64784 Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 

1For purposes of this proposed exemption, 

references to specific provisions of Title I of the 

Act, unless otherwise specified, refer also to the 

corresponding provisions of the Code.

Hugo Teufel III, Associate General 

Counsel for General Law, Office of the 

General Counsel, DHS.

Mary Kate Whalen, 

Deputy Associate General Counsel for 

Regulations, Office of the General Counsel, 

Department of Homeland Security.

[FR Doc. 04–24953 Filed 11–5–04; 8:45 am] 

BILLING CODE 4410–10–P

INTERNATIONAL TRADE 

COMMISSION 

[USITC SE–04–030] 

Sunshine Act Meeting

AGENCY: United States International 

Trade Commission.

TIME AND DATE: November 10, 2004 at 

9:30 a.m.

PLACE: Room 101, 500 E Street SW., 

Washington, DC 20436, Telephone: 

(202) 205–2000.

STATUS: Open to the public.

MATTERS TO BE CONSIDERED:

1. Agenda for future meetings: none. 

2. Minutes. 

3. Ratification List. 

4. Inv. No. 731–TA–1059 (Final)(Hand 

Trucks from China)—briefing and vote. 

(The Commission is currently scheduled 

to transmit its determination and 

Commissioners’ opinions to the 

Secretary of Commerce on or before 

November 22, 2004.) 

5. Outstanding action jackets: none. 

In accordance with Commission 

policy, subject matter listed above, not 

disposed of at the scheduled meeting, 

may be carried over to the agenda of the 

following meeting.

By order of the Commission.

Issued: November 3, 2004. 

Marilyn R. Abbott, 

Secretary to the Commission.

[FR Doc. 04–24911 Filed 11–4–04; 11:39 am] 

BILLING CODE 7020–02–P

DEPARTMENT OF LABOR

Employee Benefits Security 

Administration 

[Application No. D–11165, et al.] 

Proposed Exemptions; The National 

Electrical Benefit Fund (the Plan)

AGENCY: Employee Benefits Security 

Administration, Labor.

ACTION: Notice of proposed exemptions.

SUMMARY: This document contains 

notices of pendency before the 

Department of Labor (the Department) of 

proposed exemptions from certain of the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (the Act) and/or the Internal 

Revenue Code of 1986 (the Code). 

Written Comments and Hearing 

Requests 

All interested persons are invited to 

submit written comments or requests for 

a hearing on the pending exemptions, 

unless otherwise stated in the Notice of 

Proposed Exemption, within 45 days 

from the date of publication of this 

Federal Register Notice. Comments and 

requests for a hearing should state:

(1) The name, address, and telephone 

number of the person making the 

comment or request, and (2) the nature 

of the person’s interest in the exemption 

and the manner in which the person 

would be adversely affected by the 

exemption. A request for a hearing must 

also state the issues to be addressed and 

include a general description of the 

evidence to be presented at the hearing.

ADDRESSES: All written comments and 

requests for a hearing (at least three 

copies) should be sent to the Employee 

Benefits Security Administration 

(EBSA), Office of Exemption 

Determinations, Room N–5649, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

Attention: Application No. lll, 

stated in each Notice of Proposed 

Exemption. Interested persons are also 

invited to submit comments and/or 

hearing requests to EBSA via e-mail or 

FAX. Any such comments or requests 

should be sent either by e-mail to: 

moffitt.betty@dol.gov, or by FAX to 

(202) 219–0204 by the end of the 

scheduled comment period. The 

applications for exemption and the 

comments received will be available for 

public inspection in the Public 

Documents Room of the Employee 

Benefits Security Administration, U.S. 

Department of Labor, Room N–1513, 

200 Constitution Avenue, NW., 

Washington, DC 20210. 

Notice to Interested Persons 

Notice of the proposed exemptions 

will be provided to all interested 

persons in the manner agreed upon by 

the applicant and the Department 

within 15 days of the date of publication 

in the Federal Register. Such notice 

shall include a copy of the notice of 

proposed exemption as published in the 

Federal Register and shall inform 

interested persons of their right to 

comment and to request a hearing 

(where appropriate).

SUPPLEMENTARY INFORMATION: The 

proposed exemptions were requested in 

applications filed pursuant to section 

408(a) of the Act and/or section 

4975(c)(2) of the Code, and in 

accordance with procedures set forth in 

29 CFR part 2570, subpart B (55 FR 

32836, 32847, August 10, 1990). 

Effective December 31, 1978, section 

102 of Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. 1 (1996), transferred 

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Therefore, these notices of proposed 

exemption are issued solely by the 

Department. 

The applications contain 

representations with regard to the 

proposed exemptions which are 

summarized below. Interested persons 

are referred to the applications on file 

with the Department for a complete 

statement of the facts and 

representations.

The National Electrical Benefit Fund 

(the Plan) Located in Rockville, MD 

[Application No. D–11165] 

Proposed Exemption 

Based upon the facts and 

representations set forth in the 

application, the Department of Labor is 

considering granting an exemption 

under the authority of section 408(a) of 

the Act (or ERISA) and section 

4975(c)(2) of the Code and in 

accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (55 

FR 32836, 32847, August 10, 1990). If 

the exemption is granted, the 

restrictions of section 406(a)(1)(A) 

through (D) of the Act and the sanctions 

resulting from the application of section 

4975 of the Code, by reason of section 

4975(c)(1)(A) through (D) of the Code,1

shall not apply, effective April 1, 2003, 

to (1) the collateral assignment (the 

Collateral Assignment), by the Plan, of 

its rights and interests in the Stonegate 

at Bellefaire, LLC (the LLC), a real estate 

operating company (REOC), to M&T 

Real Estate, Inc. (the Senior Lender), a 

party in interest with respect to the 

Plan; and (2) the guaranty (the 

Guaranty) by the Plan, executed in favor 

of the Senior Lender, requiring the Plan 

to reimburse the Senior Lender for any 

losses the Senior Lender may incur as 

a result of certain affirmative ‘‘bad acts’’

that are committed by the Plan as a 

member (the Member) of the LLC.

This proposed exemption is subject to 

the following conditions: 

(a) The Plan’s execution of the 

Collateral Assignment and the Guaranty

Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 64785

2The Plan has an in house real estate division 

that makes recommendations concerning the Plan’s 

real estate investments, including the subject 

investment in the Project. With respect to the Plan’s 

investment in the Project, the Trustees also received 

assistance and advice from The Weitzman Group 

(Weitzman), a New York-based real estate appraisal/

advisory firm, which advises the Trustees on real 

estate acquisition and divestiture decisions. In 

addition to conducting ongoing discussions with 

Weitzman, the Trustees relied on the following 

written reports in making their investment decision 

for the Plan: (a) An Investment Summary, prepared 

by the Plan’s in house real estate investment staff; 

(b) an Executive Summary of the Project investment 

provided by Weitzman; (c) a Real Property 

Valuation of the Project; (d) a Legal Review Letter 

regarding a construction loan and equity investment 

in the Project; and (e) a Closing Update prepared 

by the Plan’s investment staff.

3On May 22, 2002, the date the transactions 

closed, the Trustee was John M. Grau, not D. R. 

Borden. Mr. Borden replaced Mr. Grau in January 

of 2003.

4As noted above, the Applicant believes that the 

LLC is a REOC for purposes of the plan asset 

regulations. Therefore, the Applicant requests no 

ruling or determination with respect to this issue. 

Furthermore, the Applicant states that according to 

the Department’s position in 29 CFR 2510.3–101(a), 

once plan assets are invested in a REOC, they lose 

their character as ‘‘plan assets.’’ Thus, the 

Applicant explains that the equity it contributed to 

the REOC in the form of a capital contribution 

would cease being an asset of the Plan as soon as 

it is transferred to the REOC. Thereafter, the 

Applicant indicates that the asset belongs to the 

REOC, which in turn, may transfer these assets to 

a party in interest with respect to the Plan without 

invoking the prohibited transaction provisions of 

the Act. Accordingly, the Applicant explains that 

any use of the Plan’s capital contribution to repay 

the Senior Loan described herein would not give 

rise to a prohibited transaction. 

Notwithstanding the Applicant’s assumption 

about the REOC status of the LLC, the Department 

expresses no opinion herein on whether the LLC 

would be considered a REOC.

5The Debt Reserve Account is an account in 

which an amount equal to six months of principal 

and interest payable to the Senior Lender is kept in 

reserve.

was on terms no less favorable to the 

Plan than those which the Plan could 

obtain in an arm’s length transaction 

with an unrelated party; 

(b) The decisions on behalf of the Plan 

to invest in the LLC and consent to the 

terms of the Collateral Assignment and 

Guaranty in favor of the Senior Lender 

were made by fiduciaries which were 

independent of and unaffiliated with 

the Senior Lender; 

(c) At the time of the transactions, the 

Plan had total assets that were in excess 

of $5 billion, and not more than 1% of 

the Plan’s total assets was invested or 

will be invested in the LLC. 

(d) The other member of the LLC (the 

Managing Member) also executed 

Guaranties in favor of the Senior 

Lender; 

(e) As a Member of the LLC, the Plan’s 

total potential liability with respect to 

its investment in the real estate project 

(the Project), which is being developed 

and will be owned by the LLC, is 

limited to: 

(1) Capital contributions made by the 

Plan to the LLC. 

(2) Amounts funded by the Plan to the 

LLC (the Plan Loan). 

(3) Rights and interests given to the 

Senior Lender under the Collateral 

Assignment. 

(f) In the event the Plan engages in 

any of the specified ‘‘bad acts’’ that are 

described in the Guaranty, the Plan’s 

total potential liability does not exceed 

the greater of $32.98 million or the 

outstanding principal amount of the 

loan serving as the primary funding 

vehicle for the Project (the Senior Loan).

EFFECTIVE DATE: If granted, this proposed 

exemption will be effective as of April 

1, 2003. 

Summary of Facts and Representations 

1. The Plan, also referred to herein as 

‘‘the Applicant,’’ is a multiemployer, 

defined benefit plan covering 

approximately 489,261 participants and 

beneficiaries as of December 31, 2003. 

As of December 31, 2003, which is the 

most recent date that financial 

information is available, the Plan had 

net assets available for benefits of 

approximately $9.5 billion.

2. The fiduciaries generally 

responsible for investment decisions in 

real estate matters on behalf of the Plan, 

including the subject transactions,2 are 

D.R. Borden,3 Jr. and Jeremiah J. 

O’Connor (the Trustees). In addition, the 

Plan currently utilizes CS Capital 

Management, Inc. (CSM), an unrelated 

party, to provide advisory services with 

respect to the management of the LLC 

investment described herein on an 

ongoing basis. However, CSM did not 

review or recommend to the Trustees 

the making of this investment.

3. The Plan is one of two members of 

the LLC, a Delaware limited liability 

company formed in May 2002 for the 

sole purpose of developing and owning 

the Project, a senior living facility 

located at 1104 King Street, Rye Brook, 

New York. The only other member of 

the LLC is the Managing Member, FC 

Bellefair, LLC, a New York limited 

liability company and an unrelated 

party. The Plan and the Managing 

Member are referred to herein 

collectively as the ‘‘Members,’’ or each 

individually, as a ‘‘Member.’’ The Plan 

and the Managing Member each own 

50% of the LLC. Eighty percent of the 

Managing Member is owned by Forest 

City Residential Group, Inc. (FCRG), an 

Ohio corporation whose sole 

shareholder is Forest City Rental 

Properties Corporation (FCRPC). The 

remaining 20% of the Managing 

Member is owned by Four Corners 

Ownership II, LLC (FCO), a New York 

single asset limited liability company. 

FCRG and FCO are each a ‘‘managing 

member’’ of FC Bellefair, LLC. The 

Applicant represents that the LLC 

qualifies as a ‘‘real estate operating 

company’’ (i.e., a REOC) under the 

‘‘plan asset’’ regulations issued by the 

Department, 29 CFR 2510.3–101(e).4

4. The transactions at issue arise in 

the context of the financing obtained by 

the LLC to fund construction of the 

Project. The Project has a total budget of 

approximately $59,805,349, of which 

$32,980,000 is being primarily funded 

in the form of a loan (i.e., the Senior 

Loan) dated May 24, 2002 from the 

Senior Lender (i.e., M&T Real Estate, 

Inc.) to the LLC and another entity 

known as ‘‘FCD Ryebrook, LLC,’’ the 

operator of the completed facility. In 

order to comply with New York law, the 

Senior Loan has been bifurcated into a 

primary loan in the amount of 

$28,750,995 for the ‘‘hard’’ costs 

evidenced by a Building Loan 

Agreement, and a smaller loan in the 

amount of $4,229,005 for ‘‘soft’’ costs 

evidenced by a Non-Cost of 

Improvement Loan. The Senior Loan 

requires a balloon payment of the 

outstanding principal and interest on 

the maturity date of May 1, 2007. The 

amount of the balloon is projected at 

$31,000,000. However, this amount is 

subject to fluctuation based upon such 

variables as the actual monthly 

construction/operating draw, the 

number of occupied units in the Project, 

and the market rent for each unit. 

Interest only payments are being made 

for the first 3 years the Senior Loan is 

in effect. Then, these payments will be 

amortized, commencing June 1, 2005, 

based on a 25 year amortization 

schedule. The interest rate, which is an 

adjustable rate, was initially set at 6 

percent per annum. Effective October 

31, 2002, the interest rate floor was 

reduced to 5.25 percent, and then 

lowered to 4%, effective June 1, 2003.

The Senior Loan is secured by ‘‘[a]ll 

property, tangible or intangible, real or 

personal, or fixtures, now or hereafter 

subject to any security instrument or 

mortgage in favor of the [Senior] Lender 

securing payment of the obligations of 

the [LLC], including without limitation 

membership interests in the [LLC], 

permits, licenses and the Debt Reserve 

Account.’’ 5 The documents that 

specifically collateralize the Senior 

Loan are (a) the Collateral Assignment; 

(b) the Guaranty; (c) certain Senior 

Mortgages; (d) general Security 

Agreements contained in the Senior 

Mortgages; and (e) Assignments of

64786 Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 

6The Subordinate Mortgages refer to two 

components of the Plan Loan, i.e., the Building 

Loan Agreement covering the ‘‘hard costs’’ and the 

Non-Cost of Improvement Loan covering the ‘‘soft 

costs.’’

7According to Article II, Section 2.1 of the 

Unconditional and Continuing Limited Guaranty 

and Indemnity Agreement, ‘‘bad acts’’ include, but 

are not limited to, the following: fraud, material 

misrepresentation, concealment, failure to pay real 

estate taxes, misappropriation of rents, revenues, 

profits or security deposits by the Guarantor or at 

the direction of the Guarantor, or other acts of 

willful misconduct. It should be noted that the 

Guaranty does not extend to ‘‘bad acts’’ of any other 

party that could be imputed to the Plan, or to any 

passive conduct on the part of the Plan (e.g., a 

failure to investigate or disclose). 

Besides the Plan’s Guaranty, the Managing 

Member of the LLC and other entities provided 

Guaranties to the Senior Lender in the form of (a) 

Unconditional and Continuing Limited Guaranty 

and Indemnity Agreements similar to those 

executed by the Plan (These agreements were 

entered into by (i) the Managing Member; (ii) FCRG 

(the 80 percent owner of the Managing Member); 

(iii) FCO (the 20 percent owner of the Managing 

Member); (iv) FCRPC (FCRG’s parent); and (v) 

Forest City Enterprises, Inc. (FCEI)(FCRPC 

Corporation’s parent.); (b) a Completion Guaranty 

(A Guaranty of Completion was executed by the 

Managing Member’s parent, FFCEI. This blanket 

guaranty obligates FCEI (to the extent necessary) to 

complete the Project in accordance with the plans 

and specifications); and (c) Guaranties of the Plan 

Loan and the Plan’s Equity Interest in the Project 

(The Managing Member has provided the following 

guaranties in favor of the Plan as the subordinated 

lender: (i) A Non-Recourse Exception Guaranty; (ii) 

a Guaranty of Completion; (iii) a Guaranty of 

Completion (Equity); and (iv) a Guaranty of 

Fraudulent Acts (Equity)).

8 In order to induce a construction lender to fund 

a construction loan, the Applicant states that it is 

customary for the lending bank to be provided with 

certain guaranties of repayment from a party other 

than the borrower. Such a guaranty by a ‘‘deep 

pocket’’ is often required to make the lender 

comfortable that all or a portion of the loan it will 

make to the borrower will be repaid in the event 

of a default of the borrower. When the borrower is 

a REOC, the Applicant explains that it is customary 

for the construction lender to require the guaranty 

from one or more constituent members of the REOC. 

In the event that the lender will begin funding the 

construction loan before the members of the REOC 

have fully funded their equity commitments to the 

REOC, as is the case here, the Applicant indicates 

that the members will assign their interests in the 

REOC to the lender in the event of default.

9According to the Applicant, the Plan’s total 

potential liability in connection with its capital 

contribution, the Plan Loan, and the Collateral 

Assignment will not exceed the value of the 

investment the Plan actually makes in the Project. 

The total potential investment by the Plan in the 

Project equals the potential capital contribution of 

$7,206,337, plus a maximum Plan Loan of 

$13,412,674. Thus, the Plan’s total liability in 

connection with this investment will not exceed 

$20,619,011. Although the Guaranty separately 

provides that the Plan may be liable in connection 

with any wrongful acts it takes for losses incurred 

by the Senior Lender in connection with these 

wrongful acts, this potential liability, according to 

the Applicant, is akin to liability the Plan would 

incur with any willful and tortious actions it may 

take, and would not likely exceed $32.98 million 

or the amount of the outstanding loan.

Leases and Rents from Tenants 

contained in the Senior Mortgages.

During the construction loan period 

for the Senior Loan, interest was 

calculated on the basis of a 360 day year 

consisting of 12 months with the actual 

number of days of each month. 

However, during the permanent loan 

period, interest is being calculated on 

the basis of a 360 day year consisting of 

12, thirty day months. 

Once the Senior Loan was fully 

funded, an additional $13,412,674 in 

Project budget costs were funded by the 

Plan to the LLC in the form of a loan 

(i.e., the Plan Loan). The Plan Loan, 

dated May 24, 2002, requires a balloon 

payment of the outstanding principal 

and interest on the maturity date of 

April 30, 2006. The amount of the 

balloon will be $10,747,583. However, 

this amount is also subject to fluctuation 

based upon such variables as the actual 

monthly construction/operating draw, 

the number of occupied units in the 

project, and the market rent for each 

unit. Payments of principal and interest 

can be made only after the Senior 

Lender has determined that funds are 

available to pay the Plan and no default 

of the Senior Loan has occurred. Interest 

on the Plan Loan is equal to 15 percent 

per annum. 

Like the Senior Loan, the Plan Loan 

is bifurcated to comply with New York 

law. The Plan Loan is thus evidenced by 

a Building Loan Agreement dated May 

24, 2002, in the amount of $2,956,505 

for ‘‘hard costs’’ and a Non-Cost of 

Improvement Loan of the same date for 

$10,456,169 for ‘‘soft costs.’’

In addition, the Plan Loan is secured 

by ‘‘all of the property and interests 

encumbered by the Security 

Documents.’’ Such collateral includes 

(a) certain Subordinate Mortgages on the 

Project; 6 (b) certain Lease Assignments; 

(c) the Assignment of Project Documents 

and Development Rights; (d) the 

Limited Liability Interest Pledge 

Agreement; (e) the Guaranty of 

Completion; (f) the Non-Recourse 

Exception Guaranty; and (g) certain UCC 

Financing Statements.

In accordance with a General 

Subordination and Intercreditor 

Agreement, dated May 24, 2002, 

between the Applicant and the Senior 

Lender, the Senior Loan was made 

senior in priority to the Plan Loan. The 

remaining Project budget costs were 

funded to the LLC by the Plan’s initial 

capital contribution of $6,706,337 (or 

11.2 percent of the total Project budget 

costs) and by the Managing Member’s 

initial capital contribution of $6,706,337 

(or 11.2 percent of the total Project 

budget costs). As of January 31, 2004, 

each Member had made capital 

contributions to the LLC totaling 

$7,060,774 and the Senior Lender had 

funded $27,780,337 of the Senior Loan. 

The remainder of the Senior Loan was 

funded as of April 2004. The Plan began 

making monthly disbursements on the 

Plan Loan in June 2004.

5. In addition to the Plan’s agreement 

to subordinate the Plan Loan in favor of 

the Senior Loan, the Plan executed two 

documents in favor of the Senior Lender 

which are intended to provide 

additional comfort to the Senior Lender 

that the Senior Loan will be repaid. 

First, on May 24, 2002, both the Plan 

and the Managing Member executed the 

Collateral Assignment of Membership 

Interests Agreement (i.e., the Collateral 

Assignment) in favor of the Senior 

Lender, which provided that, in order to 

induce the Senior Lender to make the 

Senior Loan, each of the Members 

agreed to assign all their respective 

rights and interests to the LLC in such 

things as compensation, voting, access 

to the LLC’s records, proceeds or 

payments due the assignors, etc., in the 

event the LLC defaults on the Senior 

Loan. Second, the Plan executed an 

Unconditional and Continuing Limited 

Liability Guaranty and Indemnity 

Agreement (i.e., the Guaranty) in favor 

of the Senior Lender, which provided 

that the Plan would indemnify the 

Senior Lender for any losses incurred by 

the Senior Lender in connection with 

any affirmative ‘‘bad acts’’7 of the Plan 

in its capacity as a Member of the LLC.8

The subject transactions involve less 

than 1 percent of the fair market value 

of the total assets of the Plan.9

As a Member of the LLC, the Plan’s 

total potential liability with respect to 

its investment in the Project, is limited 

to: (a) Capital contributions it has made 

to the LLC; (b) amounts funded to the 

LLC under the Plan Loan; and (c) rights 

and interests given to the Senior Lender 

under the Collateral Assignment. Also, 

in the event the Plan ever engages in 

any of the specified ‘‘bad acts’’ that are 

described in the Guaranty, the Plan’s 

total potential liability will not exceed 

the greater of $32.98 million or the 

outstanding principal amount of the 

Senior Loan. 

6. In December 2002, shareholders of 

M&T Bank (MTB), the Senior Lender’s 

parent company, and Allied Irish Banks, 

PLC, (AIB) approved MTB’s acquisition 

of Allfirst (Allfirst), AIB’s U.S. 

subsidiary, with the resulting merger 

(the Merger) being consummated on 

April 1, 2003. Under the terms of the 

acquisition agreement, AIB received 

26.7 million shares of MTB common 

stock, plus approximately $886 million 

in cash, in exchange for all of the 

outstanding stock of Allfirst. (For 

purposes of this proposed exemption, 

the enlarged entity is referred to as

Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 64787

10Since the Applicant is a sole proprietor and the 

only participant in the Plan, there is no jurisdiction 

under Title I of the Act pursuant to 29 CFR 2510.3–

3(b). However, there is jurisdiction under Title II of 

the Act pursuant to section 4975 of the Code.

MTB/Allfirst). As a result of the Merger, 

the Senior Lender is now a company 

that is wholly owned by MTB/Allfirst. 

The Plan is obligated to the Senior 

Lender (a) to the extent of the Plan’s 

equity interest in the LLC in the event 

that the LLC defaults on the Senior Loan 

pursuant to the Collateral Assignment; 

and (b) in the form of the Guaranty in 

that it will reimburse the Senior Lender 

in the event the Plan commits certain 

affirmative ‘‘bad acts’’ in connection 

with the LLC. Accordingly, the 

Applicant requests an administrative 

exemption from the Department.

7. The Applicant represents that for 

reasons unrelated to the transactions 

described herein, Allfirst is a party in 

interest with respect to the Plan insofar 

as it provides two types of banking 

services to the Plan. First, the Plan 

maintains an operating checking 

account with Allfirst that is used to pay 

day-to-day administrative expenses of 

the Plan. Second, at least one local 

collection agent used by the Plan in 

connection with the collection of 

employee benefit plan contributions 

from local covered employers maintains 

a bank account with Allfirst in which it 

deposits the pension contributions 

made by contributing employers in the 

area. On a regular basis, the Plan sweeps 

the local Allfirst account of all the 

contributions that have been 

accumulated. 

8. The Applicant represents that 

Allfirst does not exercise discretionary 

authority or discretionary control 

respecting the management of the funds 

deposited with it or the administration 

of the Plan, and thus it is not a fiduciary 

with respect to the Plan. The Applicant 

further represents that there are no Plan 

assets invested in loans to Allfirst, in 

property leased to Allfirst, or in 

securities issued by Allfirst. In addition, 

the Applicant explains that Allfirst is 

not involved in any manner with the 

Plan Trustees’ decision to engage in 

these transactions and it will not be 

involved in any decision making or in 

an advisory capacity with respect to the 

Plan. 

9. The Applicant represents that prior 

to the Merger, MTB was not a party in 

interest with respect to the Plan. Thus, 

any possible benefits or guarantees 

given to MTB at the time of the Senior 

Loan were not prohibited transactions. 

The Applicant explains that since the 

Merger, MTB/Allfirst has continued to 

service the foregoing Allfirst accounts 

under the name of M&T Bank. As a 

result, MTB/Allfirst is a service provider 

to the Plan as defined in section 3(14)(B) 

of the Act. In addition, the Applicant 

states that the Senior Lender became a 

party in interest with respect to the Plan 

under section 3(14)(G) of the Act insofar 

as it is a corporation in which 50 

percent or more of the combined voting 

power is owned post-merger by MTB/

Allfirst. 

10. Finally, the Applicant states that 

the transactions were not part of an 

agreement, arrangement or 

understanding designed to benefit a 

party in interest. In this regard, the 

Applicant explains that the Senior 

Lender was not, at the time the 

underlying transactions were being 

entered into, a party in interest to the 

Plan, nor did the Plan have an 

expectation that Allfirst would be 

merged into the parent of the Senior 

Lender. The Applicant represents that 

the Plan’s primary intent in executing 

the Guaranty and the Collateral 

Assignment was to further its 

investment in the LLC, not to benefit a 

party in interest. 

11. In summary, the Applicant 

represents that the transactions have 

satisfied and will satisfy the statutory 

criteria for an exemption under section 

408(a) of the Act for the following 

reasons: 

(a) The Plan’s execution of the 

Collateral Assignment and the Guaranty 

was on terms no less favorable to the 

Plan than those which the Plan could 

obtain in an arm’s length transaction 

with an unrelated party; 

(b) The decisions on behalf of the Plan 

to invest in the LLC and consent to the 

terms of the Collateral Assignment and 

Guaranty in favor of the Senior Lender 

were made by fiduciaries which were 

independent of and unaffiliated with 

the Senior Lender; 

(c) At the time of the transactions, the 

Plan had total assets that were in excess 

of $5 billion, and not more than 1% of 

the Plan’s total assets was invested or 

will be invested in the LLC; 

(d) The other member of the LLC also 

executed Guaranties in favor of the 

Senior Lender; 

(e) As a Member of the LLC, the Plan’s 

total potential liability with respect to 

its investment in the real estate Project, 

will be limited to:

(1) Its capital contributions to the 

LLC. 

(2) Amounts funded under the Plan 

Loan. 

(3) Rights and interests given to the 

Senior Lender under the Collateral 

Assignment; and 

(f) In the event the Plan engages in 

any of the specified ‘‘bad acts’’ that are 

described in the Guaranty, the Plan’s 

total potential liability will not exceed 

the greater of $32.98 million or the 

outstanding principal amount of the 

Senior Loan. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be given to interested persons by 

either hand delivery or overnight mail 

within 4 days of the date of publication 

of the notice of pendency in the Federal 

Register. Such notice will include a 

copy of the notice of proposed 

exemption, as published in the Federal 

Register, and a supplemental statement, 

as required pursuant to 29 CFR 

2570.43(b)(2), which will inform 

interested persons of their right to 

comment on the proposed exemption. 

All comments are due within 34 days 

after publication of the proposed 

exemption in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. 

Arjumand A. Ansari of the Department, 

telephone (202) 693–8566. (This is not 

a toll-free number.) 

Roy A. Herberger Defined Benefit 

Pension Plan (the Plan) Located in 

Phoenix, Arizona 

[Application No. D–11259] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 4975(c)(2) of the 

Code and in accordance with the 

procedures set forth in 29 CFR part 

2570, subpart B (55 FR 32836, August 

10, 1990). If the exemption is granted, 

the sanctions resulting from the 

application of section 4975 of the Code, 

by reason of section 4975(c)(1)(A) 

through (E) of the Code, shall not apply 

to the three past in-kind contributions 

(the Contribution(s)) to the Plan of 

common stock (the Stock) of Pinnacle 

West Capital Corporation (PNW) by Roy 

A. Herberger, Jr. (the Applicant), a 

disqualified party with respect to the 

Plan,10 provided that the following 

conditions are met:

(a) The transactions involved publicly 

traded securities, the fair market values 

of which were based upon published 

prices at the time of each Contribution; 

(b) The cumulative value of the 

Contributions represented no more than 

18% of the total assets of the Plan; 

(c) The Plan has not paid any 

commissions, costs or other expenses in 

connection with the Contributions; 

(d) The Applicant, who is the only 

person affected by the transactions, 

believes that the transactions were in 

the best interest of the Plan; 

(e) The Applicant made the 

Contributions based on erroneous 

advice from his tax adviser; and

64788 Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 

11The Department has no jurisdiction with 

respect to what constitutes correction with respect 

to a prohibited transaction under section 4975 of 

the Code. Therefore, the Department expresses no 

opinion herein on the whether the transfer of 900 

shares of the Stock back to the Plan constituted a 

correction within the meaning of the Code.

(f) The terms of the transactions 

between the Plan and the Applicant are 

no less favorable to the Plan than terms 

negotiated at arm’s length under similar 

circumstances between unrelated third 

parties. 

Summary of Facts and Representations 

1. The Plan is a defined benefit 

pension plan. The Plan administrator is 

the Applicant and is the sole participant 

in the Plan. The Applicant receives 

income from serving on various boards 

of directors. A portion of his fees for 

serving on the board of directors of 

PNW is paid in the form of common 

stock of PNW. The Applicant is a nonemployee outside director of PNW. 

PNW is a public company, whose stock 

is publicly traded on the New York 

Stock Exchange. The Applicant 

beneficially owns 8660 shares of the 

Stock.

2. On July 23, 2002, the Applicant 

contributed 900 shares of the Stock from 

his brokerage account to the Plan. On 

August 14, 2002, the Applicant 

contributed another 2700 shares of the 

Stock from his brokerage account to the 

Plan. Finally, on July 7, 2003, the 

Applicant contributed another 900 

shares of the Stock to the Plan. 

However, these 900 shares were 

transferred back to the Plan months later 

and cash was contributed in its place 

when it was discovered that the 

Contributions constituted prohibited 

transactions. The Applicant represents 

that the third transaction was corrected 

within the meaning of the Code.11 The 

values of the Stock used for purposes of 

the contributions were as follows: (1) 

July 23, 2002 (900 shares) $28.05 

(Closing Price); (2) August 14, 2002 

(2700 shares) $33.53 (Closing Price); and 

(3) July 7, 2003 (900 shares) $37.31 

(Closing Price).

3. The Applicant’s motivation for 

contributing the Stock, rather than 

selling the Stock, contributing the cash 

proceeds and then repurchasing the 

Stock, was to save brokerage fees. The 

Stock contributed to the Plan was and 

is publicly traded on the New York 

Stock Exchange and the price was 

determined based on the closing price of 

the Stock on the day of each 

Contribution. 

4. Prior to making the first 

Contribution, the Applicant consulted a 

Deloitte & Touche LLP (Deloitte & 

Touche) tax specialist regarding the 

Contributions and was mistakenly 

advised that the Contributions were not 

prohibited transactions. Deloitte & 

Touche acknowledges providing the 

erroneous advice regarding the 

Contributions. 

5. On a cumulative basis, the 

Contributions never constituted more 

than 18% of the assets of the Plan. The 

value of the Stock has increased since 

the Contributions. 

6. In summary, the Applicant 

represent that the transactions satisfy 

the statutory criteria for an 

administrative exemption under section 

4975(c)(2) of the Code because: (a) The 

Stock was valued at its fair market value 

at the time of each Contribution; (b) the 

cumulative value of the Contributions 

represented no more than 18% of the 

total assets of the Plan; (c) the Plan has 

not paid any commissions, costs or 

other expenses in connection with the 

Contributions; (d) the Applicant, who is 

the only person affected by the 

transactions, believes that the 

Contributions were in the best interest 

of the Plan; (e) the Applicant made the 

Contributions based on erroneous 

advice from his tax adviser; and (f) the 

terms of the transactions between the 

Plan and the Applicant are no less 

favorable to the Plan than terms 

negotiated at arm’s length under similar 

circumstances between unrelated third 

parties. 

Notice to Interested Persons 

It has been determined that there is no 

need to distribute the notice of proposed 

exemption (the Notice) to interested 

persons. Comments and requests for a 

hearing are due thirty (30) days after 

publication of the Notice in the Federal 

Register.

FOR FURTHER INFORMATION CONTACT:

Khalif Ford of the Department, 

telephone (202) 693–8540. (This is not 

a toll-free number.)

The North Texas Electrical Joint 

Apprenticeship and Training Trust 

Fund (the Plan) Located in Grand 

Prairie, Texas 

[Application No. L–11245] 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the Act 

and in accordance with the procedures 

set forth in 29 CFR part 2570, subpart 

B (55 FR 32836, August 10, 1990). If the 

exemption is granted, the restrictions of 

section 406(a) of the Act shall not apply 

to the sale (the Sale(s)) of (1) a 1.112 

acres of land (Parcel 1) to the North 

Texas Chapter, National Electrical 

Contractors Association (NECA), a party 

in interest to the Plan; and (2) a 5.383 

acres of land (Parcel 2) to Local Union 

#20, International Brotherhood of 

Electrical Workers (IBEW), a party in 

interest to the Plan. This proposed 

exemption is conditioned upon 

adherence to the material facts and 

representations described herein and 

upon the satisfaction of the following 

requirements: 

(a) The Sales are one-time 

transactions for cash; 

(b) The Plan does not pay any 

commissions, costs or other expenses in 

connection with the Sale of Parcel 1 and 

Parcel 2 (collectively the Parcels); and 

(c) The Plan will receive an amount 

equal to the greater of: (i) $145,000 or 

the current fair market value of Parcel 

1 as established by an independent, 

qualified, appraiser and updated at the 

time of the Sale; and (ii) $655,000; or 

the current fair market value of Parcel 

2 as established by an independent, 

qualified, appraiser and updated at the 

time of the Sale; and 

(d) The terms of the Sales will be no 

less favorable to the Plan than terms it 

would have received under similar 

circumstances in an arm’s length 

negotiation with an unrelated party. 

Summary of Facts and Representations 

1. The Plan is an apprenticeship 

training trust fund. The trustees (the 

Trustees) consist of three members 

appointed by IBEW and three members 

representing management appointed by 

NECA. The Trustees have investment 

discretion over all assets of the Plan. As 

of March 25, 2004, the Plan has 230 

participants. The Plan’s assets have an 

aggregate fair market value of 

$1,807,444.63 as of December 2003. The 

Parcels have an estimated fair market 

value of $800,000 and constitute 

approximately 44% of the total value of 

Plan assets. The Plan is organized 

exclusively for educational purposes 

within the meaning of section 501(c)(3) 

of the Code and operates as a tax exempt 

nonprofit fund solely and exclusively 

for the purposes of providing a program 

for the training and education of 

electrical apprentices, journeymen, or 

other appropriate persons, and programs 

in furtherance thereof and to defray the 

reasonable expense of administering the 

apprenticeship and training programs 

established under the provisions of the 

collective bargaining agreement. 

2. The Trustees represent that the Sale 

is in the interest of the Plan, and its 

participants and beneficiaries. The Plan 

participants (the Participants) currently 

have to drive from the school in Grand 

Prairie to the IBEW office in Dallas for 

job referrals, benefit information, and 

other business that is handled for them

Federal Register / Vol. 69, No. 215 / Monday, November 8, 2004 / Notices 64789

by the union as their collective 

bargaining representative. These offices 

are approximately twenty-five miles 

apart. NECA handles the collection and 

disbursement of benefit funds for the 

Participants, and their office is in 

Arlington, TX which is approximately 

three miles away from the school. IBEW 

and NECA seek to purchase the Parcels 

from the Plan and build offices at this 

location which would be much more 

convenient for the Participants. 

If the exemption is denied, the parties 

in interest, IBEW and NECA, will not be 

able to build their buildings next to the 

Plan facility. This will cause the Plan 

participants to have to drive 

approximately twenty-five miles to the 

IBEW office and three miles to the 

NECA office in order to conduct 

business. NECA and IBEW have not 

indicated any desire to build a new 

building unless it is next to Plan. The 

transactions will be in the best interests 

of the Plan and will also make the 

school building more accessible to 

members of the IBEW and NECA for 

their training needs.

3. On July 26, 2002 an unimproved 

11.7 acre of real property (the Land) was 

conveyed to the Plan by an unrelated 

third party. Fifty percent of the Land 

was donated to the Plan and fifty 

percent was sold to the Plan for 

$575,000. The Parcels are sections of the 

Land that the applicant now seeks to 

sell. Parcel 1 consists of a vacant 

unimproved parcel of land containing 

an area of approximately 1.112 acres 

located at W. Tarrant Road, Grand 

Prairie, Dallas County, Texas. Parcel 2 

consists of a vacant unimproved parcel 

of land containing an area of 

approximately 5.383 acres located at W. 

Tarrant Road, Grand Prairie, Dallas 

County, Texas. The remaining Land is 

road accessible and is surplus property 

for the Plan. 

4. The Parcels were appraised on 

October 13, 2003, by Donald J. 

Sherwood (Mr. Sherwood), a MAI 

Certified General Real Estate Appraiser. 

Mr. Sherwood is independent of the 

parties to the transactions and is an 

appraiser with Integra Realty Resources 

located in Dallas, Texas. 

Mr. Sherwood determined the best 

use and highest value of the Parcels was 

associated with valuing the Parcels with 

the so-called direct sales comparison 

method. Under this method, sales of 

similar land in the market area are 

compared to the subject to arrive at an 

indication of value. In arriving at value 

conclusions, the tracts are compared as 

to the rights conveyed, financing terms, 

sale conditions, market conditions, 

location, and physical characteristics. 

Therefore, based on the valuation 

procedures employed by Mr. Sherwood, 

he determined that the fair market value 

of the Parcels was as follows: (i) Parcel 

1 = $145,000; and (ii) Parcel 2 = 

$655,000. 

5. The Plan will receive an amount 

equal to the greater of: (i) $145,000; or 

(ii) the current fair market value of 

Parcel 1 as established by an 

independent, qualified, appraiser 

updated at the time of the Sale. The 

Plan also will receive an amount equal 

to the greater of: (i) $655,000; or (ii) the 

current fair market value of Parcel 2 as 

established by an independent, 

qualified, appraiser updated at the time 

of the Sale. 

6. In summary, the applicant 

represents that the subject transaction 

satisfies the statutory criteria contained 

in section 408(a) of the Act and section 

4975(c)(2) of the Code for the following 

reasons: 

(a) The Sale is a one-time transaction 

for cash; 

(b) The Plan does not pay any 

commissions, costs or other expenses in 

connection with the Sale; 

(c) The Plan will receive an amount 

equal to the greater of: (i) $145,000; or 

(ii) the current fair market value of 

Parcel 1 as established by an 

independent, qualified, appraiser and 

updated at the time of the Sale; and the 

Plan will receive an amount equal to the 

greater of: (i) $655,000; or (ii) the 

current fair market value of Parcel 2 as 

established by an independent, 

qualified, appraiser and updated at the 

time of the Sale; and 

(d) The terms of the Sales will be no 

less favorable to the Plan than terms it 

would have received under similar 

circumstances in an arm’s length 

negotiation with an unrelated party. 

Notice to Interested Persons: Notice of 

the proposed exemption shall be given 

to all interested persons in the manner 

agreed upon by the applicant and 

Department within 15 days of the date 

of publication in the Federal Register. 

Comments and requests for a hearing are 

due forty-five (45) days after publication 

of the notice in the Federal Register.

FOR FURTHER INFORMATION CONTACT:

Khalif Ford of the Department, 

telephone (202) 693–8540 (this is not a 

toll-free number).

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

408(a) of the Act and/or section 

4975(c)(2) of the Code does not relieve 

a fiduciary or other party in interest or 

disqualified person from certain other 

provisions of the Act and/or the Code, 

including any prohibited transaction 

provisions to which the exemption does 

not apply and the general fiduciary 

responsibility provisions of section 404 

of the Act, which, among other things, 

require a fiduciary to discharge his 

duties respecting the plan solely in the 

interest of the participants and 

beneficiaries of the plan and in a 

prudent fashion in accordance with 

section 404(a)(1)(b) of the Act; nor does 

it affect the requirement of section 

401(a) of the Code that the plan must 

operate for the exclusive benefit of the 

employees of the employer maintaining 

the plan and their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of the Act 

and/or section 4975(c)(2) of the Code, 

the Department must find that the 

exemption is administratively feasible, 

in the interests of the plan and of its 

participants and beneficiaries, and 

protective of the rights of participants 

and beneficiaries of the plan; 

(3) The proposed exemptions, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction; and 

(4) The proposed exemptions, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in each 

application are true and complete, and 

that each application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption.

Signed at Washington, DC, this 1st day of 

November, 2004. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor.

[FR Doc. 04–24648 Filed 11–5–04; 8:45 am] 

BILLING CODE 4510–29–P

DEPARTMENT OF LABOR

Bureau of Labor Statistics 

Proposal to Revise Method for 

Estimation of Monthly Labor Force 

Statistics for Certain Subnational 

Areas; Request for Comments

AGENCY: Bureau of Labor Statistics, 

Labor.

ACTION: Request for comments on 

proposed action.