[Federal Register Volume 77, Number 136 (Monday, July 16, 2012)]
[Rules and Regulations]
[Pages 41678-41680]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17013]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2550
RIN 1210-AB54
Amendment Relating to Reasonable Contract or Arrangement Under
Section 408(b)(2)--Fee Disclosure/Web Page
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Direct final rule.
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SUMMARY: This document revises the mailing address and web-based
submission procedures for filing certain notices under the Department
of Labor (Department) Employee Benefits Security Administration's
fiduciary-level fee disclosure regulation under section 408(b)(2) of
the Employee Retirement Income Security Act of 1974 (ERISA).
Responsible plan fiduciaries of employee pension benefit plans must
file these notices with the Department to obtain relief from ERISA's
prohibited transaction provisions that otherwise may apply when a
covered service provider to the plan fails to disclose information in
accordance with the regulation's requirements.
DATES: This amendment to the 408(b)(2) regulation is effective
September 14, 2012, without further action or notice, unless
significant adverse comment is received by August 15, 2012. If
significant adverse comment is received, the Department will publish a
timely withdrawal of this amendment in the Federal Register.
ADDRESSES: Written comments may be submitted to the addresses specified
below. All comments will be made available to the public. Warning: Do
not include any personally identifiable information (such as name,
address, or other contact information) or confidential business
information that you do not want publicly disclosed. All comments may
be posted on the Internet and can be retrieved by most Internet search
engines. Comments may be submitted anonymously.
Comments, identified by RIN 1210-AB54, may be submitted by one of
the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Email: e-ORI@dol.gov.
Mail or Hand Delivery: Office of Regulations and
Interpretations, Employee Benefits Security Administration, Room N-
5655, U.S. Department of Labor, 200 Constitution Avenue NW.,
Washington, DC 20210, Attention: RIN 1210-AB54; Class Exemption
Notice--Web Submission.
Comments received by the Department of Labor may be posted without
change to http://www.regulations.gov and http://www.dol.gov/ebsa, and
will be made available for public inspection at the Public Disclosure
Room, N-1513, Employee Benefits Security Administration, 200
Constitution Avenue NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Allison Wielobob, Office of
Regulations and Interpretations, Employee Benefits Security
Administration, (202) 693-8500. This is not a toll-free number.
SUPPLEMENTARY INFORMATION:
A. Background
On February 3, 2012, the Department published a final regulation
under ERISA section 408(b)(2) (the ``408(b)(2) regulation''), requiring
that certain service providers to pension plans disclose information
about the service providers' compensation and potential conflicts of
interest.\1\ These disclosure requirements were established to provide
guidance for compliance with a statutory exemption from ERISA's
prohibited transaction provisions. If the disclosure requirements of
the 408(b)(2) regulation are not satisfied, a prohibited provision of
services under ERISA section 406(a)(1)(C) will occur, with consequences
for both the responsible plan fiduciary and the covered service
provider. However, paragraph (c)(1)(ix) of the final regulation exempts
a responsible plan fiduciary from the prohibited transaction
restrictions, if the fiduciary takes certain specified steps upon
discovery of a disclosure failure. Among other steps, the responsible
plan fiduciary must make a written request to the covered service
provider for the undisclosed information. If the covered service
provider does not comply with this request within 90 days, the
responsible plan fiduciary must so notify the Department.
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\1\ 77 FR 5632 (Feb. 3, 2012).
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The final 408(b)(2) regulation, in paragraph (c)(1)(ix)(F),
provides two alternative methods for submitting such notices to the
Department. Responsible plan fiduciaries may send notices to the
following address: U.S. Department of Labor, Employee Benefits Security
Administration, Office of Enforcement, 200 Constitution Ave. NW., Suite
600, Washington, DC 20210. Alternatively, notices may be sent
electronically to OE-DelinquentSPnotice@dol.gov. The direct final rule
published today, and described below, amends these submission
procedures to reflect a new mailing address and to provide for
electronic submission through the Department's Web site.
B. Overview of Amendment to 408(b)(2) Regulation
The direct final rule being published today as part of this notice
amends 29 CFR 2550.408b-2(c)(1)(ix)(F) to revise the mailing address
and enhance the web-based submission procedure for responsible plan
fiduciaries to file required notices under the regulation's fiduciary
class exemption provision. Fiduciaries may continue to send paper
notices to the Department; however, a dedicated post office box has
been established to replace the original mailing address. The new
mailing address is: U.S. Department of Labor, Employee Benefits
Security Administration, Office of Enforcement, P.O. Box 75296,
Washington, DC 20013. Further, effective September 14, 2012, the
Department is eliminating the previously available email address (OE-DelinquentSPnotice@dol.gov). Instead, pursuant to instructions that
will be separately provided by the Department, responsible plan
fiduciaries who wish to submit notices electronically will be able to
do so through a dedicated link on the Department's Web site, at
www.dol.gov/ebsa/regs/feedisclosurefailurenotice.html. This Web page
will include clear instructions for how to submit the required
notification and will provide immediate confirmation to responsible
plan fiduciaries that the notice has been received by the Department.
The Department believes that the new web submission procedure will
benefit both responsible plan fiduciaries and the Department and,
therefore, does not anticipate any significant adverse comment on this
amendment. The submission process will be easier for responsible plan
fiduciaries, because the Web page will include clear instructions and
will assist responsible plan fiduciaries by ensuring that they include
all of the information required by the regulation's notice provision.
Plan fiduciaries, especially for small plans, will be more easily able
to take advantage of the relief provided by the 408(b)(2) regulation's
class exemption
[[Page 41679]]
provision. Further, unlike submissions by email or paper mail, the web-
based submission procedure will include immediate, electronic
confirmation for responsible plan fiduciaries that their notice has
been received. The online submission procedure also will benefit the
Department by enabling its staff to more efficiently receive, process,
and review class exemption notices under the 408(b)(2) regulation,
which in turn will benefit responsible plan fiduciaries who wish to
avail themselves of relief provided by the regulation's class
exemption. The Department expects that responsible plan fiduciary
errors will be fewer, due to the web-based procedures that will include
clear instructions and better ensure that complete information is
submitted, and that transcription and other errors by the Department
will be fewer, due to the automated procedures that will occur when
submissions are received electronically.
C. Good Cause Finding That Proposed Rulemaking Unnecessary
Rulemaking under section 553 of the Administrative Procedure Act (5
U.S.C. 551 et seq.) (APA) ordinarily involves publication of a notice
of proposed rulemaking in the Federal Register and the public is given
an opportunity to comment on the proposed rule. However, an agency may
issue a rule without prior notice and comment procedures if it
determines for good cause that public notice and comment procedures are
impracticable, unnecessary, or contrary to the public interest for such
rule, and incorporates a statement of the finding with the underlying
reasons in the final rule issued. For the reasons mentioned in section
B of this preamble, the Department finds that publishing a proposed
rule and seeking public comment is unnecessary.
Notwithstanding the foregoing, in the ``Proposed Rules'' section of
today's Federal Register, the Department is publishing a separate
document that will serve as a notice of proposal to amend part 2550 as
described in this direct final rule. If the Department receives
significant adverse comment during the comment period, it will publish,
in a timely manner, a document in the Federal Register withdrawing this
direct final rule. The Department will then address public comments in
a subsequent final rule based on the proposed rule. The Department will
not institute a second comment period on this rule. Any parties
interested in commenting must do so during this comment period.
D. Regulatory Impact Analysis
1. Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule (1)
Having an annual effect on the economy of $100 million or more, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. Pursuant to the terms
of the Executive Order, OMB has been determined that this action is not
``significant'' within the meaning of section 3(f)(4) of the Executive
Order and therefore is not subject to review by OMB.
2. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the APA (5
U.S.C. 551 et seq.) and that are likely to have a significant economic
impact on a substantial number of small entities. Under Section 553(b)
of the APA, a general notice of proposed rulemaking is not required
when an agency, for good cause, finds that notice and public comment
thereon are impracticable, unnecessary, or contrary to the public
interest. This direct final regulation is exempt from the APA's notice
and comment requirements because the Department made a good cause
finding earlier in this preamble that a general notice of proposed
rulemaking is not necessary. Therefore, the RFA does not apply and the
Department is not required to either certify that this regulation would
not have a significant economic impact on a substantial number of small
entities or conduct a regulatory flexibility analysis.
Nevertheless, the Department carefully considered the likely impact
of the rule on small entities. The direct final rule will enhance the
web-based submission procedure for responsible plan fiduciaries,
especially for small plans, to file required notices under the
regulation's fiduciary class exemption provision. The Web page will
include clear instructions and ensure that responsible plan fiduciaries
include all of the required information and provide an immediate
electronic confirmation that their notice has been received. No
additional burden is imposed on such fiduciaries, because, as discussed
earlier in this preamble, the direct final rule allows them to continue
to send notices to a dedicated post office box that the Department has
established to replace the original mailing address provided in the
final rule. Based on the foregoing, the Department hereby certifies
that the proposed rule is not likely to have a significant economic
impact on a substantial number of small entities.
3. Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3506(c)(2)), the Department submitted an
information collection request (ICR) to OMB in accordance with 44
U.S.C. 3507(d) for the final regulation that was published on February
3, 2012. OMB approved the ICR on March 29, 2012, under control number
1210-0133, which is currently schedule to expire on March 31, 2015. A
copy of the ICR may be obtained by contacting the PRA addressee shown
below.
PRA Addressee: G. Christopher Cosby, Office of Policy and Research,
U.S. Department of Labor, Employee Benefits Security Administration,
200 Constitution Avenue NW., Room N 5647, Washington, DC 20210.
Telephone (202) 219-8410; Fax: (202) 219-4745. These are not toll free
numbers.
OMB has determined that the direct final rule does not implement
any substantive or material change to the information collection;
therefore, no change is made to the ICR and no further review is
requested of OMB at this time.
4. Congressional Review Act
This direct final rule is subject to the Congressional Review Act
provisions of
[[Page 41680]]
the Small Business Regulatory Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.) and has been transmitted to Congress and the
Comptroller General for review.
5. Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, the direct final rule does
not include any Federal mandate that may result in expenditures by
State, local, or tribal governments in the aggregate of more than $100
million, adjusted for inflation, or increase expenditures by the
private sector of more than $100 million, adjusted for inflation.
6. Federalism Statement
Executive Order 13132 (August 4, 1999) outlines fundamental
principles of federalism, and requires the adherence to specific
criteria by Federal agencies in the process of their formulation and
implementation of policies that have substantial direct effects on the
States, the relationship between the national government and States, or
on the distribution of power and responsibilities among the various
levels of government. The direct final rule does not have federalism
implications because it has no substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government. Section 514 of ERISA provides, with certain
exceptions specifically enumerated, that the provisions of Titles I and
IV of ERISA supersede any and all laws of the States as they relate to
any employee benefit plan covered under ERISA. The requirements
implemented in the direct final rule do not alter the fundamental
reporting and disclosure requirements of the statute with respect to
employee benefit plans, and, as such, have no implications for the
States or the relationship or distribution of power between the
national government and the States.
List of Subjects in 29 CFR Part 2550
Employee benefit plans, Exemptions, Fiduciaries, Investments,
Pensions, Prohibited transactions, Reporting and recordkeeping
requirements, and Securities.
For the reasons set forth in the preamble, the Department amends
chapter XXV, subchapter F, part 2550 of title 29 of the Code of Federal
Regulations as follows:
SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974
PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY
0
1. The authority citation for part 2550 continues to read as follows:
Authority: 29 U.S.C. 1135 and Secretary of Labor's Order No. 6-
2009, 74 FR Sec. 21524 (May 7, 2009). Sec. 2550.401c-1 also issued
under 29 U.S.C. 1101. Sec. 2550.404a-1 also issued under sec. 657,
Pub. L. 107-16, 115 Stat. 38. Sections 2550.404c-1 and 2550.404c-5
also issued under 29 U.S.C. 1104. Sec. 2550.408b-1 also issued under
29 U.S.C. 1108(b)(1) and sec. 102, Reorganization Plan No. 4 of
1978, 5 U.S.C. App. 1. Sec. 2550.408b-19 also issued under sec. 611,
Pub. L. 109-280, 120 Stat. 780, 972, and sec. 102, Reorganization
Plan No. 4 of 1978, 5 U.S.C. App. 1. Sec. 2550.412-1 also issued
under 29 U.S.C. 1112.
0
2. Section 2550.408b-2 is amended by revising paragraph (c)(1)(ix)(F)
to read as follows:
Sec. 2550.408b-2 General statutory exemption for services or office
space.
* * * * *
(c) * * *
(1) * * *
(ix) * * *
(F) The notice required by paragraph (c)(1)(ix)(C) of this section
shall be furnished to the U.S. Department of Labor electronically in
accordance with instructions published by the Department; or may be
sent to the following address: U.S. Department of Labor, Employee
Benefits Security Administration, Office of Enforcement, P.O. Box
75296, Washington, DC 20013; and
* * * * *
Signed at Washington, DC, this 2nd day of July 2012.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
[FR Doc. 2012-17013 Filed 7-13-12; 8:45 am]
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