11 inch paper. filed by a party within fifteen (15) days (2) Illegible documents, whether of the filing of the petition. If objec- handwritten, typewritten, photocopies, tions to the petition are filed, the ad- or otherwise, will not be accepted. Pa- ministrative law judge shall then de- pers may be reproduced by any dupli- termine whether petitioners have the cating process provided all copies are requisite interest to be a party in the clear and legible. proceedings, as defined in paragraph (b) of this section, and shall permit or § 2570.93 Parties, how designated. deny participation accordingly. Where For 502(c)(5) civil penalty pro- petitions to participate as parties are ceedings, this section shall apply in made by individuals or groups with lieu of 29 CFR 18.10. common interests, the administrative (a) The term party wherever used in law judge may request all such peti- this subpart shall include any natural tioners to designate a single represent- person, corporation, employee benefit ative, or he or she may recognize one plan, association, firm, partnership, or more of such petitioners. The ad- trustee, receiver, agency, public or pri- ministrative law judge shall give each vate organization, or government agen- such petitioner as well as the parties,

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written notice of the decision on his or (1) That the order shall have the her petition. For each petition granted, same force and effect as an order made the administrative law judge shall pro- after full hearing; vide a brief statement of the basis of (2) That the entire record on which the decision. If the petition is denied, any order may be based shall consist he or she shall briefly state the solely of the notice and the agreement; grounds for denial and shall then treat (3) A waiver of any further proce- the petition as a request for participa- dural steps before the administrative tion as amicus curiae. law judge; (4) A waiver of any right to challenge § 2570.94 Consequences of default. or contest the validity of the order and For 502(c)(5) civil penalty pro- decision entered into in accordance ceedings, this section shall apply in with the agreement; and lieu of 29 CFR 18.5(a) and (b). Failure of (5) That the order and decision of the the respondent to file an answer to the administrative law judge shall be final notice of determination described in 29 agency action. CFR 2560.502c–5(g) within the 30 day pe- (c) Submission. On or before the expi- riod provided by 29 CFR 2560.502c–5(h) ration of the time granted for negotia- shall be deemed to constitute a waiver tions, but, in any case, at least five (5) of his or her right to appear and con- days prior to the date set for hearing, test the allegations of the notice of de- the parties or their authorized rep- termination, and such failure shall be resentative or their counsel may: deemed to be an admission of the facts (1) Submit the proposed agreement as alleged in the notice for purposes of containing consent findings and an any proceeding involving the assess- order to the administrative law judge; ment of a civil penalty under section (2) Notify the administrative law 502(c)(5) of the Act. Such notice shall judge that the parties have reached a then become a final order of the Sec- full settlement and have agreed to dis- retary, within the meaning of missal of the action subject to compli- § 2570.91(g), forty-five (45) days from the ance with the terms of the settlement; date of the service of the notice. or (3) Inform the administrative law § 2570.95 Consent order or settlement. judge that agreement cannot be For 502(c)(5) civil penalty pro- reached. ceedings, the following shall apply in (d) Disposition. In the event that a lieu of 29 CFR 18.9. settlement agreement containing con- (a) In general. At any time after the sent findings and an order is submitted commencement of a proceeding, but at within the time allowed therefor, the least five (5) days prior to the date set administrative law judge shall issue a for hearing, the parties jointly may decision incorporating such findings move to defer the hearing for a reason- and agreement within thirty (30) days able time to permit negotiation of a of receipt of such document. The deci- settlement or an agreement containing sion of the administrative law judge findings and an order disposing of the shall incorporate all of the findings, whole or any part of the proceeding. terms, and conditions of the settlement The allowance of such deferment and agreement and consent order of the the duration thereof shall be in the dis- parties. Such decision shall become a cretion of the administrative law final agency action within the meaning judge, after consideration of such fac- of 5 U.S.C. 704. tors as the nature of the proceeding, (e) Settlement without consent of all the requirements of the public interest, parties. In cases in which some, but not the representations of the parties and all, of the parties to a proceeding sub- the probability of reaching an agree- mit a consent agreement to the admin- ment which will result in a just dis- istrative law judge, the following pro- position of the issues involved. cedure shall apply: (b) Content. Any agreement con- (1) If all of the parties have not con- taining consent findings and an order sented to the proposed settlement sub- disposing of a proceeding or any part mitted to the administrative law judge, thereof shall also provide: then such non-consenting parties must

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receive notice, and a copy, of the pro- surety, indemnitor, insurer, or agent) posed settlement at the time it is sub- only upon showing that the party seek- mitted to the administrative law judge; ing discovery has substantial need of (2) Any non-consenting party shall the materials or information in the have fifteen (15) days to file any objec- preparation of his or her case and that tions to the proposed settlement with he or she is unable without undue hard- the administrative law judge and all ship to obtain the substantial equiva- other parties; lent of the materials or information by (3) If any party submits an objection other means. In ordering discovery of to the proposed settlement, the admin- such materials when the required istrative law judge shall decide within showing has been made, the adminis- thirty (30) days after receipt of such trative law judge shall protect against objections whether to sign or reject the disclosure of the mental impressions, proposed settlement. Where the record conclusions, opinions, or legal theories lacks substantial evidence upon which of an attorney or other representative to base a decision or there is a genuine of a party concerning the proceeding. issue of material fact, then the admin- istrative law judge may establish pro- § 2570.97 Summary decision. cedures for the purpose of receiving ad- For 502(c)(5) civil penalty pro- ditional evidence upon which a deci- ceedings, this section shall apply in sion on the contested issues may rea- lieu of 29 CFR 18.41. sonably be based; (a) No genuine issue of material fact. (1) (4) If there are no objections to the Where no issue of material fact is proposed settlement, or if the adminis- found to have been raised, the adminis- trative law judge decides to sign the trative law judge may issue a decision proposed settlement after reviewing which, in the absence of an appeal pur- any such objections, the administra- suant to §§ 2570.99 through 2570.101, tive law judge shall incorporate the shall become a final order. consent agreement into a decision (2) A decision made under this para- meeting the requirements of paragraph graph shall include a statement of: (d) of this section. (i) Findings of fact and conclusions of § 2570.96 Scope of discovery. law, and the reasons therefore, on all issues presented; and For 502(c)(5) civil penalty pro- ceedings, this section shall apply in (ii) Any terms and conditions of the lieu of 29 CFR 18.14. rule or order. (a) A party may file a motion to con- (3) A copy of any decision under this duct discovery with the administrative paragraph shall be served on each law judge. The motion for discovery party. shall be granted by the administrative (b) Hearings on issues of fact. Where a law judge only upon a showing of good genuine question of material fact is cause. In order to establish ‘‘good raised, the administrative law judge cause’’ for the purposes of this section, shall, and in any other case may, set a party must show that the discovery the case for an evidentiary hearing. requested relates to a genuine issue as to a material fact that is relevant to § 2570.98 Decision of the administra- tive law judge. the proceeding. The order of the admin- istrative law judge shall expressly For 502(c)(5) civil penalty pro- limit the scope and terms of discovery ceedings, this section shall apply in to that for which ‘‘good cause’’ has lieu of 29 CFR 18.57. been shown, as provided in this para- (a) Proposed findings of fact, conclu- graph. sions, and order. Within twenty (20) (b) A party may obtain discovery of days of the filing of the transcript of documents and tangible things other- the testimony or such additional time wise discoverable under paragraph (a) as the administrative law judge may of this section and prepared in antici- allow, each party may file with the ad- pation of or for the hearing by or for ministrative law judge, subject to the another party’s representative (includ- judge’s discretion, proposed findings of ing his or her attorney, consultant, fact, conclusions of law, and an order

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together with a supporting brief ex- seeking review. Such notice of appeal pressing the reasons for such proposals. must be served on all parties of record. Such proposals and briefs shall be (c) Upon receipt of a notice of appeal, served on all parties, and shall refer to the Secretary shall request the Chief all portions of the record and to all au- Administrative Law Judge to submit thorities relied upon in support of each to him or her a copy of the entire proposal. record before the administrative law (b) Decision of the administrative law judge. judge. Within a reasonable time after the time allowed for the filing of the § 2570.100 Scope of review. proposed findings of fact, conclusions The review of the Secretary shall not of law, and order, or within thirty (30) be a de novo proceeding but rather a re- days after receipt of an agreement con- view of the record established before taining consent findings and an order the administrative law judge. There disposing of the disputed matter in shall be no opportunity for oral argu- whole, the administrative law judge ment. shall make his or her decision. The de- cision of the administrative law judge § 2570.101 Procedures for review by shall include findings of fact and con- the Secretary. clusions of law with reasons therefor (a) Upon receipt of the notice of ap- upon each material issue of fact or law peal, the Secretary shall establish a presented on the record. The decision briefing schedule which shall be served of the administrative law judge shall on all parties of record. Upon motion of be based upon the whole record. In a one or more of the parties, the Sec- contested case in which the Depart- retary may, in his or her discretion, ment and the Respondent have pre- permit the submission of reply briefs. sented their positions to the adminis- (b) The Secretary shall issue a deci- trative law judge pursuant to the pro- sion as promptly as possible after re- cedures for 502(c)(5) civil penalty pro- ceipt of the briefs of the parties. The ceedings as set forth in this subpart, Secretary may affirm, modify, or set the penalty (if any) which may be in- aside, in whole or in part, the decision cluded in the decision of the adminis- on appeal and shall issue a statement trative law judge shall be limited to of reasons and bases for the action(s) the penalty expressly provided for in taken. Such decision by the Secretary section 502(c)(5) of ERISA. It shall be shall be final agency action within the supported by reliable and probative meaning of 5 U.S.C. 704. evidence. The decision of the adminis- trative law judge shall become a final Subpart F—Procedures for the As- agency action within the meaning of 5 sessment of Civil Penalties U.S.C. 704 unless an appeal is made pur- Under ERISA Section suant to the procedures set forth in 502(c)(6) §§ 2570.99 through 2570.101.

§ 2570.99 Review by the Secretary. SOURCE: 67 FR 786, Jan. 7, 2002, unless oth- erwise noted. (a) The Secretary may review a deci- sion of an administrative law judge. § 2570.110 Scope of rules. Such a review may occur only when a The rules of practice set forth in this party files a notice of appeal from a de- subpart are applicable to ‘‘502(c)(6) cision of an administrative law judge civil penalty proceedings’’ (as defined within twenty (20) days of the issuance in § 2570.111(n) of this subpart) under of such decision. In all other cases, the section 502(c)(6) of the Employee Re- decision of the administrative law tirement Income Security Act of 1974. judge shall become final agency action The rules of procedure for administra- within the meaning of 5 U.S.C. 704. tive hearings published by the Depart- (b) A notice of appeal to the Sec- ment’s Office of Law Judges at Part 18 retary shall state with specificity the of this title will apply to matters aris- issue(s) in the decision of the adminis- ing under ERISA section 502(c)(6) ex- trative law judge on which the party is cept as modified by this section. These

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proceedings shall be conducted as expe- position of a matter under ERISA sec- ditiously as possible, and the parties tion 502(c)(6); shall make every effort to avoid delay (j) Party includes a person or agency at each stage of the proceedings. named or admitted as a party to a pro- ceeding; § 2570.111 Definitions. (k) Person includes an individual, For section 502(c)(6) civil penalty partnership, corporation, employee proceedings, this section shall apply in benefit plan, association, exchange or lieu of the definitions in § 18.2 of this other entity or organization; title: (l) Petition means a written request, (a) Adjudicatory proceeding means a made by a person or party, for some af- judicial-type proceeding before an ad- firmative action; ministrative law judge leading to the (m) Pleading means the notice as de- formulation of a final order; fined in § 2560.502c–6(g) of this chapter, (b) Administrative law judge means an the answer to the notice, any supple- administrative law judge appointed ment or amendment thereto, and any pursuant to the provisions of 5 U.S.C. reply that may be permitted to any an- 3105; swer, supplement or amendment; (c) Answer means a written state- (n) 502(c)(6) civil penalty proceeding ment that is supported by reference to means an adjudicatory proceeding re- specific circumstances or facts sur- lating to the assessment of a civil pen- rounding the notice of determination alty provided for in section 502(c)(6) of issued pursuant to § 2560.502c–6(g) of ERISA; this chapter; (o) Respondent means the party (d) Commencement of proceeding is the against whom the Department is seek- filing of an answer by the respondent; ing to assess a civil sanction under (e) Consent agreement means any writ- ERISA section 502(c)(6); ten document containing a specified proposed remedy or other relief accept- (p) Secretary means the Secretary of able to the Department and consenting Labor and includes, pursuant to any parties; delegation of authority by the Sec- (f) ERISA means the Employee Re- retary, any assistant secretary (includ- tirement Income Security Act of 1974, ing the Assistant Secretary for Em- as amended; ployee Benefits Security), adminis- (g) Final order means the final deci- trator, commissioner, appellate body, sion or action of the Department of board, or other official; and Labor concerning the assessment of a (q) Solicitor means the Solicitor of civil penalty under ERISA section Labor or his or her delegate. 502(c)(6) against a particular party. Such final order may result from a de- § 2570.112 Service: Copies of docu- ments and pleadings. cision of an administrative law judge or the Secretary, the failure of a party For 502(c)(6) penalty proceedings, this to file a statement of matters reason- section shall apply in lieu of § 18.3 of ably beyond the control of the plan ad- this title. ministrator described in § 2560.502c–6(e) (a) General. Copies of all documents of this chapter within the prescribed shall be served on all parties of record. time limits, or the failure of a party to All documents should clearly designate invoke the procedures for hearings or the docket number, if any, and short appeals under this title within the pre- title of all matters. All documents to scribed time limits. Such a final order be filed shall be delivered or mailed to shall constitute final agency action the Chief Docket Clerk, Office of Ad- within the meaning of 5 U.S.C. 704; ministrative Law Judges, 800 K Street, (h) Hearing means that part of a pro- NW., Suite 400, Washington, DC 20001– ceeding which involves the submission 8002, or to the OALJ Regional Office to of evidence, either by oral presentation which the proceeding may have been or written submission, to the adminis- transferred for hearing. Each document trative law judge; filed shall be clear and legible. (i) Order means the whole or any part (b) By parties. All motions, petitions, of a final procedural or substantive dis- pleadings, briefs, or other documents

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shall be filed with the Office of Admin- (b) Other persons or organizations istrative Law Judges with a copy, in- shall be permitted to participate as cluding any attachments, to all other parties only if the administrative law parties of record. When a party is rep- judge finds that the final decision resented by an attorney, service shall could directly and adversely affect be made upon the attorney. Service of them or the class they represent, that any document upon any party may be they may contribute materially to the made by personal delivery or by mail- disposition of the proceedings and their ing a copy to the last known address. interest is not adequately represented The Department shall be served by de- by existing parties, and that in the dis- livery to the Associate Solicitor, Plan cretion of the administrative law judge Benefits Security Division, ERISA sec- the participation of such persons or or- tion 502(c)(6) Proceeding, P.O. Box 1914, ganizations would be appropriate. Washington, DC 20013. The person serv- (c) A person or organization not ing the document shall certify to the named as a respondent wishing to par- manner and date of service. ticipate as a party under this section (c) By the Office of Administrative Law shall submit a petition to the adminis- Judges. Service of orders, decisions and trative law judge within fifteen (15) all other documents shall be made by days after the person or organization regular mail to the last known address. has knowledge of or should have known (d) Form of pleadings. (1) Every plead- about the proceeding. The petition ing shall contain information indi- shall be filed with the administrative cating the name of the Employee Bene- law judge and served on each person or fits Security Administration (EBSA) as organization who has been made a the agency under which the proceeding party at the time of filing. Such peti- is instituted, the title of the pro- tion shall concisely state: ceeding, the docket number (if any) as- (1) Petitioner’s interest in the pro- signed by the Office of Administrative ceeding; Law Judges and a designation of the (2) How his or her participation as a type of pleading or paper (e.g., notice, party will contribute materially to the motion to dismiss, etc.). The pleading disposition of the proceeding; or paper shall be signed and shall con- (3) Who will appear for petitioner; tain the address and telephone number (4) The issues on which petitioner of the party or person representing the wishes to participate; and party. Although there are no formal (5) Whether petitioner intends to specifications for documents, they present witnesses. should be typewritten when possible on (d) Objections to the petition may be standard size 81⁄2 × 11 inch paper. filed by a party within fifteen (15) days (2) Illegible documents, whether of the filing of the petition. If objec- handwritten, typewritten, photocopied, tions to the petition are filed, the ad- or otherwise, will not be accepted. Pa- ministrative law judge shall then de- pers may be reproduced by any dupli- termine whether petitioner has the cating process provided all copies are requisite interest to be a party in the clear and legible. proceedings, as defined in paragraph (b) of this section, and shall permit or § 2570.113 Parties, how designated. deny participation accordingly. Where For 502(c)(6) civil penalty pro- petitions to participate as parties are ceedings, this section shall apply in made by individuals or groups with lieu of § 18.10 of this title. common interests, the administrative (a) The term ‘‘party’’ wherever used law judge may request all such peti- in this subpart shall include any nat- tioners to designate a single represent- ural person, corporation, employee ative, or he or she may recognize one benefit plan, association, firm, partner- or more of such petitioners. The ad- ship, trustee, receiver, agency, public ministrative law judge shall give each or private organization, or government such petitioner, as well as the parties, agency. A party against whom a civil written notice of the decision on his or penalty is sought shall be designated as her petition. For each petition granted, ‘‘respondent’’. The Department shall be the administrative law judge shall pro- designated as the ‘‘complainant’’. vide a brief statement of the basis of

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the decision. If the petition is denied, (1) That the order shall have the he or she shall briefly state the same force and effect as an order made grounds for denial and shall then treat after full hearing; the petition as a request for participa- (2) That the entire record on which tion as amicus curiae. any order may be based shall consist solely of the notice and the agreement; § 2570.114 Consequences of default. (3) A waiver of any further proce- For 502(c)(6) civil penalty pro- dural steps before the administrative ceedings, this section shall apply in law judge; lieu of § 18.5(a) and (b) of this title. (4) A waiver of any right to challenge Failure of the respondent to file an an- or contest the validity of the order and swer to the notice of determination de- decision entered into in accordance scribed in § 2560.502c–6(g) of this chapter with the agreement; and within the 30 day period provided by (5) That the order and decision of the § 2560.502c–6(h) of this chapter shall be administrative law judge shall be final deemed to constitute a waiver of his or agency action. her right to appear and contest the al- (c) Submission. On or before the expi- legations of the notice of determina- ration of the time granted for negotia- tion, and such failure shall be deemed tions, but, in any case, at least five (5) to be an admission of the facts as al- days prior to the date set for hearing, leged in the notice for purposes of any the parties or their authorized rep- proceeding involving the assessment of resentative or their counsel may: a civil penalty under section 502(c)(6) of (1) Submit the proposed agreement the Act. Such notice shall then become containing consent findings and an the final order of the Secretary, within order to the administrative law judge; the meaning of § 2570.111(g) of this sub- or part, forty-five (45) days from the date (2) Notify the administrative law of service of the notice. judge that the parties have reached a full settlement and have agreed to dis- [68 FR 3738, Jan. 24, 2003] missal of the action subject to compli- ance with the terms of the settlement; § 2570.115 Consent order or settle- or ment. (3) Inform the administrative law For 502(c)(6) civil penalty pro- judge that agreement cannot be ceedings, the following shall apply in reached. lieu of § 18.9 of this title. (d) Disposition. In the event a settle- (a) General. At any time after the ment agreement containing consent commencement of a proceeding, but at findings and an order is submitted least five (5) days prior to the date set within the time allowed therefor, the for hearing, the parties jointly may administrative law judge shall issue a move to defer the hearing for a reason- decision incorporating such findings able time to permit negotiation of a and agreement within 30 days of his re- settlement or an agreement containing ceipt of such document. The decision of findings and an order disposing of the the administrative law judge shall in- whole or any part of the proceeding. corporate all of the findings, terms, The allowance of such a deferral and and conditions of the settlement agree- the duration thereof shall be in the dis- ment and consent order of the parties. cretion of the administrative law Such decision shall become final agen- judge, after consideration of such fac- cy action within the meaning of 5 tors as the nature of the proceeding, U.S.C. 704. the requirements of the public interest, (e) Settlement without consent of all the representations of the parties, and parties. In cases in which some, but not the probability of reaching an agree- all, of the parties to a proceeding sub- ment which will result in a just dis- mit a consent agreement to the admin- position of the issues involved. istrative law judge, the following pro- (b) Content. Any agreement con- cedure shall apply: taining consent findings and an order (1) If all of the parties have not con- disposing of a proceeding or any part sented to the proposed settlement sub- thereof shall also provide: mitted to the administrative law judge,

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then such non-consenting parties must ing his or her attorney, consultant, receive notice, and a copy, of the pro- surety, indemnitor, insurer, or agent) posed settlement at the time it is sub- only upon showing that the party seek- mitted to the administrative law judge; ing discovery has substantial need of (2) Any non-consenting party shall the materials or information in the have fifteen (15) days to file any objec- preparation of his or her case and that tions to the proposed settlement with he or she is unable without undue hard- the administrative law judge and all ship to obtain the substantial equiva- other parties; lent of the materials or information by (3) If any party submits an objection other means. In ordering discovery of to the proposed settlement, the admin- such materials when the required istrative law judge shall decide within showing has been made, the adminis- 30 days after receipt of such objections trative law judge shall protect against whether he shall sign or reject the pro- disclosure of the mental impressions, posed settlement. Where the record conclusions, opinions, or legal theories lacks substantial evidence upon which of an attorney or other representatives to base a decision or there is a genuine of a party concerning the proceeding. issue of material fact, then the admin- istrative law judge may establish pro- § 2570.117 Summary decision. cedures for the purpose of receiving ad- For 502(c)(6) civil penalty pro- ditional evidence upon which a deci- ceedings, this section shall apply in sion on the contested issues may rea- lieu of § 18.41 of this title. sonably be based; (a) No genuine issue of material fact. (1) (4) If there are no objections to the Where no issue of a material fact is proposed settlement, or if the adminis- found to have been raised, the adminis- trative law judge decides to sign the trative law judge may issue a decision proposed settlement after reviewing which, in the absence of an appeal pur- any such objections, the administra- suant to §§ 2570.119 through 2570.121 of tive law judge shall incorporate the this subpart, shall become a final consent agreement into a decision order. meeting the requirements of paragraph (2) A decision made under this para- (d) of this section. graph (a) shall include a statement of: (i) Findings of fact and conclusions of § 2570.116 Scope of discovery. law, and the reasons therefor, on all For 502(c)(6) civil penalty pro- issues presented; and ceedings, this section shall apply in (ii) Any terms and conditions of the lieu of § 18.14 of this title. rule or order. (a) A party may file a motion to con- (3) A copy of any decision under this duct discovery with the administrative paragraph shall be served on each law judge. The motion for discovery party. shall be granted by the administrative (b) Hearings on issues of fact. Where a law judge only upon a showing of good genuine question of a material fact is cause. In order to establish ‘‘good raised, the administrative law judge cause’’ for the purposes of this section, shall, and in any other case may, set a party must show that the discovery the case for an evidentiary hearing. requested relates to a genuine issue as to a material fact that is relevant to § 2570.118 Decision of the administra- the proceeding. The order of the admin- tive law judge. istrative law judge shall expressly For 502(c)(6) civil penalty pro- limit the scope and terms of discovery ceedings, this section shall apply in to that for which ‘‘good cause’’ has lieu of § 18.57 of this title. been shown, as provided in this para- (a) Proposed findings of fact, conclu- graph. sions, and order. Within twenty (20) (b) A party may obtain discovery of days of the filing of the transcript of documents and tangible things other- the testimony, or such additional time wise discoverable under paragraph (a) as the administrative law judge may of this section and prepared in antici- allow, each party may file with the ad- pation of or for the hearing by or for ministrative law judge, subject to the another party’s representative (includ- judge’s discretion, proposed findings of

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fact, conclusions of law, and order to- seeking review. Such notice of appeal gether with a supporting brief express- must be served on all parties of record. ing the reasons for such proposals. (c) Upon receipt of a notice of appeal, Such proposals and briefs shall be the Secretary shall request the Chief served on all parties, and shall refer to Administrative Law Judge to submit all portions of the record and to all au- to him or her a copy of the entire thorities relied upon in support of each record before the administrative law proposal. judge. (b) Decision of the administrative law judge. Within a reasonable time after § 2570.120 Scope of review. the time allowed for the filing of the The review of the Secretary shall not proposed findings of fact, conclusions be a de novo proceeding but rather a re- of law, and order, or within 30 days view of the record established before after receipt of an agreement con- the administrative law judge. There taining consent findings and order dis- shall be no opportunity for oral argu- posing of the disputed matter in whole, ment. the administrative law judge shall make his or her decision. The decision § 2570.121 Procedures for review by of the administrative law judge shall the Secretary. include findings of fact and conclusions of law with reasons therefor upon each (a) Upon receipt of the notice of ap- material issue of fact or law presented peal, the Secretary shall establish a on the record. The decision of the ad- briefing schedule which shall be served ministrative law judge shall be based on all parties of record. Upon motion of upon the whole record. In a contested one or more of the parties, the Sec- case in which the Department and the retary may, in his or her discretion, Respondent have presented their posi- permit the submission of reply briefs. tions to the administrative law judge (b) The Secretary shall issue a deci- pursuant to the procedures for 502(c)(6) sion as promptly as possible after re- civil penalty proceedings as set forth in ceipt of the briefs of the parties. The this subpart, the penalty (if any) which Secretary may affirm, modify, or set may be included in the decision of the aside, in whole or in part, the decision administrative law judge shall be lim- on appeal and shall issue a statement ited to the penalty expressly provided of reasons and bases for the action(s) for in section 502(c)(6) of ERISA. It taken. Such decision by the Secretary shall be supported by reliable and pro- shall be final agency action within the bative evidence. The decision of the ad- meaning of 5 U.S.C. 704. ministrative law judge shall become final agency action within the meaning Subpart G—Procedures for the As- of 5 U.S.C. 704 unless an appeal is made sessment of Civil Penalties pursuant to the procedures set forth in §§ 2570.119 through 2570.121. Under ERISA Section 502(c)(7) § 2570.119 Review by the Secretary. (a) The Secretary may review a deci- SOURCE: 68 FR 3738, Jan. 24, 2003, unless sion of an administrative law judge. otherwise noted. Such a review may occur only when a party files a notice of appeal from a de- § 2570.130 Scope of rules. cision of an administrative law judge The rules of practice set forth in this within twenty (20) days of the issuance subpart are applicable to ‘‘502(c)(7) of such decision. In all other cases, the civil penalty proceedings’’ (as defined decision of the administrative law in § 2570.131(n) of this subpart) under judge shall become final agency action section 502(c)(7) of the Employee Re- within the meaning of 5 U.S.C. 704. tirement Income Security Act of 1974, (b) A notice of appeal to the Sec- as amended (the Act). The rules of pro- retary shall state with specificity the cedure for administrative hearings issue(s) in the decision of the adminis- published by the Department’s Office of trative law judge on which the party is Administrative Law Judges at Part 18

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of this title will apply to matters aris- (i) Order means the whole or any part ing under ERISA section 502(c)(7) ex- of a final procedural or substantive dis- cept as modified by this subpart. These position of a matter under ERISA sec- proceedings shall be conducted as expe- tion 502(c)(7); ditiously as possible, and the parties (j) Party includes a person or agency shall make every effort to avoid delay named or admitted as a party to a pro- at each stage of the proceedings. ceeding; (k) Person includes an individual, § 2570.131 Definitions. partnership, corporation, employee For 502(c)(7) civil penalty pro- benefit plan, association, exchange or ceedings, this section shall apply in other entity or organization; lieu of the definitions in § 18.2 of this (l) Petition means a written request, title: made by a person or party, for some af- (a) Adjudicatory proceeding means a firmative action; judicial-type proceeding before an ad- (m) Pleading means the notice as de- ministrative law judge leading to the fined in § 2560.502c–7(g) of this chapter, formulation of a final order; the answer to the notice, any supple- (b) Administrative law judge means an ment or amendment thereto, and any administrative law judge appointed reply that may be permitted to any an- pursuant to the provisions of 5 U.S.C. swer, supplement or amendment; 3105; (n) 502(c)(7) civil penalty proceeding (c) Answer means a written state- means an adjudicatory proceeding re- ment that is supported by reference to lating to the assessment of a civil pen- specific circumstances or facts sur- alty provided for in section 502(c)(7) of rounding the notice of determination ERISA; issued pursuant to § 2560.502c–7(g) of (o) Respondent means the party this chapter; against whom the Department is seek- (d) Commencement of proceeding is the ing to assess a civil sanction under filing of an answer by the respondent; ERISA section 502(c)(7); (e) Consent agreement means any writ- ten document containing a specified (p) Secretary means the Secretary of proposed remedy or other relief accept- Labor and includes, pursuant to any able to the Department and consenting delegation of authority by the Sec- parties; retary, any assistant secretary (includ- (f) ERISA means the Employee Re- ing the Assistant Secretary for Em- tirement Income Security Act of 1974, ployee Benefits Security), adminis- as amended; trator, commissioner, appellate body, (g) Final order means the final deci- board, or other official; and sion or action of the Department of (q) Solicitor means the Solicitor of Labor concerning the assessment of a Labor or his or her delegate. civil penalty under ERISA section 502(c)(7) against a particular party. § 2570.132 Service: Copies of docu- ments and pleadings. Such final order may result from a de- cision of an administrative law judge For 502(c)(7) penalty proceedings, this or the Secretary, the failure of a party section shall apply in lieu of § 18.3 of to file a statement of reasonable cause this title. described in § 2560.502c–7(e) of this chap- (a) General. Copies of all documents ter within the prescribed time limits, shall be served on all parties of record. or the failure of a party to invoke the All documents should clearly designate procedures for hearings or appeals the docket number, if any, and short under this title within the prescribed title of all matters. All documents to time limits. Such a final order shall be filed shall be delivered or mailed to constitute final agency action within the Chief Docket Clerk, Office of Ad- the meaning of 5 U.S.C. 704; ministrative Law Judges, 800 K Street, (h) Hearing means that part of a pro- NW., Suite 400, Washington, DC 20001– ceeding which involves the submission 8002, or to the OALJ Regional Office to of evidence, by either oral presentation which the proceeding may have been or written submission, to the adminis- transferred for hearing. Each document trative law judge; filed shall be clear and legible.

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(b) By parties. All motions, petitions, ‘‘respondent.’’ The Department shall be pleadings, briefs, or other documents designated as the ‘‘complainant.’’ shall be filed with the Office of Admin- (b) Other persons or organizations istrative Law Judges with a copy, in- shall be permitted to participate as cluding any attachments, to all other parties only if the administrative law parties of record. When a party is rep- judge finds that the final decision resented by an attorney, service shall could directly and adversely affect be made upon the attorney. Service of them or the class they represent, that any document upon any party may be they may contribute materially to the made by personal delivery or by mail- disposition of the proceedings and their ing a copy to the last known address. interest is not adequately represented The Department shall be served by de- by existing parties, and that in the dis- livery to the Associate Solicitor, Plan cretion of the administrative law judge Benefits Security Division, ERISA sec- the participation of such persons or or- tion 502(c)(7) Proceeding, P.O. Box 1914, ganizations would be appropriate. Washington, DC 20013. The person serv- (c) A person or organization not ing the document shall certify to the named as a respondent wishing to par- manner and date of service. ticipate as a party under this section (c) By the Office of Administrative Law shall submit a petition to the adminis- Judges. Service of orders, decisions and trative law judge within fifteen (15) all other documents shall be made by days after the person or organization regular mail to the last known address. has knowledge of or should have known (d) Form of pleadings. (1) Every plead- about the proceeding. The petition ing shall contain information indi- shall be filed with the administrative cating the name of the Employee Bene- law judge and served on each person fits Security Administration (EBSA) as who or organization that has been the agency under which the proceeding made a party at the time of filing. is instituted, the title of the pro- Such petition shall concisely state: ceeding, the docket number (if any) as- (1) Petitioner’s interest in the pro- signed by the Office of Administrative ceeding; Law Judges and a designation of the (2) How his or her participation as a type of pleading or paper (e.g., notice, party will contribute materially to the motion to dismiss, etc.). The pleading disposition of the proceeding; or paper shall be signed and shall con- (3) Who will appear for petitioner; tain the address and telephone number (4) The issues on which petitioner of the party or person representing the wishes to participate; and party. Although there are no formal (5) Whether petitioner intends to specifications for documents, they present witnesses. should be typewritten when possible on (d) Objections to the petition may be standard size 81⁄2 × 11 inch paper. filed by a party within fifteen (15) days (2) Illegible documents, whether of the filing of the petition. If objec- handwritten, typewritten, photocopied, tions to the petition are filed, the ad- or otherwise, will not be accepted. Pa- ministrative law judge shall then de- pers may be reproduced by any dupli- termine whether petitioner has the cating process provided all copies are requisite interest to be a party in the clear and legible. proceedings, as defined in paragraph (b) of this section, and shall permit or § 2570.133 Parties, how designated. deny participation accordingly. Where For 502(c)(7) civil penalty pro- petitions to participate as parties are ceedings, this section shall apply in made by individuals or groups with lieu of § 18.10 of this title. common interests, the administrative (a) The term ‘‘party’’ wherever used law judge may request all such peti- in this subpart shall include any nat- tioners to designate a single represent- ural person, corporation, employee ative, or he or she may recognize one benefit plan, association, firm, partner- or more of such petitioners. The ad- ship, trustee, receiver, agency, public ministrative law judge shall give each or private organization, or government such petitioner, as well as the parties, agency. A party against whom a civil written notice of the decision on his or penalty is sought shall be designated as her petition. For each petition granted,

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the administrative law judge shall pro- (1) That the order shall have the vide a brief statement of the basis of same force and effect as an order made the decision. If the petition is denied, after full hearing; he or she shall briefly state the (2) That the entire record on which grounds for denial and shall then treat any order may be based shall consist the petition as a request for participa- solely of the notice and the agreement; tion as amicus curiae. (3) A waiver of any further proce- dural steps before the administrative § 2570.134 Consequences of default. law judge; For 502(c)(7) civil penalty pro- (4) A waiver of any right to challenge ceedings, this section shall apply in or contest the validity of the order and lieu of § 18.5(a) and (b) of this title. decision entered into in accordance Failure of the respondent to file an an- with the agreement; and swer to the notice of determination de- (5) That the order and decision of the scribed in § 2560.502c–7(g) of this chapter administrative law judge shall be final within the 30 day period provided by agency action. § 2560.502c–7(h) of this chapter shall be (c) Submission. On or before the expi- deemed to constitute a waiver of his or ration of the time granted for negotia- her right to appear and contest the al- tions, but, in any case, at least five (5) legations of the notice of determina- days prior to the date set for hearing, tion, and such failure shall be deemed the parties or their authorized rep- to be an admission of the facts as al- resentative or their counsel may: leged in the notice for purposes of any (1) Submit the proposed agreement proceeding involving the assessment of containing consent findings and an a civil penalty under section 502(c)(7) of order to the administrative law judge; the Act. Such notice shall then become or the final order of the Secretary, within (2) Notify the administrative law the meaning of § 2570.131(g) of this sub- judge that the parties have reached a part, forty-five (45) days from the date full settlement and have agreed to dis- of service of the notice. missal of the action subject to compli- ance with the terms of the settlement; § 2570.135 Consent order or settle- or ment. (3) Inform the administrative law For 502(c)(7) civil penalty pro- judge that agreement cannot be ceedings, the following shall apply in reached. lieu of § 18.9 of this title. (d) Disposition. In the event a settle- (a) General. At any time after the ment agreement containing consent commencement of a proceeding, but at findings and an order is submitted least five (5) days prior to the date set within the time allowed therefor, the for hearing, the parties jointly may administrative law judge shall issue a move to defer the hearing for a reason- decision incorporating such findings able time to permit negotiation of a and agreement within 30 days of his re- settlement or an agreement containing ceipt of such document. The decision of findings and an order disposing of the the administrative law judge shall in- whole or any part of the proceeding. corporate all of the findings, terms, The allowance of such a deferral and and conditions of the settlement agree- the duration thereof shall be in the dis- ment and consent order of the parties. cretion of the administrative law Such decision shall become final agen- judge, after consideration of such fac- cy action within the meaning of 5 tors as the nature of the proceeding, U.S.C. 704. the requirements of the public interest, (e) Settlement without consent of all the representations of the parties, and parties. In cases in which some, but not the probability of reaching an agree- all, of the parties to a proceeding sub- ment which will result in a just dis- mit a consent agreement to the admin- position of the issues involved. istrative law judge, the following pro- (b) Content. Any agreement con- cedure shall apply: taining consent findings and an order (1) If all of the parties have not con- disposing of a proceeding or any part sented to the proposed settlement sub- thereof shall also provide: mitted to the administrative law judge,

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then such non-consenting parties must ing his or her attorney, consultant, receive notice, and a copy, of the pro- surety, indemnitor, insurer, or agent) posed settlement at the time it is sub- only upon showing that the party seek- mitted to the administrative law judge; ing discovery has substantial need of (2) Any non-consenting party shall the materials or information in the have fifteen (15) days to file any objec- preparation of his or her case and that tions to the proposed settlement with he or she is unable without undue hard- the administrative law judge and all ship to obtain the substantial equiva- other parties; lent of the materials or information by (3) If any party submits an objection other means. In ordering discovery of to the proposed settlement, the admin- such materials when the required istrative law judge shall decide within showing has been made, the adminis- 30 days after receipt of such objections trative law judge shall protect against whether he shall sign or reject the pro- disclosure of the mental impressions, posed settlement. Where the record conclusions, opinions, or legal theories lacks substantial evidence upon which of an attorney or other representatives to base a decision or there is a genuine of a party concerning the proceeding. issue of material fact, then the admin- istrative law judge may establish pro- § 2570.137 Summary decision. cedures for the purpose of receiving ad- For 502(c)(7) civil penalty pro- ditional evidence upon which a deci- ceedings, this section shall apply in sion on the contested issues may rea- lieu of § 18.41 of this title. sonably be based; (a) No genuine issue of material fact. (1) (4) If there are no objections to the Where no issue of a material fact is proposed settlement, or if the adminis- found to have been raised, the adminis- trative law judge decides to sign the trative law judge may issue a decision proposed settlement after reviewing which, in the absence of an appeal pur- any such objections, the administra- suant to §§ 2570.139 through 2570.141 of tive law judge shall incorporate the this subpart, shall become a final consent agreement into a decision order. meeting the requirements of paragraph (2) A decision made under paragraph (d) of this section. (a) of this section shall include a state- ment of: § 2570.136 Scope of discovery. (i) Findings of fact and conclusions of For 502(c)(7) civil penalty pro- law, and the reasons therefor, on all ceedings, this section shall apply in issues presented; and lieu of § 18.14 of this title. (ii) Any terms and conditions of the (a) A party may file a motion to con- rule or order. duct discovery with the administrative (3) A copy of any decision under this law judge. The motion for discovery paragraph shall be served on each shall be granted by the administrative party. law judge only upon a showing of good (b) Hearings on issues of fact. Where a cause. In order to establish ‘‘good genuine question of a material fact is cause’’ for the purposes of this section, raised, the administrative law judge a party must show that the discovery shall, and in any other case may, set requested relates to a genuine issue as the case for an evidentiary hearing. to a material fact that is relevant to the proceeding. The order of the admin- § 2570.138 Decision of the administra- istrative law judge shall expressly tive law judge. limit the scope and terms of discovery For 502(c)(7) civil penalty pro- to that for which ‘‘good cause’’ has ceedings, this section shall apply in been shown, as provided in this para- lieu of § 18.57 of this title. graph. (a) Proposed findings of fact, conclu- (b) A party may obtain discovery of sions, and order. Within twenty (20) documents and tangible things other- days of the filing of the transcript of wise discoverable under paragraph (a) the testimony, or such additional time of this section and prepared in antici- as the administrative law judge may pation of or for the hearing by or for allow, each party may file with the ad- another party’s representative (includ- ministrative law judge, subject to the

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judge’s discretion, proposed findings of trative law judge on which the party is fact, conclusions of law, and order to- seeking review. Such notice of appeal gether with a supporting brief express- must be served on all parties of record. ing the reasons for such proposals. (c) Upon receipt of a notice of appeal, Such proposals and briefs shall be the Secretary shall request the Chief served on all parties, and shall refer to Administrative Law Judge to submit all portions of the record and to all au- to him or her a copy of the entire thorities relied upon in support of each record before the administrative law proposal. judge. (b) Decision of the administrative law judge. Within a reasonable time after § 2570.140 Scope of review. the time allowed for the filing of the The review of the Secretary shall not proposed findings of fact, conclusions be a de novo proceeding but rather a of law, and order, or within thirty (30) review of the record established before days after receipt of an agreement con- the administrative law judge. There taining consent findings and order dis- shall be no opportunity for oral argu- posing of the disputed matter in whole, ment. the administrative law judge shall make his or her decision. The decision § 2570.141 Procedures for review by of the administrative law judge shall the Secretary. include findings of fact and conclusions (a) Upon receipt of the notice of ap- of law with reasons therefor upon each peal, the Secretary shall establish a material issue of fact or law presented briefing schedule which shall be served on the record. The decision of the ad- on all parties of record. Upon motion of ministrative law judge shall be based one or more of the parties, the Sec- upon the whole record. In a contested retary may, in his or her discretion, case in which the Department and the permit the submission of reply briefs. Respondent have presented their posi- (b) The Secretary shall issue a deci- tions to the administrative law judge sion as promptly as possible after re- pursuant to the procedures for 502(c)(7) ceipt of the briefs of the parties. The civil penalty proceedings as set forth in Secretary may affirm, modify, or set this subpart, the penalty (if any) which aside, in whole or in part, the decision may be included in the decision of the on appeal and shall issue a statement administrative law judge shall be lim- of reasons and bases for the action(s) ited to the penalty expressly provided taken. Such decision by the Secretary for in section 502(c)(7) of ERISA. It shall be final agency action within the shall be supported by reliable and pro- meaning of 5 U.S.C. 704. bative evidence. The decision of the ad- ministrative law judge shall become final agency action within the meaning Subpart H—Procedures for of 5 U.S.C. 704 unless an appeal is made Issuance of Findings Under pursuant to the procedures set forth in ERISA Sec. 3(40) §§ 2570.139 through 2570.141 of this sub- part. SOURCE: 68 FR 17489, Apr. 9, 2003, unless otherwise noted. § 2570.139 Review by the Secretary. (a) The Secretary may review a deci- § 2570.150 Scope of rules. sion of an administrative law judge. The rules of practice set forth in this Such a review may occur only when a subpart H apply to ‘‘section 3(40) Find- party files a notice of appeal from a de- ing Proceedings’’ (as defined in cision of an administrative law judge § 2570.152(g)), under section 3(40) of the within twenty (20) days of the issuance Employee Retirement Income Security of such decision. In all other cases, the Act of 1974 (ERISA or the Act). Refer to decision of the administrative law 29 CFR 2510.3–40 for the definition of judge shall become final agency action relevant terms of section 3(40) of within the meaning of 5 U.S.C. 704. ERISA, 29 U.S.C. 1002(40). To the extent (b) A notice of appeal to the Sec- that the regulations in this subpart dif- retary shall state with specificity the fer from the regulations in subpart A of issue(s) in the decision of the adminis- 29 CFR part 18, the regulations in this

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subpart apply to matters arising under been identified as asserting jurisdic- section 3(40) of ERISA rather than the tion over a plan or other arrangement, rules of procedure for administrative including any agency, commission, hearings published by the Depart- board, or committee charged with in- ment’s Office of Administrative Law vestigating and enforcing state insur- Judges in subpart A of 29 CFR part 18. ance laws, including parties joined These proceedings shall be conducted under § 2570.153; as expeditiously as possible, and the (2) The person or entity asserting parties shall make every effort to that state law or state jurisdiction ap- avoid delay at each stage of the pro- plies to the petitioner; ceedings. (3) The Secretary of Labor; and § 2570.151 In general. (4) A state not named in the petition that has intervened under § 2570.153(b). If there is an attempt to assert state (f) Secretary means the Secretary of jurisdiction or the application of state Labor, and includes, pursuant to any law, either by the issuance of a state delegation or sub-delegation of author- administrative or court subpoena to, or the initiation of administrative or ju- ity, the Assistant Secretary for Em- dicial proceedings against, a plan or ployee Benefits Security or other em- other arrangement that alleges it is ployee of the Employee Benefits Secu- covered by title I of ERISA, 29 U.S.C. rity Administration. 1003, the plan or other arrangement (g) Section 3(40) Finding Proceeding may petition the Secretary to make a means a proceeding before the Office of finding under section 3(40)(A)(i) of Administrative Law Judges (OALJ) re- ERISA that it is a plan established or lating to whether the Secretary finds maintained under or pursuant to an an entity to be a plan to be established agreement or agreements that the Sec- or maintained under or pursuant to one retary finds to be collective bargaining or more collective bargaining agree- agreements for purposes of section 3(40) ments within the meaning of section of ERISA. 3(40) of ERISA.

§ 2570.152 Definitions. § 2570.153 Parties. For section 3(40) Finding Pro- For section 3(40) Finding Pro- ceedings, this section shall apply in- ceedings, this section shall apply in- stead of the definitions in 29 CFR 18.2. stead of 29 CFR 18.10. (a) ERISA means the Employee Re- (a) The term ‘‘party’’ with respect to tirement Income Security Act of 1974, a Section 3(40) Finding Proceeding et seq., 29 U.S.C. 1001, et seq., as amend- means the petitioner and the respond- ed. ents. (b) Order means the whole or part of (b) States not named in the petition a final procedural or substantive dis- may participate as parties in a Section position by the administrative law 3(40) Finding Proceeding by notifying judge of a matter under section 3(40) of the OALJ and the other parties in writ- ERISA. No order will be appealable to ing prior to the date for filing a re- the Secretary except as provided in sponse to the petition. After the date this subpart. (c) Petition means a written request for service of responses to the petition, under the procedures in this subpart a state not named in the petition may for a finding by the Secretary under intervene as a party only with the con- section 3(40) of ERISA that a plan is es- sent of all parties or as otherwise or- tablished or maintained under or pur- dered by the ALJ. suant to one or more collective bar- (c) The Secretary of Labor shall be gaining agreements. named as a ‘‘respondent’’ to all ac- (d) Petitioner means the plan or ar- tions. rangement filing a petition. (d) The failure of any party to com- (e) Respondent means: ply with any order of the ALJ may, at (1) A state government instrumen- the discretion of the ALJ, result in the tality charged with enforcing the law denial of the opportunity to present that is alleged to apply or which has evidence in the proceeding.

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§ 2570.154 Filing and contents of peti- § 2570.155 Service. tion. For section 3(40) proceedings, this (a) A person seeking a finding under section shall apply instead of 29 CFR section 3(40) of ERISA must file a writ- 18.3. ten petition by delivering or mailing it (a) In general. Copies of all documents to the Chief Docket Clerk, Office of Ad- shall be served on all parties of record. ministrative Law Judges (OALJ), 800 K All documents should clearly designate Street, NW., Suite 400, Washington, DC the docket number, if any, and short 20001–8002, or by making a filing by any title of all matters. All documents to be filed shall be delivered or mailed to electronic means permitted under pro- the Chief Docket Clerk, Office of Ad- cedures established by the OALJ. ministrative Law Judges (OALJ), 800 K (b) The petition shall— Street, NW., Suite 400, Washington, DC (1) Provide the name and address of 20001–8002, or to the OALJ Regional Of- the entity for which the petition is fice to which the proceeding may have filed; been transferred for hearing. Each doc- (2) Provide the names and addresses ument filed shall be clear and legible. of the plan administrator and plan (b) By parties. All motions, petitions, sponsor(s) of the plan or other arrange- pleadings, briefs, or other documents ment for which the finding is sought; shall be filed with the Office of Admin- (3) Identify the state or states whose istrative Law Judges with a copy, in- law or jurisdiction the petitioner cluding any attachments, to all other claims has been asserted over the peti- parties of record. When a party is rep- tioner, and provide the addresses and resented by an attorney, service shall names of responsible officials; be made upon the attorney. Service of any document upon any party may be (4) Include affidavits or other written made by personal delivery or by mail- evidence showing that: ing by first class, prepaid U.S. mail, a (i) State jurisdiction has been as- copy to the last known address. The serted over or legal process commenced Secretary shall be served by delivery to against the petitioner pursuant to the Associate Solicitor, Plan Benefits state law; Security Division, ERISA Section 3(40) (ii) The petitioner is an employee Proceeding, PO Box 1914, Washington, welfare benefit plan as defined at sec- DC 20013. The person serving the docu- tion 3(1) of ERISA (29 U.S.C. 1002(1)) ment shall certify to the manner and and 29 CFR 2510.3–1 and is covered by date of service. title I of ERISA (see 29 U.S.C. 1003); (c) By the Office of Administrative Law (iii) The petitioner is established or Judges. Service of orders, decisions and maintained for the purpose of offering all other documents shall be made to or providing benefits described in sec- all parties of record by regular mail to tion 3(1) of ERISA (29 U.S.C. 1002(1)) to their last known address. employees of two or more employers (d) Form of pleadings (1) Every plead- (including one or more self-employed ing shall contain information indi- individuals) or their beneficiaries; cating the name of the Employee Bene- fits Security Administration (EBSA) as (iv) The petitioner satisfies the cri- the agency under which the proceeding teria in 29 CFR 2510.3–40(b); and is instituted, the title of the pro- (v) Service has been made as provided ceeding, the docket number (if any) as- in § 2570.155. signed by the OALJ and a designation (5) The affidavits shall set forth such of the type of pleading or paper (e.g., facts as would be admissible in evi- notice, motion to dismiss, etc.). The dence in a proceeding under 29 CFR pleading or paper shall be signed and part 18 and shall show affirmatively shall contain the address and telephone that the affiant is competent to testify number of the party or person rep- to the matters stated therein. The affi- resenting the party. Although there davit or other written evidence must are no formal specifications for docu- set forth specific facts showing the fac- ments, they should be typewritten tors required under paragraph (b)(4) of when possible on standard size 81⁄2 × 11 this section. inch paper.

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(2) Illegible documents, whether judge shall be issued within twenty (20) handwritten, typewritten, photocopies, days after receipt of the transcript of or otherwise, will not be accepted. Pa- any oral hearing or within twenty (20) pers may be reproduced by any dupli- days after the filing of all documentary cating process provided all copies are evidence if no oral hearing is con- clear and legible. ducted.

§ 2570.156 Expedited proceedings. § 2570.157 Allocation of burden of For section 3(40) Finding Pro- proof. ceedings, this section shall apply in- For purposes of a final decision under stead of 29 CFR 18.42. § 2570.158 (Decision of the Administra- (a) At any time after commencement tive Law Judge) or § 2570.159 (Review by of a proceeding, any party may move the Secretary), the petitioner shall to advance the scheduling of a pro- have the burden of proof as to whether ceeding, including the time for con- it meets 29 CFR 2510.3–40. ducting discovery. (b) Except when such proceedings are § 2570.158 Decision of the Administra- directed by the Chief Administrative tive Law Judge. Law Judge or the administrative law For section 3(40) finding proceedings, judge assigned, any party filing a mo- this section shall apply instead of 29 tion under this section shall: CFR 18.57. (1) Make the motion in writing; (2) Describe the circumstances justi- (a) Proposed findings of fact, conclu- fying advancement; sions of law, and order. Within twenty (3) Describe the irreparable harm (20) days of filing the transcript of the that would result if the motion is not testimony, or such additional time as granted; and the administrative law judge may (4) Incorporate in the motion affida- allow, each party may file with the ad- vits to support any representations of ministrative law judge, subject to the fact. judge’s discretion under 29 CFR 18.55, (c) Service of a motion under this proposed findings of fact, conclusions section shall be accomplished by per- of law, and order together with the sonal delivery, or by facsimile, fol- supporting brief expressing the reasons lowed by first class, prepaid, U.S. mail. for such proposals. Such proposals and Service is complete upon personal de- brief shall be served on all parties, and livery or mailing. shall refer to all portions of the record (d) Except when such proceedings are and to all authorities relied upon in required, or unless otherwise directed support of each proposal. by the Chief Administrative Law Judge (b) Decision based on oral argument in or the administrative law judge as- lieu of briefs. In any case in which the signed, all parties to the proceeding in administrative law judge believes that which the motion is filed shall have ten written briefs or proposed findings of (10) days from the date of service of the fact and conclusions of law may not be motion to file an opposition in re- necessary, the administrative law sponse to the motion. judge shall notify the parties at the (e) Following the timely receipt by opening of the hearing or as soon the administrative law judge of state- thereafter as is practicable that he or ments in response to the motion, the she may wish to hear oral argument in administrative law judge may advance lieu of briefs. The administrative law pleading schedules, discovery sched- judge shall issue his or her decision at ules, prehearing conferences, and the the close of oral argument, or within 30 hearing, as deemed appropriate; pro- days thereafter. vided, however, that a hearing on the (c) Decision of the administrative law merits shall not be scheduled with less judge. Within 30 days, or as soon as pos- than five (5) working days notice to the sible thereafter, after the time allowed parties, unless all parties consent to an for the filing of the proposed findings earlier hearing. of fact, conclusions of law, and order, (f) When an expedited hearing is held, or within thirty (30) days after receipt the decision of the administrative law of an agreement containing consent

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findings and order disposing of the dis- Subpart I—Procedures for the As- puted matter in whole, the administra- sessment of Civil Penalties tive law judge shall make his or her de- Under ERISA Section cision. The decision of the administra- 502(c)(8) tive law judge shall include findings of fact and conclusions of law, with rea- sons therefore, upon each material SOURCE: 75 FR 8801, Feb. 26, 2010, unless otherwise noted. issue of fact or law presented on the record. The decision of the administra- § 2570.160 Scope of rules. tive law judge shall be based upon the The rules of practice set forth in this whole record. It shall be supported by subpart are applicable to ‘‘502(c)(8) reliable and probative evidence. Such civil penalty proceedings’’ (as defined decision shall be in accordance with in § 2570.161(n) of this subpart) under the regulations found at 29 CFR 2510.3– section 502(c)(8) of the Employee Re- 40 and shall be limited to whether the tirement Income Security Act of 1974, petitioner, based on the facts presented as amended (the Act). The rules of pro- at the time of the proceeding, is a plan cedure for administrative hearings established or maintained under or published by the Department’s Office of pursuant to collective bargaining for Administrative Law Judges at Part 18 the purposes of section 3(40) of ERISA. of this title will apply to matters aris- ing under ERISA section 502(c)(8) ex- § 2570.159 Review by the Secretary. cept as modified by this subpart. These (a) A request for review by the Sec- proceedings shall be conducted as expe- retary of an appealable decision of the ditiously as possible, and the parties administrative law judge may be made shall make every effort to avoid delay at each stage of the proceedings. by any party. Such a request must be filed within 20 days of the issuance of § 2570.161 Definitions. the final decision or the final decision For 502(c)(8) civil penalty pro- of the administrative law judge will be- ceedings, this section shall apply in come the final agency order for pur- lieu of the definitions in § 18.2 of this poses of 5 U.S.C. 701 et seq. title: (b) A request for review by the Sec- (a) Adjudicatory proceeding means a retary shall state with specificity the judicial-type proceeding before an ad- issue(s) in the administrative law ministrative law judge leading to the judge’s final decision upon which re- formulation of a final order; view is sought. The request shall be (b) Administrative law judge means an served on all parties to the proceeding. administrative law judge appointed (c) The review by the Secretary shall pursuant to the provisions of 5 U.S.C. not be a de novo proceeding but rather 3105; a review of the record established by (c) Answer means a written state- the administrative law judge. ment that is supported by reference to (d) The Secretary may, in his or her specific circumstances or facts sur- discretion, allow the submission of sup- rounding the notice of determination plemental briefs by the parties to the issued pursuant to § 2560.502c–8(g) of proceeding. this chapter; (e) The Secretary shall issue a deci- (d) Commencement of proceeding is the sion as promptly as possible, affirming, filing of an answer by the respondent; modifying, or setting aside, in whole or (e) Consent agreement means any writ- ten document containing a specified in part, the decision under review, and proposed remedy or other relief accept- shall set forth a brief statement of rea- able to the Department and consenting sons therefor. Such decision by the parties; Secretary shall be the final agency ac- (f) ERISA means the Employee Re- tion within the meaning of 5 U.S.C. 704. tirement Income Security Act of 1974, as amended; (g) Final order means the final deci- sion or action of the Department of

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Labor concerning the assessment of a § 2570.162 Service: Copies of docu- civil penalty under ERISA section ments and pleadings. 502(c)(8) against a particular party. For 502(c)(8) penalty proceedings, this Such final order may result from a de- section shall apply in lieu of § 18.3 of cision of an administrative law judge this title. or the Secretary, the failure of a party (a) General. Copies of all documents to file a statement of reasonable cause described in § 2560.502c–8(e) of this chap- shall be served on all parties of record. ter within the prescribed time limits, All documents should clearly designate or the failure of a party to invoke the the docket number, if any, and short procedures for hearings or appeals title of all matters. All documents to under this title within the prescribed be filed shall be delivered or mailed to time limits. Such a final order shall the Chief Docket Clerk, Office of Ad- constitute final agency action within ministrative Law Judges, 800 K Street, the meaning of 5 U.S.C. 704; NW., Suite 400, Washington, DC 20001– (h) Hearing means that part of a pro- 8002, or to the OALJ Regional Office to ceeding which involves the submission which the proceeding may have been of evidence, by either oral presentation transferred for hearing. Each document or written submission, to the adminis- filed shall be clear and legible. trative law judge; (b) By parties. All motions, petitions, (i) Order means the whole or any part pleadings, briefs, or other documents of a final procedural or substantive dis- shall be filed with the Office of Admin- position of a matter under ERISA sec- istrative Law Judges with a copy, in- tion 502(c)(8); cluding any attachments, to all other (j) Party includes a person or agency parties of record. When a party is rep- named or admitted as a party to a pro- resented by an attorney, service shall ceeding; be made upon the attorney. Service of (k) Person includes an individual, any document upon any party may be partnership, corporation, employee made by personal delivery or by mail- benefit plan, association, exchange or ing a copy to the last known address. other entity or organization; The Department shall be served by de- (l) Petition means a written request, livery to the Associate Solicitor, Plan made by a person or party, for some af- Benefits Security Division, ERISA sec- firmative action; tion 502(c)(8) Proceeding, P.O. Box 1914, (m) Pleading means the notice as de- Washington, DC 20013. The person serv- fined in § 2560.502c–8(g) of this chapter, ing the document shall certify to the the answer to the notice, any supple- manner and date of service. ment or amendment thereto, and any (c) By the Office of Administrative Law reply that may be permitted to any an- Judges. Service of orders, decisions and swer, supplement or amendment; all other documents shall be made by (n) 502(c)(8) civil penalty proceeding regular mail to the last known address. means an adjudicatory proceeding re- (d) Form of pleadings. (1) Every plead- lating to the assessment of a civil pen- ing shall contain information indi- alty provided for in section 502(c)(8) of cating the name of the Employee Bene- ERISA; fits Security Administration (EBSA) as (o) Respondent means the party the agency under which the proceeding against whom the Department is seek- is instituted, the title of the pro- ing to assess a civil sanction under ceeding, the docket number (if any) as- ERISA section 502(c)(8); signed by the Office of Administrative (p) Secretary means the Secretary of Law Judges and a designation of the Labor and includes, pursuant to any type of pleading or paper (e.g., notice, delegation of authority by the Sec- motion to dismiss, etc.). The pleading retary, any assistant secretary (includ- or paper shall be signed and shall con- ing the Assistant Secretary for Em- tain the address and telephone number ployee Benefits Security), adminis- of the party or person representing the trator, commissioner, appellate body, party. Although there are no formal board, or other official; and specifications for documents, they (q) Solicitor means the Solicitor of should be typewritten when possible on Labor or his or her delegate. standard size 81⁄2 × 11-inch paper.

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(2) Illegible documents, whether of the filing of the petition. If objec- handwritten, typewritten, photocopied, tions to the petition are filed, the ad- or otherwise, will not be accepted. Pa- ministrative law judge shall then de- pers may be reproduced by any dupli- termine whether petitioner has the cating process provided all copies are requisite interest to be a party in the clear and legible. proceedings, as defined in paragraph (b) of this section, and shall permit or § 2570.163 Parties, how designated. deny participation accordingly. Where For 502(c)(8) civil penalty pro- petitions to participate as parties are ceedings, this section shall apply in made by individuals or groups with lieu of § 18.10 of this title. common interests, the administrative (a) The term ‘‘party’’ wherever used law judge may request all such peti- in this subpart shall include any nat- tioners to designate a single represent- ural person, corporation, employee ative, or he or she may recognize one benefit plan, association, firm, partner- or more of such petitioners. The ad- ship, trustee, receiver, agency, public ministrative law judge shall give each or private organization, or government such petitioner, as well as the parties, agency. A party against whom a civil written notice of the decision on his or penalty is sought shall be designated as her petition. For each petition granted, ‘‘respondent.’’ The Department shall be the administrative law judge shall pro- designated as the ‘‘complainant.’’ vide a brief statement of the basis of (b) Other persons or organizations the decision. If the petition is denied, shall be permitted to participate as he or she shall briefly state the parties only if the administrative law grounds for denial and shall then treat judge finds that the final decision the petition as a request for participa- could directly and adversely affect tion as amicus curiae. them or the class they represent, that they may contribute materially to the § 2570.164 Consequences of default. disposition of the proceedings and their For 502(c)(8) civil penalty pro- interest is not adequately represented ceedings, this section shall apply in by existing parties, and that in the dis- lieu of § 18.5(a) and (b) of this title. cretion of the administrative law judge Failure of the respondent to file an an- the participation of such persons or or- swer to the notice of determination de- ganizations would be appropriate. scribed in § 2560.502c–8(g) of this chapter (c) A person or organization not within the 30 day period provided by named as a respondent wishing to par- § 2560.502c–8(h) of this chapter shall be ticipate as a party under this section deemed to constitute a waiver of his or shall submit a petition to the adminis- her right to appear and contest the al- trative law judge within fifteen (15) legations of the notice of determina- days after the person or organization tion, and such failure shall be deemed has knowledge of or should have known to be an admission of the facts as al- about the proceeding. The petition leged in the notice for purposes of any shall be filed with the administrative proceeding involving the assessment of law judge and served on each person a civil penalty under section 502(c)(8) of who or organization that has been the Act. Such notice shall then become made a party at the time of filing. the final order of the Secretary, within Such petition shall concisely state: the meaning of § 2570.161(g) of this sub- (1) Petitioner’s interest in the pro- part, forty-five (45) days from the date ceeding; of service of the notice. (2) How his or her participation as a party will contribute materially to the § 2570.165 Consent order or settle- disposition of the proceeding; ment. (3) Who will appear for petitioner; For 502(c)(8) civil penalty pro- (4) The issues on which petitioner ceedings, the following shall apply in wishes to participate; and lieu of § 18.9 of this title. (5) Whether petitioner intends to (a) General. At any time after the present witnesses. commencement of a proceeding, but at (d) Objections to the petition may be least five (5) days prior to the date set filed by a party within fifteen (15) days for hearing, the parties jointly may

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move to defer the hearing for a reason- decision incorporating such findings able time to permit negotiation of a and agreement within 30 days of his re- settlement or an agreement containing ceipt of such document. The decision of findings and an order disposing of the the administrative law judge shall in- whole or any part of the proceeding. corporate all of the findings, terms, The allowance of such a deferral and and conditions of the settlement agree- the duration thereof shall be in the dis- ment and consent order of the parties. cretion of the administrative law Such decision shall become final agen- judge, after consideration of such fac- cy action within the meaning of 5 tors as the nature of the proceeding, U.S.C. 704. the requirements of the public interest, (e) Settlement without consent of all the representations of the parties, and parties. In cases in which some, but not the probability of reaching an agree- all, of the parties to a proceeding sub- ment which will result in a just dis- mit a consent agreement to the admin- position of the issues involved. istrative law judge, the following pro- (b) Content. Any agreement con- cedure shall apply: taining consent findings and an order (1) If all of the parties have not con- disposing of a proceeding or any part sented to the proposed settlement sub- thereof shall also provide: mitted to the administrative law judge, (1) That the order shall have the then such non-consenting parties must same force and effect as an order made receive notice, and a copy, of the pro- after full hearing; posed settlement at the time it is sub- (2) That the entire record on which mitted to the administrative law judge; any order may be based shall consist (2) Any non-consenting party shall solely of the notice and the agreement; have fifteen (15) days to file any objec- (3) A waiver of any further proce- tions to the proposed settlement with dural steps before the administrative the administrative law judge and all law judge; other parties; (4) A waiver of any right to challenge (3) If any party submits an objection or contest the validity of the order and to the proposed settlement, the admin- decision entered into in accordance istrative law judge shall decide within with the agreement; and 30 days after receipt of such objections (5) That the order and decision of the whether he shall sign or reject the pro- administrative law judge shall be final posed settlement. Where the record agency action. lacks substantial evidence upon which (c) Submission. On or before the expi- to base a decision or there is a genuine ration of the time granted for negotia- issue of material fact, then the admin- tions, but, in any case, at least five (5) istrative law judge may establish pro- days prior to the date set for hearing, cedures for the purpose of receiving ad- the parties or their authorized rep- ditional evidence upon which a deci- resentative or their counsel may: sion on the contested issues may rea- (1) Submit the proposed agreement sonably be based; containing consent findings and an (4) If there are no objections to the order to the administrative law judge; proposed settlement, or if the adminis- or trative law judge decides to sign the (2) Notify the administrative law proposed settlement after reviewing judge that the parties have reached a any such objections, the administra- full settlement and have agreed to dis- tive law judge shall incorporate the missal of the action subject to compli- consent agreement into a decision ance with the terms of the settlement; meeting the requirements of paragraph or (d) of this section. (3) Inform the administrative law judge that agreement cannot be § 2570.166 Scope of discovery. reached. For 502(c)(8) civil penalty pro- (d) Disposition. In the event a settle- ceedings, this section shall apply in ment agreement containing consent lieu of § 18.14 of this title. findings and an order is submitted (a) A party may file a motion to con- within the time allowed therefor, the duct discovery with the administrative administrative law judge shall issue a law judge. The motion for discovery

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shall be granted by the administrative (3) A copy of any decision under this law judge only upon a showing of good paragraph shall be served on each cause. In order to establish ‘‘good party. cause’’ for the purposes of this section, (b) Hearings on issues of fact. Where a a party must show that the discovery genuine question of a material fact is requested relates to a genuine issue as raised, the administrative law judge to a material fact that is relevant to shall, and in any other case may, set the proceeding. The order of the admin- the case for an evidentiary hearing. istrative law judge shall expressly limit the scope and terms of discovery § 2570.168 Decision of the administra- to that for which ‘‘good cause’’ has tive law judge. been shown, as provided in this para- For 502(c)(8) civil penalty pro- graph. ceedings, this section shall apply in (b) A party may obtain discovery of lieu of § 18.57 of this title. documents and tangible things other- (a) Proposed findings of fact, conclu- wise discoverable under paragraph (a) sions, and order. Within twenty (20) of this section and prepared in antici- days of the filing of the transcript of pation of or for the hearing by or for the testimony, or such additional time another party’s representative (includ- as the administrative law judge may ing his or her attorney, consultant, allow, each party may file with the ad- surety, indemnitor, insurer, or agent) ministrative law judge, subject to the only upon showing that the party seek- judge’s discretion, proposed findings of ing discovery has substantial need of fact, conclusions of law, and order to- the materials or information in the gether with a supporting brief express- preparation of his or her case and that ing the reasons for such proposals. he or she is unable without undue hard- Such proposals and briefs shall be ship to obtain the substantial equiva- served on all parties, and shall refer to lent of the materials or information by all portions of the record and to all au- other means. In ordering discovery of thorities relied upon in support of each such materials when the required proposal. showing has been made, the adminis- (b) Decision of the administrative law trative law judge shall protect against judge. Within a reasonable time after disclosure of the mental impressions, the time allowed for the filing of the conclusions, opinions, or legal theories proposed findings of fact, conclusions of an attorney or other representatives of law, and order, or within thirty (30) of a party concerning the proceeding. days after receipt of an agreement con- taining consent findings and order dis- § 2570.167 Summary decision. posing of the disputed matter in whole, For 502(c)(8) civil penalty pro- the administrative law judge shall ceedings, this section shall apply in make his or her decision. The decision lieu of § 18.41 of this title. of the administrative law judge shall (a) No genuine issue of material fact. (1) include findings of fact and conclusions Where no issue of a material fact is of law with reasons therefor upon each found to have been raised, the adminis- material issue of fact or law presented trative law judge may issue a decision on the record. The decision of the ad- which, in the absence of an appeal pur- ministrative law judge shall be based suant to §§ 2570.169 through 2570.171 of upon the whole record. In a contested this subpart, shall become a final case in which the Department and the order. Respondent have presented their posi- (2) A decision made under paragraph tions to the administrative law judge (a) of this section shall include a state- pursuant to the procedures for 502(c)(8) ment of: civil penalty proceedings as set forth in (i) Findings of fact and conclusions of this subpart, the penalty (if any) which law, and the reasons therefor, on all may be included in the decision of the issues presented; and administrative law judge shall be lim- (ii) Any terms and conditions of the ited to the penalty expressly provided rule or order. for in section 502(c)(8) of ERISA. It

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shall be supported by reliable and pro- shall be final agency action within the bative evidence. The decision of the ad- meaning of 5 U.S.C. 704. ministrative law judge shall become final agency action within the meaning PART 2571—PROCEDURAL REGULA- of 5 U.S.C. 704 unless an appeal is made TIONS FOR ADMINISTRATION pursuant to the procedures set forth in AND ENFORCEMENT UNDER THE §§ 2570.169 through 2570.171 of this sub- part. EMPLOYEE RETIREMENT INCOME SECURITY ACT § 2570.169 Review by the Secretary. Subpart A—Procedures for Administrative (a) The Secretary may review a deci- Hearings on the Issuance of Cease sion of an administrative law judge. and Desist Orders Under ERISA Section Such a review may occur only when a 521—Multiple Employer Welfare Ar- party files a notice of appeal from a de- rangements cision of an administrative law judge within twenty (20) days of the issuance Sec. of such decision. In all other cases, the 2571.1 Scope of rules. decision of the administrative law 2571.2 Definitions. judge shall become final agency action 2571.3 Service: copies of documents and pleadings. within the meaning of 5 U.S.C. 704. 2571.4 Parties. (b) A notice of appeal to the Sec- 2571.5 Consequences of default. retary shall state with specificity the 2571.6 Consent order or settlement. issue(s) in the decision of the adminis- 2571.7 Scope of discovery. trative law judge on which the party is 2571.8 Summary decision. seeking review. Such notice of appeal 2571.9 Decision of the administrative law judge. must be served on all parties of record. 2571.10 Review by the Secretary. (c) Upon receipt of a notice of appeal, 2571.11 Scope of review by the Secretary. the Secretary shall request the Chief 2571.12 Procedures for review by the Sec- Administrative Law Judge to submit retary. to him or her a copy of the entire 2571.13 Effective date. record before the administrative law judge. Subpart B [Reserved]

§ 2570.170 Scope of review. AUTHORITY: 29 U.S.C. 1002(40), 1132, 1135; and 1151, Secretary of Labor’s Order 1–2011, 77 The review of the Secretary shall not FR 1088 (January 9, 2012). be a de novo proceeding but rather a SOURCE: 78 FR 13808, Mar. 1, 2013, unless review of the record established before otherwise noted. the administrative law judge. There shall be no opportunity for oral argu- ment. Subpart A—Procedures for Admin- istrative Hearings on the § 2570.171 Procedures for review by Issuance of Cease and Desist the Secretary. Orders Under ERISA Section (a) Upon receipt of the notice of ap- 521—Multiple Employer Wel- peal, the Secretary shall establish a fare Arrangements briefing schedule which shall be served on all parties of record. Upon motion of § 2571.1 Scope of rules. one or more of the parties, the Sec- The rules of practice set forth in this retary may, in his or her discretion, part apply to ex parte cease and desist permit the submission of reply briefs. order proceedings under section 521 of (b) The Secretary shall issue a deci- the Employee Retirement Income Se- sion as promptly as possible after re- curity Act of 1974, as amended ceipt of the briefs of the parties. The (ERISA). The rules of procedure for ad- Secretary may affirm, modify, or set ministrative hearings published by the aside, in whole or in part, the decision Department’s Office of Administrative on appeal and shall issue a statement Law Judges at part 18 of this title will of reasons and bases for the action(s) apply to matters arising under ERISA taken. Such decision by the Secretary section 521 except as modified by this section. These proceedings shall be 695

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