[Federal Register Volume 81, Number 93 (Friday, May 13, 2016)]
[Rules and Regulations]
[Pages 29765-29767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11296]
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PENSION BENEFIT GUARANTY CORPORATION
29 CFR Parts 4010, 4041, 4071, and 4302
RIN 1212-AB33
Adjustment of Civil Penalties
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Interim final rule.
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SUMMARY: The Pension Benefit Guaranty Corporation is amending its
regulations to adjust the penalties provided for in sections 4071 and
4302 of the Employee Retirement Income Security Act of 1974. This
action is being taken in accordance with the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015 and Office of
Management and Budget memorandum M-16-06. The regulations being amended
are those on Penalties for Failure to Provide Certain Notices or Other
Material Information (29 CFR part 4071) and Penalties for Failure to
Provide Certain Multiemployer Plan Notices (29 CFR part 4302).
Conforming amendments are also being made to the regulations on Annual
Financial and Actuarial Information Reporting (29 CFR part 4010) and
Termination of Single-Employer Plans (29 CFR part 4041).
DATES: The amendments are effective August 1, 2016. Also see
Applicability, below.
FOR FURTHER INFORMATION CONTACT: Deborah C. Murphy, Deputy Assistant
General Counsel for Regulatory Affairs ([email protected]),
Office of the General Counsel, Pension Benefit Guaranty Corporation,
1200 K Street NW., Washington, DC 20005-4026; 202-326-4400 extension
3451. (TTY and TDD users may call the Federal relay service toll-free
at 800-877-8339 and ask to be connected to 202-326-4400 extension
3451.)
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose of the Regulatory Action
This rule is needed to carry out the requirements of the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The
rule adjusts the maximum civil penalties that PBGC may assess for
failure to provide certain notices or other material information.
PBGC's legal authority for this action comes from the Federal Civil
Penalties Inflation Adjustment Act of 1990 as amended by the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and
from sections 4002(b)(3), 4071, and 4302 of the Employee Retirement
Income Security Act of 1974.
Major Provisions of the Regulatory Action
This rule adjusts the maximum civil penalties that PBGC may assess
under sections 4071 and 4302 of ERISA. The new maximum amounts are
$2,063 for section 4071 penalties and $275 for section 4302 penalties.
Background
The Pension Benefit Guaranty Corporation (PBGC) administers title
IV of the Employee Retirement Income Security Act of 1974 (ERISA).
Title IV has two provisions that authorize PBGC to assess civil
monetary penalties.\1\ Section 4302, added to ERISA by the
Multiemployer Pension Plan
[[Page 29766]]
Amendments Act of 1980, authorizes PBGC to assess a civil penalty of up
to $100 a day for failure to provide a notice under subtitle E of title
IV of ERISA (dealing with multiemployer plans). Section 4071, added to
ERISA by the Omnibus Budget Reconciliation Act of 1987, authorizes PBGC
to assess a civil penalty of up to $1,000 a day for failure to provide
a notice or other material information under subtitles A, B, and C of
title IV and sections 303(k)(4) and 306(g)(4) of title I of ERISA.
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\1\ Under the Federal Civil Penalties Inflation Adjustment Act
of 1990, a penalty is a civil monetary penalty if (among other
things) it is for a specific monetary amount or has a maximum amount
specified by Federal law. Title IV also provides (in section 4007)
for penalties for late payment of premiums, but those penalties are
neither in a specified amount nor subject to a specified maximum
amount.
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The Federal Civil Penalties Inflation Adjustment Act of 1990 called
for reports by the President to Congress about the effect of inflation
on civil penalties and the adjustment of civil penalties for inflation.
The Debt Collection Improvement Act of 1996 amended the 1990 act to
require agencies to make inflation adjustments of civil monetary
penalties by regulation in accordance with principles in the 1990 act.
On July 10, 1997 (at 62 FR 36993), PBGC published a final rule to
implement the 1996 act. That final rule added to PBGC's regulations
parts 4071 and 4302, which provided that the maximum penalty amounts
under sections 4071 and 4302 were $1,100 a day for section 4071 and
$110 a day for section 4302.
Several of PBGC's regulations note that section 4071 penalties may
be assessed for failure to provide notices or other material
information required under those regulations, but only two mention the
adjusted maximum amount. The two regulations that do so are those on
Annual Financial and Actuarial Information Reporting (29 CFR part 4010)
and Termination of Single-Employer Plans (29 CFR part 4041).
Adjustment of Civil Penalties
On November 2, 2015, the President signed into law the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015,\2\
which further amended the 1990 act. The 2015 act requires agencies to
adjust civil monetary penalties for inflation and to publish the
adjustments in the Federal Register. An initial adjustment must be made
by interim final rule published by July 1, 2016, and effective by
August 1, 2016. Subsequent adjustments must be promulgated by January
15 of each year after 2016. Adjustments must be based on changes in the
Consumer Price Index, and the initial adjustment is to be made from the
penalty level most recently established, other than by an adjustment
under the 1990 act. The initial adjustment cannot increase a penalty
more than 150 percent over its level on November 2, 2015. Adjusted
penalties are to be rounded to the nearest dollar.
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\2\ Sec. 701, Public Law 114-74, 129 Stat. 599-601 (Bipartisan
Budget Act of 2015).
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On February 24, 2016, the Office of Management and Budget issued
memorandum M-16-06 on implementation of the 2015 act.\3\ The memorandum
provides guidance to agencies about how to comply with the act. In
particular, the memorandum includes a table of multipliers to use for
the initial adjustment. The multiplier for 1980 (when section 4302 was
added to ERISA) is 2.80469. The multiplier for 1987 (when section 4071
was added to ERISA) is 2.06278. Applying these multipliers to the
enacted maximum amounts of the two penalties yields new maximum penalty
levels (rounded to the nearest dollar) of $280 for section 4302 and
$2,063 for section 4071. But applying the 150-percent-maximum-increase
rule, the maximum penalty under section 4302 may not exceed $275.
Accordingly, PBGC is adjusting the maximum penalty under section 4071
to $2,063 and adjusting the maximum penalty under section 4302 to $275.
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\3\ https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
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Given the prospect of annual adjustments of the maximum section
4071 penalty, PBGC is simply removing the references in its other
regulations to the maximum amount of section 4071 penalties. Removal of
these references has no substantive effect, since the operative
provision for the maximum amount is in part 4071; and removal avoids
the need for annual amendments to these other regulations to track
adjustments in the maximum penalty level.
Applicability
The increases in the civil monetary penalties under sections 4071
and 4302 provided for in this rule apply on and after August 1, 2016.
Compliance With Regulatory Requirements
PBGC has determined, in consultation with the Office of Management
and Budget, that this rule is not a ``significant regulatory action''
under Executive Order 12866.
PBGC has determined that notice and public comment on this interim
final rule are unnecessary because the adjustment of civil penalties
implemented in the rule is required by law. See 5 U.S.C. 553(b).
Because no general notice of proposed rulemaking is required for
this rule, the Regulatory Flexibility Act of 1980 does not apply. See 5
U.S.C. 601(2).
List of Subjects
29 CFR Part 4010
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 4041
Penalties, Pension insurance, Pensions, Reporting and recordkeeping
requirements.
29 CFR Part 4071
Penalties.
29 CFR Part 4302
Penalties.
In consideration of the foregoing, PBGC amends 29 CFR parts 4010,
4043, 4071, and 4302 as follows:
PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING
0
1. The authority citation for part 4010 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1310.
Sec. 4010.14 [Amended]
0
2. In Sec. 4010.14, the words ``of up to $1,100 a day for each day
that the failure continues'' are removed.
PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS
0
3. The authority citation for part 4041 continues to read as follows:
Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.
Sec. 4041.6 [Amended]
0
4. In Sec. 4041.6, the words ``of up to $1,100 a day for each day that
the failure continues'' are removed.
PART 4071--PENALTIES FOR FAILURE TO PROVIDE CERTAIN NOTICES OR
OTHER MATERIAL INFORMATION
0
5. The authority citation for part 4071 is revised to read as follows:
Authority: 28 U.S.C. 2461 note, as amended by sec. 701, Pub. L.
114-74, 129 Stat. 599-601; 29 U.S.C. 1302(b)(3), 1371.
Sec. 4071.3 [Amended]
0
6. In Sec. 4071.3, the figures ``$1,100'' are removed and the figures
``$2,063'' are added in their place.
[[Page 29767]]
PART 4302--PENALTIES FOR FAILURE TO PROVIDE CERTAIN MULTIEMPLOYER
PLAN NOTICES
0
7. The authority citation for part 4302 is revised to read as follows:
Authority: 28 U.S.C. 2461 note, as amended by sec. 701, Pub. L.
114-74, 129 Stat. 599-601; 29 U.S.C. 1302(b)(3), 1452.
Sec. 4302.3 [Amended]
0
8. In Sec. 4302.3, the figures ``$110'' are removed and the figures
$275'' are added in their place.
Issued in Washington, DC, this 5 day of May, 2016.
W. Thomas Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2016-11296 Filed 5-12-16; 8:45 am]
BILLING CODE 7709-02-P