59434 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 

8For purposes of this exemption, references to 

specific provisions of Title I of the Act, unless 

otherwise specified, refer also to the corresponding 

provisions of the Code. 

consideration of this request, the 

Department has determined that it is 

appropriate to modify the proposed 

exemption in the manner requested by 

the Applicants and, accordingly, has 

revised section III(h) of the final 

exemption. 

After full consideration and review of 

the entire record, including the written 

comment, the Department has 

determined to grant the exemption, as 

modified herein. The comment 

submitted by the Applicants to the 

Department has been included as part of 

the public record of the exemption 

application. The complete application 

file, including all supplemental 

submissions received by the 

Department, is available for public 

inspection in the Public Disclosure 

Room of the Employee Benefits Security 

Administration, Room N–1513, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

For a complete statement of the facts 

and representations supporting the 

Department’s decision to grant this 

exemption, refer to the Notice published 

on October 6, 2010 (75 FR 61932). 

FOR FURTHER INFORMATION CONTACT: 

Christopher Motta of the Department, 

telephone (202) 693–8544. (This is not 

a toll-free number.) 

Pacific Capital Bancorp Amended and 

Restated Incentive and Investment and 

Salary Savings Plan (the Plan) Located 

in Santa Barbara, California 

[Prohibited Transaction Exemption No. 

2011–20; Exemption Application No. 

D–11659] 

Exemption 

Section I: Transactions 

Effective October 27, 2010, the 

restrictions of sections 406(a)(1)(A), 

406(a)(1)(E), 406(a)(2), 406(b)(1), 

406(b)(2), and 407(a)(1)(A) of the Act 

and the sanctions resulting from the 

application of section 4975 of the Code, 

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

4975(c)(1)(E) of the Code,8 shall not 

apply: 

(1) To the acquisition of certain rights 

(the Rights) by the Plan in connection 

with an offering (the Offering) of shares 

of the common stock (the Stock) in 

Pacific Capital Bancorp (Bancorp) by 

Bancorp, a party in interest with respect 

to the Plan, and 

(2) To the holding of the Rights 

received by the Plan during the 

subscription period of the Offering; 

provided that the conditions as set forth 

in section II of this exemption were 

satisfied for the duration of the 

acquisition and holding. 

Section II: Conditions 

The relief provided in this exemption 

is conditioned upon adherence to the 

material facts and representations 

described, herein, and as set forth in the 

application file and upon compliance 

with the conditions, as set forth in this 

exemption. 

(1) The receipt of the Rights by the 

Plan occurred in connection with the 

Offering and was made available by 

Bancorp on the same terms to all 

shareholders of the Stock of Bancorp; 

(2) The acquisition of the Rights by 

the Plan resulted from an independent 

act of Bancorp, as a corporate entity, 

and all holders of the Rights, including 

the Plan, were treated in the same 

manner with respect to the acquisition 

of such Rights; 

(3) Each shareholder of the Stock, 

including the Plan, received the same 

proportionate number of Rights based 

on the number of shares of Stock of 

Bancorp held by such shareholder; 

(4) The Board of Directors of Bancorp 

decided that the Offering should be 

made available to all shareholders of the 

Stock, including the Plan, as record 

owner of the Stock held in the Plan on 

behalf of the accounts of the individual 

participants (the Invested Participants) 

all or a portion of whose accounts in the 

Plan are invested in the Stock, in 

accordance with provisions under such 

Plan for individually-directed 

investment of such accounts; 

(5) The decision to exercise the Rights 

or to refrain from exercising the Rights 

was made by each of the Invested 

Participants in accordance with the 

provision under the Plan for 

individually-directed accounts; and 

(6) No brokerage fees, commissions, 

subscription fees, or any other charges 

were paid by the Plan with respect to 

the Offering, and no brokerage fees, 

commissions, or other monies were paid 

by the Plan to any broker in connection 

with the exercise of the Rights. 

DATES: Effective Date: This exemption is 

effective, October 27, 2010, the date the 

Plan acquired the Rights. 

For a more complete statement of the 

facts and representations supporting the 

Department’s decision to grant this 

exemption refer to the Notice of 

Proposed Exemption published on June 

13, 2011, at 76 FR 34266. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Angelena C. Le Blanc 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 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) This exemption is supplemental to 

and not in derogation of, any other 

provisions of the Act and/or the Code, 

including statutory or administrative 

exemptions and transactional 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 

(3) The availability of this exemption 

is subject to the express condition that 

the material facts and representations 

contained in the application accurately 

describes all material terms of the 

transaction which is the subject of the 

exemption. 

Signed at Washington, DC, this 21st day of 

September 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–24657 Filed 9–23–11; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Exemptions From Certain 

Prohibited Transaction Restrictions 

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 


jlentini on DSK4TPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 59435 

1For purposes of this proposed exemption, 

references to section 406 of ERISA should be read 

to refer as well to the corresponding provisions of 

section 4975 of the Code. 

2Prior to August 25, 2011, the Plan was known 

as the Unitrin, Inc. Pension Plan. 

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

the Internal Revenue Code of 1986 (the 

Code). This notice includes the 

following proposed exemptions: D– 

11676 The Kemper Corporation Pension 

Plan (the Plan); L–11618 OregonWashington Carpenters Employers 

Apprenticeship and Training Trust 

Fund (the Plan); and L–11647 R+L 

Carriers Shared Services, LLC 

DATES: 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. 

ADDRESSES: 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. 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– 

5700, U.S. Department of Labor, 200 

Constitution Avenue, N.W., 

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, N.W., 

Washington, DC 20210. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

you do not want to be publiclydisclosed. All comments and hearing 

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

SUPPLEMENTARY INFORMATION: 

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). 

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 Kemper Corporation Pension Plan 

(the Plan) Located in Chicago, Illinois 

Exemption Application Number 

D–11676 

Proposed Exemption 

The Department is considering 

granting an exemption under the 

authority of section 408(a) of the 

Employee Retirement Income Security 

Act of 1974 (ERISA or the Act) and 

section 4975(c)(2) of the Internal 

Revenue Code of 1986, as amended (the 

Code), and in accordance with the 

procedures set forth in 29 CFR part 

2570, Subpart B (55 FR 32836, 32847, 

August 10, 1990).1 If the proposed 

exemption is granted, the restrictions of 

section 406(a)(1)(A) and (D), and 

406(b)(1) and (2) of the Act and the 

sanctions resulting from the application 

of section 4975 of the Code, by reason 

of section 4975(c)(1)(A), (D) and (E) of 

the Code, shall not apply, effective 

September 1, 2011, to the one-time, inkind contribution (the Contribution) of 

shares of the common stock of Intermec, 

Inc. (the Stock) to the Kemper 

Corporation Pension Plan (the Plan) 2 by 

the Kemper Corporation (Kemper or the 

Applicant), a party in interest with 

respect to the Plan, provided that the 

following conditions are satisfied: 

(a) The Applicant makes cash 

contributions to the Plan to the extent 

that the cumulative proceeds from the 

sale of the Stock at each contribution 

due date (determined under section 

303(j) of the Act) are less than the 

cumulative cash contributions the 

Applicant would have been required to 

make to the Plan, in the absence of the 

Contribution. Such cash contributions 

shall be made until all of the Stock 

contributed to the Plan is sold; 

(b) The Applicant contributes to the 

Plan such cash amounts as are needed 

for the Plan to attain an Adjusted 

Funding Target Attainment Percentage 

(AFTAP) of at least 80% as of January 

1, 2012, as determined by the Plan’s 

actuary (the Actuary), without taking 

into account any unsold Stock as of 

April 1, 2012; 

(c) Solely for purposes of determining 

the Plan’s minimum funding 

requirements, AFTAP and funding 

target attainment percentage, the 

Actuary will not count as a Plan asset 

any Stock that has not been liquidated 

as a contribution to the Plan; 

(d) For purposes of determining Plan 

contribution amounts, the Stock shall be 

considered a contribution only at the 

time it is sold, with the contribution 

amount being the lesser of the proceeds 

from the sale of the Stock, or the value 

of the Stock on the date of the 

Contribution as determined by the 

Independent Fiduciary described below; 

(e) The Stock represents no more than 

20% of the fair market value of the total 

assets of the Plan at the time it is 

contributed to the Plan; 

(f) The Plan pays no commissions, 

costs or other expenses in connection 

with the contribution, holding or 

subsequent sale of the Stock and any 

such expenses paid by the Applicant are 

not treated as a contribution to the Plan; 

(g) The terms of the Contribution 

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 

parties; 

(h) Fiduciary Counselors Inc. (the 

Independent Fiduciary) represents the 


jlentini on DSK4TPTVN1PROD with NOTICES
59436 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 

3Prior to August 25, 2011, Kemper was known as 

Unitrin, Inc. 

4Prior to August 25, 2011, the Master Trust was 

known as the Unitrin, Inc. Master Retirement Trust. 

5The Applicant is not required to make any cash 

contributions to the Plan for the 2011 Plan Year 

until September 15, 2012, because the Plan has 

satisfied the quarterly contribution requirements 

through offsetting such contributions against its 

credit balance. The minimum required contribution 

for the 2011 Plan Year is $23,216,585, and the 

credit balances available to satisfy the minimum 

required contributions total $18,627,878. The 

difference of $4,588,707 is the amount of the 

required contribution due as of January 1, 2011, but, 

under section 303(j) of the Act, this amount is not 

required to be contributed to the Plan until 

September 15, 2012. However, if the amount is 

contributed after January 1, 2011, it must be 

increased by interest. Thus, the adjusted minimum 

required contribution as of September 15, 2012 is 

$5,093,876. 

interests of the Plan, the participants 

and beneficiaries with respect to the 

Contribution; 

(i) The Independent Fiduciary 

determines that the Contribution is in 

the interests of the Plan and of its 

participants and beneficiaries and is 

protective of the rights of participants 

and beneficiaries of the Plan; and 

(j) The Independent Fiduciary 

monitors the transaction on a 

continuing basis and takes all 

appropriate actions to safeguard the 

interests of the Plan to ensure that the 

transaction remains in the interests of 

the Plan, and, if not, takes appropriate 

action available under the 

circumstances. 

Effective Date: If granted, this 

proposed exemption will be effective as 

of September 1, 2011. 

Summary of Facts and Representations 

1. The Kemper Corporation 3 (Kemper 

or the Applicant) is a diversified 

insurance holding company, with 

subsidiaries that principally provide 

life, automobile, homeowners and other 

insurance products for individuals. The 

Applicant reported total shareholders’ 

equity of over $2.1 billion as of June 30, 

2011 and its debt is rated investment 

grade by S&P, Moody’s and Fitch. The 

Applicant is the sponsor and a named 

fiduciary of the Kemper Corporation 

Pension Plan (the Plan). 

2. The Plan is a defined benefit 

pension plan that is tax-qualified under 

section 401(a) of the Code. As of January 

1, 2011, the Plan had approximately 

9,800 participants and beneficiaries. 

The fair market value of invested Plan 

assets as of June 30, 2011 was $360.9 

million. The Plan’s independent 

actuary, AON Hewitt (the Actuary) has 

determined that the Plan’s Adjusted 

Funding Target Attainment Percentage 

(AFTAP) as of January 1, 2011 is 80%. 

3. The Kemper Corporation Master 

Retirement Trust (Master Trust) 4 holds 

the assets of the Plan. The Plan’s 

Investment Committee is the named 

fiduciary for Plan investments under the 

Master Trust. The Applicant serves as 

the Plan Administrator for the Plan. The 

Northern Trust Company serves as 

trustee of the Master Trust. The 

Investment Committee has the 

authority, under the terms of the Master 

Trust, to appoint one or more 

investment managers with respect to a 

portion or all of the Plan’s assets. 

4. The Applicant has requested 

exemptive relief from the Department 

for the proposed one-time, in-kind 

contribution (the Contribution) of shares 

of the common stock of Intermec, Inc. 

(the Stock) to the Kemper Corporation 

Pension Plan (the Plan). The 

Contribution represents an in-kind 

contribution to the Plan from the 

Applicant, a party in interest, that 

would, in the absence of the exemption 

proposed herein, violate section 

406(a)(1)(A) and (D) and section 

406(b)(1) and (b)(2) of the Act. 

5. All required minimum 

contributions for the 2011 Plan Year 

have been made to the Plan, except for 

a contribution in the amount of 

$5,093,876, which is due on September 

15, 2012. Thus, the Contribution is not 

needed to satisfy a required minimum 

contribution by September 15, 2011.5

6. The Applicant represents that the 

Contribution improves the benefit 

security of participants because it is 

substantially in excess of the 

contribution required for the 2011 Plan 

year and is being made one year in 

advance of the date the final 

contribution for the 2011 Plan year is 

due. To provide added protection to the 

Plan and its participants, the Applicant 

has agreed to make cash contributions to 

the Plan to the extent that the 

cumulative proceeds from the sale of the 

Stock at each contribution due date 

(determined under section 303(j) of the 

Act) are less than the cumulative cash 

contributions the Applicant would have 

been required to make to the Plan, in the 

absence of the Contribution. This 

commitment will remain in effect until 

all of the Stock contributed to the Plan 

has been sold. 

7. Trinity Universal Insurance 

Company (Trinity), a wholly owned 

subsidiary of the Applicant, owns 

7,661,607 shares of the Stock, with an 

approximate fair market value of $56.47 

million based upon the closing price of 

the Stock on August 31, 2011. The 

Applicant and its subsidiaries acquired 

the Stock on November 3, 1997 in 

connection with Western Atlas Inc.’s 

spin-off of Intermec, Inc. (formerly 

known as UNOVA Inc.) to the 

shareholders of Western Atlas. Intermec, 

Inc. (Intermec) is a publicly traded 

company listed on the New York Stock 

Exchange under the symbol ‘‘IN.’’ The 

Applicant proposes to acquire the Stock 

owned by Trinity and contribute it to 

the Plan. The Stock would represent 

approximately 13.5% of invested Plan 

assets (based on their fair market value 

as of June 30, 2011), on a pro forma 

basis, after taking into account the 

Contribution (based on the closing price 

of the Stock on August 31, 2011). 

8. The Investment Committee has 

appointed Fiduciary Counselors Inc. as 

the Independent Fiduciary to represent 

the Plan in connection with the 

proposed transaction. The Independent 

Fiduciary is an investment adviser, 

within the meaning of the Investment 

Advisers Act of 1940, which primarily 

acts as an independent fiduciary for 

employee benefit plans, such as the 

Plan. Fiduciary Counselors Inc. has 

represented that it is qualified to assume 

these responsibilities and is 

independent of the Applicant and its 

affiliates. The Independent Fiduciary is 

responsible for determining whether 

and on what terms the Stock should be 

contributed to the Plan; reviewing and 

approving the process for liquidating 

the Stock as quickly as is prudent, 

subject to the limitations hereafter 

described and its fiduciary obligations; 

and voting proxies and responding to 

tender offers with respect to the Stock. 

The Independent Fiduciary has 

determined that the contribution of the 

Stock to the Plan is in the interests of 

the Plan and its participants. The 

Independent Fiduciary represents that 

the Contribution will significantly 

improve the funding of the Plan, and 

that the Contribution is significantly in 

excess of required minimum funding. 

9. The Independent Fiduciary 

represents that Intermec is a global 

business that designs, develops, 

integrates sells and resells wired and 

wireless automated identification and 

data collection products and related 

services. As of July 3, 2011, Intermec’s 

assets were $870 million and liabilities 

totaled $414 million. Intermec’s debt-toequity ratio is just 17%. Intermec’s 

operating profit from continuing 

operations since 2009 has been at the 

breakeven point, excluding additional 

restructuring and acquisition costs. 

10. The Stock is a marketable security 

that trades on the New York Stock 

Exchange. There are, however, 

limitations on how quickly the Stock 

can be liquidated because of Rule 144 of 

the Securities and Exchange 

Commission (Rule 144). Rule 144 limits 

the amount of Stock that the Applicant 


jlentini on DSK4TPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 59437 

6See 17 CFR 230.144(a)(1)(iii). 

7 In determining the Plan’s AFTAP, Kemper will 

only count Stock that has been liquidated as of 

April 1, 2012. This date is being used as a 

measurement for Stock sales because a 

determination must be made as of April 1, 2012 that 

the AFTAP is at least 80% to avoid the participants 

being subject to benefit restrictions. The Applicant 

represents that these benefit restrictions would 

affect a significant number of Plan participants. The 

Plan provides for elective lump sum distributions 

upon termination of employment for certain 

participants. The Applicant states that currently up 

to 650 participants would be entitled to a lump sum 

distribution upon termination of employment 

(excluding participants whose benefits have a value 

of $5,000 or less and thus, would not be subject to 

benefit restrictions). In addition, certain 

participants have made employee contributions to 

the Plan which they are entitled to withdraw. If the 

benefit restrictions become applicable, the Plan’s 

actuary estimates that approximately 92 

participants would have the right to withdraw these 

contributions restricted. 

and its affiliates may sell during any 

three-month period because the 

Applicant and its affiliates own more 

than 10% of Intermec’s outstanding 

shares. The Applicant represents that 

after the Contribution, the Plan would 

be subject to Rule 144 because the Plan 

would own more than 10% of the 

outstanding stock of Intermec.6

Assuming that the current facts and 

circumstances and Rule 144 

requirements remain in effect, the 

Applicant estimates that Rule 144 will 

limit the shares of Stock that may be 

sold by the Plan until early May, 2012. 

The Applicant further estimates that 

based upon the volume of Stock that the 

Applicant has been able to sell over the 

last several months, the Stock would 

likely be completely liquidated by the 

Plan by July, 2012. 

10. The Independent Fiduciary has 

retained a valuation firm, Murray, 

Devine & Co., Inc., headquartered in 

Philadelphia, Pennsylvania, to advise it 

on whether a liquidity discount should 

be applied to the market value of the 

Stock. The Applicant has agreed to use 

the value of the Stock as determined by 

the Independent Fiduciary for the 

purpose of determining the amount of 

the Contribution for funding purposes. 

11. The Applicant represents that the 

Contribution is administratively 

feasible, in the interests of the Plan, its 

participants and beneficiaries and 

would be protective of the Plan and its 

participants and beneficiaries. The 

Applicant believes that the Contribution 

is administratively feasible because it is 

a one-time only Contribution that would 

require no further action by the 

Department. Moreover, the Plan will 

pay no fees, commissions or costs with 

respect to the Contribution or the sale of 

the Stock by the Plan. 

The Applicant states that the 

Contribution is in the interests of the 

participants and beneficiaries because 

the Contribution will increase the 

benefit security of the participants by 

adding assets to the Plan that are 

substantially in excess of the 

contribution amount under the 

minimum funding requirements. The inkind Contribution is the stock of a wellestablished public company traded on 

the New York Stock Exchange so the 

Plan has a market to sell the Stock. 

The Applicant believes that the 

Contribution is protective of the Plan 

and its participants and beneficiaries 

because an Independent Fiduciary has 

been appointed to represent the Plan, its 

participants and beneficiaries. Any 

potential downside to the Contribution 

is addressed and effectively eliminated 

by: 

(a) The Applicant’s commitment to 

make additional cash contributions to 

the Plan if the cumulative proceeds 

from the sale of the Stock at each 

contribution due date are less than the 

cumulative minimum amounts that 

would otherwise have been contributed 

to the Plan in cash, until all of the Stock 

is sold; 

(b) The Applicant’s commitment to 

contribute such cash amounts as are 

needed for the Plan’s AFTAP to be at 

least 80% as of January 1, 2012, without 

taking into account any unsold Stock as 

of April 1, 2012; 7 and 

(c) The Applicant’s agreement to only 

count the Stock to the extent that it has 

been liquidated in determining the 

Plan’s contributions, minimum funding 

requirements, the AFTAP and the 

funding target attainment percentage. 

This agreement means that the 

contribution of Stock serves as security 

for the obligation that the Applicant has 

to contribute cash to the Plan if the 

proceeds from sales of the Stock are not 

equal to what those cash contributions 

would have been. 

12. In summary, the Applicant 

represents that the Contribution will 

satisfy the statutory requirements for an 

exemption under section 408(a) of the 

Act because: 

(a) The Applicant will make cash 

contributions to the Plan to the extent 

that the cumulative proceeds from the 

sale of the Stock at each contribution 

due date (determined under section 

303(j) of the Act) are less than the 

cumulative cash contributions the 

Applicant would have been required to 

make to the Plan, in the absence of the 

Contribution. Such cash contributions 

shall be made until all of the Stock 

contributed to the Plan is sold; 

(b) The Applicant will contribute to 

the Plan such cash amounts as are 

needed for the Plan to attain an AFTAP 

of at least 80% as of January 1, 2012, as 

determined by the Actuary, without 

taking into account any unsold Stock as 

of April 1, 2012; 

(c) For purposes of determining the 

Plan’s minimum funding requirements, 

AFTAP and funding target attainment 

percentage, the Actuary will not count 

as a Plan asset any Stock that has not 

been liquidated as a contribution to the 

Plan; 

(d) For purposes of determining Plan 

contribution amounts, the Stock shall be 

considered a contribution only at the 

time it is sold, with the contribution 

amount being the lesser of the proceeds 

from the sale of the Stock, or the value 

of the Stock on the date of the 

Contribution as determined by the 

Independent Fiduciary; 

(e) The Stock will represent no more 

than 20% of the fair market value of the 

total assets of the Plan at the time it is 

contributed to the Plan; 

(f) The Plan will pay no commissions, 

costs or other expenses in connection 

with the contribution, holding or 

subsequent sale of the Stock, and any 

such expenses paid by the Applicant 

will not be treated as a contribution to 

the Plan; 

(g) The terms of the Contribution 

between the Plan and the Applicant will 

be no less favorable to the Plan than 

terms negotiated at arm’s length under 

similar circumstances between 

unrelated parties; 

(h) An Independent Fiduciary will 

represent the interests of the Plan, the 

participants and beneficiaries with 

respect to the Contribution; 

(i) The Independent Fiduciary will 

have determined that the Contribution 

is in the interests of the Plan and of its 

participants and beneficiaries and 

protective of the rights of participants 

and beneficiaries of the Plan; 

(j) The Independent Fiduciary intends 

to sell the Stock into the market as 

quickly as is prudent under the 

circumstances, subject to the limitations 

of SEC Rule 144 and the Independent 

Fiduciary’s fiduciary responsibilities 

under ERISA; and 

(k) The Independent Fiduciary will 

monitor the transaction on a continuing 

basis and take all appropriate actions to 

safeguard the interests of the Plan to 

ensure that the transaction remains in 

the interests of the Plan, and, if not, take 

any appropriate actions available under 

the circumstances. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be given to interested persons 

within 5 days of the publication of the 

notice of proposed exemption in the 


jlentini on DSK4TPTVN1PROD with NOTICES
59438 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 

8As a result of negotiations, the seller later agreed 

to accept a $100,000 reduction in the purchase 

price in exchange for several conditions of 

purchase, including paying for street improvements 

as they pertain to the property being purchased by 

the Plan. Thus, the modified purchase price was 

$4,100,000. The final cost to the Plan was 

$4,221,716.02, which included $121,716.02 of 

additional charges, including $94,351 for the 158th 

Ave. street improvements. 

9The Property, Tax Lot 500 and the Training 

Center are collectively referred to herein as the 

‘‘Entire Property.’’ 

Federal Register. The notice will be 

given to interested persons by first class 

mail or by return receipt requested 

electronic mail. Such notice will 

contain 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). The supplemental 

statement will inform interested persons 

of their right to comment on and/or to 

request a hearing with respect to the 

pending exemption. Written comments 

and hearing requests are due within 35 

days of the publication of the notice of 

proposed exemption in the Federal 

Register. 

For Further Information Contact: Gary 

H. Lefkowitz of the Department, 

telephone (202) 693–8546. (This is not 

a toll-free number.) 

Oregon-Washington Carpenters 

Employers Apprenticeship and 

Training Trust Fund (the Plan or the 

Applicant) Located in Portland, Oregon 

[Application No. L–11618] 

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, 32847, August 10, 

1990). If the proposed exemption is 

granted, the restrictions of sections 

406(a)(1)(A) and (D) of the Act, shall not 

apply to the sale by the Plan of certain 

unimproved real property known as 

‘‘Tax Lot 300’’ and ‘‘Tax Lot 400’’ 

(together, the Tax Lots or the Property), 

to the Pacific Northwest Regional 

Council of Carpenters (the Union), a 

party in interest with respect to the 

Plan, provided that the following 

conditions are satisfied: 

(a) The sale is a one-time transaction 

for cash; 

(b) At the time of the sale, the Plan 

receives the greater of either: (1) 

$390,000; or (2) the fair market value of 

the Property as established by a 

qualified, independent appraiser in an 

updated appraisal of such Property on 

the date of the sale; 

(c) The Plan pays no fees, 

commissions or other expenses 

associated with the sale; 

(d) The terms and conditions of the 

sale are at least as favorable to the Plan 

as those obtainable in an arm’s length 

transaction with an unrelated third 

party; 

(e) The Plan trustees appointed by the 

Union (the Union Trustees) recuse 

themselves from discussions and voting 

with respect to the Plan’s decision to 

enter into the proposed sale; and 

(f) The Plan trustees appointed by the 

employer associations (the Employer 

Trustees), who have no interest in the 

proposed sale, (1) determine, among 

other things, whether it is in the best 

interest of the Plan to proceed with the 

sale of the Property; (2) review and 

approve the methodology used in the 

appraisal that is being relied upon; and 

(3) ensure that such methodology is 

applied by the qualified, independent 

appraiser in determining the fair market 

value of the Property on the date of the 

sale. 

Summary of Facts and Representations 

The Parties 

1. The Plan is a multiemployer, TaftHartley trust fund. The Plan was 

established on December 28, 1965, and 

is now maintained, pursuant to a Plan 

Agreement between the OregonColumbia Chapter; the Associated 

General Contractors of America, Inc.; 

the Associated Wall and Ceiling 

Contractors of Oregon and Southwest 

Washington, Inc.; the Home Builders 

Association of Metropolitan Portland; 

the General & Concrete Contractors 

Association, Inc. (collectively, the 

Employers); and the Union. As of 

February 28, 2011, the Plan had total 

assets of $12,465,988.34. As of May 31, 

2011, the Plan had approximately 4,122 

participants. 

2. The Plan is administered by a 

twelve member Board of Trustees, six of 

whom are appointed by the Employers 

and six of whom are appointed by the 

Union. The Trustees have ultimate 

fiduciary, operational, and investment 

discretion over the Plan’s assets. The 

Plan’s current Union Trustees are 

Gerald Auvil (Chairman of the Board of 

Trustees), Boyd Martin, Hank 

Mroczkowski, Ronald Robbins, Doug 

Tweedy, and Ben Embree. The Plan’s 

current Employer Trustees are Jim 

McKune, Yasmine Branden, Jeff Herd, 

Gayland Looney (Secretary-Treasurer), 

Lonnie Kronsteiner, and Doug McClain. 

Pursuant to the voting rules under the 

Plan Agreement and to avoid any selfdealing or conflict of interest issues, the 

Union Trustees are required to recuse 

themselves from discussions and voting 

with respect to the Plan’s decision to 

enter into the proposed exemption 

transaction that is described herein. 

3. The Plan is headquartered in 

Portland, Oregon. It was created to 

provide training and education to 

member apprentices and journeymen 

who are construction carpenters, 

acoustical applicators, boat builders, 

bridge carpenters, cabinet makers, 

divers, dock and wharf carpenters, floor 

layers, gypsum drywall and system 

installers, insulation applicators, 

lathers, maintenance carpenters, 

millwright pile drivers, residential 

carpenters, scaffold erectors, and 

shipwright and tradeshow workers. 

The Union is headquartered in Kent, 

Washington, and it was chartered on 

January 1, 1996. Its geographic 

jurisdiction covers the States of 

Washington, Oregon, Idaho, Montana, 

and Wyoming. According to the 

Applicant, the Union’s mission and 

purpose, include but are not limited to, 

promoting and protecting the interests 

of its membership, encouraging the 

apprenticeship system and higher 

standards of skill, and securing 

adequate pay for its membership’s work. 

The Property Acquisition 

4. On January 25, 2005, the Plan 

purchased the Property from an 

unrelated party, IBC Portland I, LLC of 

Evergreen, Colorado, in order to 

establish a training facility for its 

members. Prior to the acquisition, the 

Plan had been looking for a new training 

facility site and it had hired a 

commercial real estate consultant, Bruce 

J. Korter, CRE, Director, Real Estate for 

Washington Capital Management of 

Portland, Oregon, to assist the Board of 

Trustees with finding a suitable 

property. The Trustees had looked at 

many facilities and even considered 

purchasing a parcel of unimproved land 

on which to construct the training 

facility. 

The original purchase price of 

$4,200,000 8 included the subject 

Property, Tax Lot 500 and a building 

situated on Tax Lot 500. The building 

serves as the Plan’s principal training 

facility (the Training Center).9

The Property is located at NE 158th 

Avenue and NE Mason Street, Portland, 

Oregon. It consists of two parcels, Tax 

Lot 300, which is approximately 0.71 

acres or 30,909 square feet of land, and 

Tax Lot 400, which is approximately 

0.92 acres or 40,030 square feet of land. 

Adjacent to the Property are Tax Lot 500 

and the Training Center, which are 

located at 4424 NE 158th Avenue, 

Portland, Oregon. Tax Lot 500 consists 

of approximately 4.64 acres or 202,118 

square feet of land. Currently, the 


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10 In a separate appraisal report dated August 11, 

2004, Mr. Hickok placed the fair market value of 

Tax Lot 500 and the Training Center at $4,000,000, 

also as of July 19, 2004. As noted previously, the 

original purchase price included the Entire 

Property. 

11Based on the Applicant’s calculations, the 

acquisition costs for Tax Lot 300 and 400 were 

$147,760.06 (3.5% of the $154,600 appraised value) 

and $194,198.94 (4.6% of the $200,155 appraised 

value), respectively. The acquisition cost for Tax 

Lot 500 and the Training Center was $3,879,757.02 

(91.9% of the $4,000,000 appraised value). 

Property is vacant and does not produce 

any income. The Union owns no real 

estate that is within close proximity to 

the Entire Property. 

The Plan financed the cost of the 

Training Center and Tax Lot 500 with a 

$2,250,000, 20 year loan from AEGON 

USA Realty Advisors, Inc. (AEGON) of 

Cedar Rapids, Iowa, an unrelated party. 

The loan is secured by the Training 

Center and Tax Lot 500. It carries 

interest at the rate of 6.75% and requires 

monthly payments of $16,564.13 that 

include both principal and interest, 

commencing March 2005. The Plan paid 

the remaining $1,950,000 balance for 

the Training Center and Tax Lot 500 in 

cash. 

Plan’s Intentions Regarding the Property 

5. According to the Applicant, the 

Plan had the seller divide the Entire 

Property into three separate tax lots 

prior to the purchase. This action was 

meant to facilitate the Plan’s future sale 

of either or both Tax Lots 300 and 400, 

should a decision be made to dispose of 

these parcels, and not to have such 

property serve as security for the 

AEGON loan. 

Also, according to the Applicant, the 

Plan’s interest in the Entire Property 

prompted preliminary discussions about 

determining ways to finance the 

purchase. These discussions included 

the Union’s purchase, from the seller, of 

one of the Tax Lots as a site for its new 

headquarters. In this regard, Mr. Korter, 

the real estate consultant, had suggested 

that the Plan apply for a loan for the 

Training Center, but not include the 

Property as security for such loan. Mr. 

Korter also suggested that the Union 

prepare a letter of intent to demonstrate 

its commitment to purchase one of the 

Tax Lots from the seller. However, no 

such letter of intent from the Union was 

ever forthcoming. (According to Jim 

McCune, an Employer Trustee, Mr. 

Korter believed the letter of intent was 

needed by the lender to approve the 

financing of the Entire Property.) 

The Plan was able to sell the property 

at which its training facility was 

previously located for $1 million. As a 

result, the Plan was able to obtaining 

financing without needing to have the 

Union or an unrelated party purchase 

Tax Lot 300 or Tax Lot 400 from the 

seller. 

Furthermore, the Applicant states that 

following the election of Doug Tweedy 

as the Union’s Executive SecretaryTreasurer and CEO in August 2004, 

there was a complete changeover of 

Union personnel. The Applicant 

explains that there was nothing in the 

Plan’s records relating to the acquisition 

of the Entire Property to indicate that 

the Union’s new executive personnel 

had any interest in the Tax Lots for the 

Union’s headquarters. In this regard, the 

Applicant explains that some time 

before May 2005, the Union’s executive 

personnel began searching for property 

other than the Tax Lots as its 

headquarters. On May 21, 2005, the 

Union committed to purchase and 

renovating a building located at 1636 

East Burnside Street, Portland, Oregon 

(the East Burnside Property) by 

approving the financing. The Applicant 

notes that the Union has maintained its 

offices at the East Burnside Property 

ever since. 

Thus, according to the Applicant, the 

possibility of the Union building its 

headquarters on the Property was not a 

consideration after the August 2004 

election of Mr. Tweedy, which was well 

before the Entire Property was acquired 

by the Plan on January 25, 2005. 

Plan’s Use of the Property 

6. Since the time of acquisition, the 

Plan has used the Property for training 

purposes, including surveying and 

building layout. The Applicant states 

that one of the ideas being considered 

for the use of Tax Lot 300 and Tax Lot 

400 is to provide parking spaces for 

apprentices and Training Center 

employees so that the present south side 

parking lot can be used to expand the 

Training Center. 

Plan’s Acquisition and Holding Costs 

Regarding the Property 

7. Because the Entire Property was 

listed for sale as a single parcel of land, 

the Applicant explains that there was no 

separate breakdown of the purchase 

price for Tax Lot 300, Tax Lot 400, Tax 

Lot 500, and the Training Center. In an 

appraisal report dated August 13, 2004 

that was prepared on the Property for 

possible use as collateral for a federallyrelated loan transaction (see 

Representation 5), Tax Lot 300 was 

appraised at $154,660, as of July 19, 

2004. In that same appraisal report, Tax 

Lot 400 was appraised at $200,155 as of 

July 19, 2004.10

The appraisal was performed by 

Robert Hickok, MAI, MRICS, a qualified, 

independent appraiser affiliated with 

Integra Realty Resources, a real estate 

valuation and consulting firm located in 

Portland, Oregon. Mr. Hickok is also a 

Certified General Real Estate Appraiser 

and he is licensed in the States of 

Oregon and Washington. The Applicant 

represents that Mr. Hickok is a 

qualified, independent appraiser, and 

that less than 1% of his annual income 

is derived from the Applicant and its 

affiliates. 

Thus, due to the absence of an actual 

purchase price for the Property, the 

Applicant has estimated this price to be 

$147,760.06 for Tax Lot 300 and 

$194,198.94 for Tax Lot 400, as of 

January 25, 2005 based on the allocation 

percentage the Tax Lot represented to 

the total appraised value of the Entire 

Property, as determined by Mr. Hickok 

in his July and August 2004 appraisals. 

The Applicant then applied each 

allocation percentage to the aggregate 

purchase price. Thus, the Plan’s 

acquisition cost for the Property was 

$341,959.11

8. At the time of the purchase 

transaction, the Plan also paid half of 

the improvement costs on NE 158th 

Avenue, where the Property is located. 

The improvements that were made to 

NE 158th Avenue included the 

construction of curbs, gutters, and 

sidewalks, storm and sanitary sewers, 

water mains, and street pavement. 

Additionally, fire hydrants and trees 

were relocated and traffic control 

signage, pavement striping and marking, 

and permanent barricades were 

installed. The Plan’s share of the 

improvement costs was approximately 

$94,351. 

Following the purchase transaction, 

the Plan has incurred maintenance costs 

associated with the Property and it has 

paid drainage taxes to Multnomah 

County, Oregon. Thus, the Plan’s 

aggregate acquisition and holding costs 

incurred with respect to the Property 

between 2005 and 2010 is $363,486.51. 

A summary of the Plan’s acquisition 

and holding costs as they relate to the 

Property for the period 2005–2010 is 

shown in the table below: 


jlentini on DSK4TPTVN1PROD with NOTICES
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12 In the exemption application, the Applicant 

initially represented that the Trustees had not made 

any efforts to sell the Property to unrelated parties 

because at the time of the Plan’s acquisition of the 

Entire Property, ‘‘the Trustees foresaw that the 

Property would be a good location to build the 

Union headquarters because of its proximity to the 

Training Center.’’ As noted above, the Applicant 

provided further information to the Department to 

support the Trustees’ actual intentions regarding 

the Property. Notwithstanding the supporting 

documentation, the Department is still concerned 

that the Applicant’s statement raises issues under 

the general standards of fiduciary conduct of 

section 404 of the Act and the prohibited 

transaction provisions of 406 of the Act with 

respect to the Plan’s acquisition and holding of the 

Property. Accordingly, the Department is not 

passing on the prudence of the Plan’s investment 

in the Property, nor is it providing exemptive relief 

herein from section 406 of the Act for any 

prohibited transactions that may have occurred 

during the Plan’s acquisition and holding of such 

Property. 

ACQUISITION AND HOLDING COSTS FOR TAX LOTS (TLS) 300 AND 400 FROM 2005–2010 

Property expenses 2005 2006 2007 2008 2009 2010 TL 300 and 

TL 400 totals 

TL 300 Acq. Cost * ....... $147,760.06 ........................ ........................ ........................ ........................ ........................ $147,760.06 

TL 300 Maint. Costs ** 1,352.58 1,352.58 1,352.58 1,352.58 1,352.58 1,352.58 8,115.48 

TL 300 Taxes *** .......... 253.01 211.33 221.93 234.20 237.26 253.28 1,411.01 

TL 300 Totals ........ $149,365.65 1,563.91 1,574.51 1,586.78 1,589.84 1,605.86 157,286.55 

TL 400 Acq. Cost 111* $194,198.94 ........................ ........................ ........................ ........................ ........................ 194,198.94 

TL 400 Maint. Costs ** 1,752.00 1,752.00 1,752.00 1,752.00 1,752.00 1,752.00 10,512.00 

TL 400 Taxes *** .......... 327.67 330.88 171.85 209.80 218.09 230.73 1,489.02 

TL 400 Totals ........ $196,278.61 2,082.88 1,923.85 1,961.80 1,970.09 1,982.73 206,199.96 

TL 300 and TL 

400 Totals .. $345,644.26 3,646.79 3,498.36 3,548.58 3,559.93 3,588.59 363,486.51 

* Maintenance Costs. The maintenance costs of $695/month were divided and allocated based on square footage of land (excluding the Training Center). 

** Taxes. The 2005 through 2010 Multnomah County Property Tax assessments for Tax Lot 300 and Tax Lot 400 were used to calculate property taxes. 

***Insurance Costs. No insurance cost was allocated to Tax Lots 300 and 400 because, as explained by the Plan’s insurance agent of record, 

Joseph P. Herrle, general liability insurance coverage extends automatically to any property that adjoins the Plan’s business location (i.e., the 

Training Center Building) at no additional premium charge. 

Request for Exemptive Relief 

9. The Applicant requests an 

individual exemption from the 

Department in order to sell the Property 

to the Union. The Union’s objective in 

buying the Property is to construct its 

Oregon and Southwest Washington 

headquarters building. The Applicant 

represents that the sale of the Property 

is in the best interest of the Plan and its 

participants because: (a) The Plan has 

no apparent or immediate need or use 

for the Property; and (b) the Plan does 

not derive any income from the 

Property. The sale of the Property will 

allow the Plan to convert the Property 

to cash and will permit the Plan to then 

invest the cash in a vehicle more 

appropriate to the Plan’s investment 

needs and to meet its commitments that 

require liquidity. If the Union constructs 

its headquarters on the Property it 

would be a convenience to the 

participants receiving training and 

education as they are represented by the 

Union. 

Efforts to Sell the Property to Unrelated 

Parties 

10. The Applicant represents that it 

has not made efforts to sell the Property 

to unrelated third parties for the 

following reasons 12: 

• Limited Use of the Property to 

Potential Purchasers. According to the 

Applicant, Tax Lot 300 and Tax Lot 400 

are zoned ‘‘IG2, General Industrial 2,’’ 

which permits various industrial uses. 

Because the Tax Lots are both less than 

one acre in size, which is not customary 

for industrial neighborhoods, only 

atypical small industrial buildings 

could potentially be built on the 

Property. The Applicant explains that 

there is currently limited demand for 

additional industrial development. The 

Applicant also explains that Mr. Hickok, 

the independent appraiser, determined 

that industrial use of the Property was 

not considered financially feasible 

because a newly-developed use would 

not have a value commensurate with its 

cost. Since the Property is not 

appropriate for most industrial uses, the 

Applicant states that this limits the 

number of potential buyers and would 

likely result in a lower sale price for an 

industrial use other than the Union’s 

office building use. Further, the 

Applicant indicates that there are 

currently four larger industrial buildings 

that remain unsold to the east of the 

Training Center and undeveloped land 

to the south of the Training Center. 

• Inability of an Unrelated Purchaser 

to Receive Municipal Construction 

Approval or Have a Use Ancillary to the 

Training Center. According to the 

Applicant, an unrelated purchaser 

would not likely receive approval from 

the City of Portland to construct an 

office building on the Property. 

However, the Applicant believes that 

the Union would receive such approval 

because it represents the Plan 

participants being trained in the 

Training Center. In addition, the 

Applicant states that it is not expected 

that an unrelated purchaser’s use of the 

Property would be ancillary to the 

Training Center as the Union’s potential 

use. 

• Cash Flow Problems Experienced by 

the Plan. The Applicant states that the 

Plan had a reduced cash flow in 2008 

and 2009 due to the recession. As a 

result, there had been fewer jobs for 

carpenters and fewer contributions to 

the Plan. The Applicant explains that 

the need for apprentice and journeymen 

training has increased as labor 

agreements have increased their training 

requirements. The Applicant further 

explains that the Trustees recognized 

that Union headquarters building would 

be a complimentary and nonintrusive 

use to the Training Center and a 

convenience to the Plan participants 

receiving training, as they are 

represented by the Union. After Mr. 

Hickok completed his 2009 appraisal of 

Property, the Applicant indicates that 

the Union commenced the process 

involved to purchase the Property from 

the Plan, following approval by the 

Employer Trustees of filing an 


jlentini on DSK4TPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 59441 

13The individual related employers comprising 

the R+L Companies are: (1) R+L Carriers Shared 

Services, LLC; (2) Strategic Management, LLC; (3) 

Paramount Transportation Logistics Services, LLC; 

(4) R+L Carriers Payroll, LLC; (5) Paramount Labor 

Leasing Southern, LLC; (6) Paramount Labor 

Leasing Eastern, LLC; (7) Paramount Labor Leasing 

Southern, LLC; (8) Golden Ocala Management, Inc.; 

(9) Royal Resorts, LLC; (10) ABCO Transportation, 

Inc.; (11) Spirit Express Trucking, Inc.; (12) Royal 

Shell Property Management, Inc.; (13) Quality 

Quest Linen Service, Inc.; (14) Royal Shell 

Vacations, Inc.; (15) AFC LS, LLC; and (16) AFC 

Worldwide Express, Inc. The foregoing employers, 

along with the captive insurer, Royal Assurance, 

constitute the applicants requesting an individual 

exemption for the proposed transaction described 

herein. 

14The applicants represent that Mr. Ralph 

‘‘Larry’’ Roberts, Sr., the founder of the R+L 

Companies, is the owner (either directly, or 

indirectly through the combined voting interests of 

his spouse and his children) of 50 percent or more 

of the combined voting power of all classes of stock 

entitled to vote of each of the employers 

constituting the R+L Companies whose employees 

are covered under the Plan. Therefore, according to 

the applicants, Mr. Roberts is a party in interest 

with respect to the Plan for purposes of section 

3(14)(E) of the Act. The applicants further represent 

Continued 

exemption application with the 

Department. 

• Use of the Property that Does Not 

Impair the Training Center or the Safety 

of the Apprentices. Due to the proximity 

of the Property to the Training Center, 

the Applicant states that the Trustees 

must ensure that the Property is used in 

a manner that will not hinder the use, 

and the view of the Training Center 

from NE 158th Avenue. Additionally, 

the Applicant notes that because the 

apprentices are mainly young adults, 

the Trustees desire that the Property be 

used in a manner that does not 

compromise the safety of the 

apprentices or create liability issues for 

the Plan and the Training Center. 

Recent Appraisals of the Property 

11. The Property was appraised by 

Mr. Hickok who, as noted in 

Representation 7, had initially valued 

the Property in 2004. Using the Sales 

Comparison Approach to valuation, Mr. 

Hickok placed the fair market value of 

Tax Lot 300 at $170,000 as of October 

20, 2009 in an appraisal report dated 

November 12, 2009. In that same 

appraisal report, Mr. Hickok placed the 

fair market value of Tax Lot 400 at 

$220,000, for a combined total 

appraised value of $390,000 for the 

Property. Mr. Hickok explains that the 

Sales Comparison Approach to 

valuation was the only approach 

available for the valuation of the 

Property. The Cost Approach was not 

available because there are no 

improvements that contribute to the 

value of the Property. Mr. Hickok 

concluded that the Income Approach 

was not available because the Property 

is not likely to generate rental income in 

its current state. 

12. The Department requested a 1–2 

page addendum to the 2009 appraisal 

asking Mr. Hickok whether there had 

been a change in the fair market value 

of the Property since the date of the 

2009 appraisal. On April 18, 2011, the 

Applicant’s representative submitted a 

summary appraisal report, effective 

March 22, 2011. Using the Sales 

Comparison Approach to valuation in 

the updated appraisal, Mr. Hickok again 

placed the fair market value of Tax Lot 

300 at $170,000, and Tax Lot 400 at 

$220,000. Thus, the Property had a 

combined total appraised value of 

$390,000 as of March 22, 2011. 

Conditions of the Proposed Sale 

13. The Plan will pay no real estate 

commissions or other expenses 

associated with the sale. The Union will 

pay the Plan in cash, the greater of 

either: (a) $390,000 or (b) the fair market 

value of the Property, as established by 

a qualified, independent appraiser on 

the date of the transaction, as reflected 

in an updated appraisal of such 

Property. 

14. The Employer Trustees have 

determined, among other things, that it 

is in the best interest of the Plan to 

proceed with the sale of the Property. In 

addition, the Trustees have reviewed 

and approved the methodology used in 

the appraisal that is being relied upon, 

and they will ensure that such 

methodology is applied by the qualified 

independent appraiser in determining 

the fair market value of the Property on 

the date of the sale. 

Summary 

15. In summary, it is represented that 

the proposed transaction will satisfy the 

statutory criteria for an exemption 

under section 408(a) of the Act because: 

(a) The sale will be a one-time 

transaction for cash; 

(b) At the time of the sale, the Plan 

will receive the greater of either: (1) 

$390,000; or (2) the fair market value of 

the Property as established by a 

qualified, independent appraiser in an 

updated appraisal of such Property on 

the date of the sale; 

(c) The Plan will pay no fees, 

commissions or other expenses 

associated with the sale; 

(d) The terms and conditions of the 

sale will be at least as favorable to the 

Plan as those obtainable in an arm’s 

length transaction with an unrelated 

third party; 

(e) The Union Trustees will recuse 

themselves from discussions and voting 

with respect to the Plan’s decision to 

enter into the proposed sale; and 

(f) The Employer Trustees, who have 

no interest in the proposed sale will (1) 

determine, among other things, whether 

it is in the best interest of the Plan to 

proceed with the sale of the Property; 

(2) review and approve the methodology 

used in the appraisal that is being relied 

upon; and (3) ensure that such 

methodology is applied by the qualified, 

independent appraiser in determining 

the fair market value of the Property on 

the date of the sale. 

Notice to Interested Persons 

Notice of the proposed exemption 

will be provided to the Employers and 

the Union within 15 days of the 

publication of the notice of proposed 

exemption in the Federal Register. The 

Plan will provide notice to interested 

persons by first-class mail. Such notice 

will contain a copy of the proposed 

exemption, as published in the Federal 

Register, and a supplemental statement 

as required pursuant to 29 CFR 

2570.43(b)(2). The supplemental 

statement will inform interested persons 

of their right to comment and/or to 

request a hearing with respect to the 

proposed exemptions. Written 

comments and hearing requests are due 

within 45 days of the publication of the 

proposed exemption in the Federal 

Register. 

For Further Information Contact: Ms. 

Jan D. Broady of the Department at (202) 

693–8556. (This is not a toll-free 

number). 

R+L Carriers Shared Services, LLC, 

Located in Wilmington, Ohio 

[Application No. L–11647] 

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, 32847, August 10, 

1990). If the exemption is granted, the 

restrictions of sections 406(a) and (b) of 

the Act shall not apply to the 

reinsurance of risks, and receipt of 

premiums related therefrom, by Royal 

Assurance, Inc. (Royal Assurance), in 

connection with insurance contracts 

sold by Unum Life Insurance Company 

of America (Unum), or any successor 

insurance company to Unum which is 

unrelated, to the R+L Carriers Shared 

Services, LLC to provide group life, 

short-term disability (STD), long-term 

disability (LTD), and Accidental Death 

and Dismemberment (AD&D) insurance 

benefits to employees of the R+L 

Companies 13 under an employee 

welfare benefit plan (the 

Plan) 14sponsored by the R+L Carriers 


jlentini on DSK4TPTVN1PROD with NOTICES
59442 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 

that Mr. Roberts is the owner, either directly or 

indirectly, of 50 percent or more of the combined 

voting power of all classes of stock entitled to vote 

of the captive, Royal Assurance; accordingly, the 

applicants represent that Royal Assurance is a party 

in interest with respect to the Plan for purposes of 

section 3(14)(G) of the Act. In this regard, the 

Department is providing no opinion herein as to 

whether Mr. Roberts is a party in interest with 

respect to the Plan for purposes of section 3(14)(E) 

of the Act; similarly, the Department is providing 

no opinion herein as to whether Royal Assurance 

is a party in interest with respect to the Plan for 

purposes of section 3(14)(G) of the Act. 

Shared Services, LLC, provided the 

following conditions are met: 

(a) Royal Assurance— 

(1) Is a party in interest with respect 

to the Plan by reason of a stock or 

partnership affiliation with R+L Carriers 

Shared Services LLC that is described in 

section 3(14)(E) or (G) of the Act; 

(2) Is licensed to sell insurance or 

conduct reinsurance operations in at 

least one State as defined in section 

3(10) of the Act; 

(3) Has obtained a Certificate of 

Authority from the Director of the 

Department of Insurance of its 

domiciliary state which has neither 

been revoked nor suspended; 

(4)(A) Has undergone and shall 

continue to undergo an examination by 

an independent certified public 

accountant for its last completed taxable 

year immediately prior to the taxable 

year of the reinsurance transaction; or 

(B) Has undergone a financial 

examination (within the meaning of the 

law of its domiciliary State, Arizona) by 

the Director of the Arizona Department 

of Insurance within 5 years prior to the 

end of the year preceding the year in 

which the reinsurance transaction 

occurred; and 

(5) Is licensed to conduct reinsurance 

transactions by a State whose law 

requires that an actuarial review of 

reserves be conducted annually by an 

independent firm of actuaries and 

reported to the appropriate regulatory 

authority; 

(b) The Plan pays no more than 

adequate consideration for the 

insurance contracts; 

(c) No commissions are paid by the 

Plan with respect to the direct sale of 

such contracts or the reinsurance 

thereof; 

(d) In the initial year of any contract 

involving Royal Assurance, there will be 

an immediate and objectively 

determined benefit to the Plan’s 

participants and beneficiaries in the 

form of increased benefits; 

(e) In subsequent years, the formula 

used to calculate premiums by Unum or 

any successor insurer will be similar to 

formulae used by other insurers 

providing comparable coverage under 

similar programs. Furthermore, the 

premium charge calculated in 

accordance with the formula will be 

reasonable and will be comparable to 

the premium charged by the insurer and 

its competitors with the same or a better 

rating providing the same coverage 

under comparable programs; 

(f) The Plan only contracts with 

insurers with a financial strength rating 

of ‘‘A’’ or better from A. M. Best 

Company (A. M. Best). The reinsurance 

arrangement between the insurer and 

Royal Assurance will be indemnity 

insurance only, i.e., the insurer will not 

be relieved of liability to the Plan 

should Royal Assurance be unable or 

unwilling to cover any liability arising 

from the reinsurance arrangement; 

(g) The Plan retains an independent 

fiduciary to analyze the transaction and 

render an opinion that the requirements 

of sections (a) through (f) have been 

satisfied. For purposes of the proposed 

exemption, the independent fiduciary is 

a person who: 

(1) Is not directly or indirectly, 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with an applicant (this 

relationship hereinafter referred to as an 

affiliate); 

(2) Is not an officer, director, 

employee of, or partner in, Royal 

Assurance or any other applicant (or an 

affiliate of either); 

(3) Is not a corporation or partnership 

in which Royal Assurance or any other 

applicant has an ownership interest or 

is a partner; 

(4) Does not have an ownership 

interest in Royal Assurance, or any of 

the other applicants, or their Affiliates; 

(5) Is not a fiduciary with respect to 

the Plan prior to the appointment; and 

(6) Has acknowledged in writing 

acceptance of fiduciary responsibility 

and has agreed not to participate in any 

decision with respect to any transaction 

in which the independent Fiduciary has 

an interest that might affect its best 

judgment as a fiduciary. 

For purposes of this definition of an 

‘‘independent fiduciary,’’ no 

organization or individual may serve as 

an independent fiduciary for any fiscal 

year if the gross income received by 

such organization or individual (or 

partnership or corporation of which 

such individual is an officer, director, or 

10 percent or more partner or 

shareholder) from Royal Assurance, any 

other applicant, or their affiliates 

(including amounts received for services 

as independent fiduciary under any 

prohibited transaction exception 

granted by the Department) for that 

fiscal year exceeds one percent of that 

organization or individual’s annual 

gross income from all sources for the 

prior fiscal year. 

In addition, no organization or 

individual who is an independent 

fiduciary, and no partnership or 

corporation of which such organization 

or individual is an officer, director, or 

10 percent or more partner or 

shareholder, may acquire any property 

from, sell any property to, or borrow 

funds from Royal Assurance, any other 

applicant, or their affiliates during the 

period that such organization or 

individual serves as independent 

fiduciary, and continuing for a period of 

six months after such organization or 

individual ceases to be an independent 

fiduciary, or negotiates any such 

transaction during the period that such 

organization or individual serves as 

independent fiduciary. 

Summary of Facts and Representations 

1. The R+L Companies comprise a 

group of enterprises, primarily focused 

on the trucking and transportation 

services industries, that are under 

common ownership. The R+L 

Companies are a major nationwide 

interstate motor carrier network 

providing ‘‘less-than-truckload’’ 

transportation services, i.e., partial-load 

shipments to one or more destinations, 

or full trailer-load shipments directed to 

multiple destinations. Today, the R+L 

Companies have approximately 9,000 

employees with operations extending to 

all 50 states, Canada, Puerto Rico and 

the Dominican Republic. 

2. Royal Assurance is a captive 

insurance company that was established 

for the purpose of insuring or reinsuring 

certain risks associated with the 

business operations of the R+L 

Companies, and that shares common 

ownership with the R+L Companies. 

The applicants represent that Royal 

Assurance has insured the R+L 

Companies’ property and casualty risks, 

and also reinsured the employee benefit 

plans of the R+L Companies. The 

applicants further state that Royal 

Assurance was incorporated in Arizona 

on August 13, 2008. On December 3, 

2008, the Director of the Arizona 

Department of Insurance granted Royal 

Assurance a Certificate of Authority to 

transact the business of a captive 

insurance company in the State of 

Arizona. The Certificate of Authority 

grants Royal Assurance the authority to 

transact the following kinds of 

insurance business within the State of 

Arizona: Casualty, Workers’ 

Compensation, Property, Life 

Reinsurance, and Disability 

Reinsurance. 

3. The independent certified public 

accounting firm of Saslow Lufkin & 


jlentini on DSK4TPTVN1PROD with NOTICES
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15The applicants state that any successor insurer 

would be a legal reserve life insurance company 

with assets of such a size as to afford similar 

protection and responsibility. 

Buggy, LLP has served as Royal 

Assurance’s auditor since its 

incorporation. Saslow Lufkin & Buggy, 

LLP currently examines Royal 

Assurance’s reserves on an annual basis 

in connection with the employee benefit 

business to be reinsured by Royal 

Assurance to ensure that appropriate 

reserve levels are maintained. The 

applicants represent that, as of 

December 31, 2009 (the most recent date 

for which audited financial statements 

from Saslow Lufkin & Buggy, LLP are 

available), Royal Assurance disclosed 

approximately $335,719 in gross annual 

premiums and $1,349,327 in total assets 

(audited financial statements for Royal 

Assurance for calendar year 2010, 

according to the applicants, are not yet 

available). 

4. The R+L Carriers Shared Services, 

LLC Plan (the Plan) is maintained for 

employees of the R+L Companies. The 

Plan provides both basic and 

supplemental life and disability 

coverage. The Plan has historically 

insured with the Unum Life Insurance 

Company of America (‘‘Unum’’). 

However, pursuant to the transaction for 

which an exemption is being sought, 

Royal Assurance would now be utilized 

for the reinsurance of benefits and 

would make substantial improvements 

to the Plan in anticipation of that 

transaction. 

5. Specifically, the new benefits (at no 

additional cost or obligation to the 

participants) are as follows: 

(a) Accidental Death and 

Dismemberment Benefit—Upon grant of 

the exemption, the Plan would provide 

a completely new $10,000 AD&D 

benefit, in addition to the basic benefits 

that are currently available under the 

existing life insurance and disability 

coverages. The AD&D enhancement 

would pay the full $10,000 amount in 

the event of accidental death, in 

addition to the basic life insurance 

benefit and any additional life insurance 

benefit options selected by the 

participant. The new AD&D benefit 

would pay an enhanced benefit in 

accordance with a predetermined 

schedule for automobile-related deaths 

occurring while seatbelts and/or air bags 

are in use. Moreover, the new AD&D 

benefit would include a schedule of 

education benefits for qualified children 

in the event a Plan participant dies as 

a result of an accidental injury. Such 

benefits are in addition to any life 

insurance benefit that may be available. 

The new AD&D enhancement would 

also operate alongside any benefits that 

would otherwise be available under the 

Plan’s existing LTD and/or STD 

coverages. Specifically, the AD&D 

enhancement would pay the full 

$10,000 amount in the event of grievous 

injury involving loss of both hands, both 

feet, or both eyes. The full $10,000 

amount would also be payable in the 

event of the loss of two different 

appendages or organs, e.g., loss of a 

hand and a foot. One-half of the new 

benefit would be paid if a single organ 

or appendage were lost. These enhanced 

benefits would be available in addition 

to any available benefits under the LTD 

or STD coverages; 

(b) Short-Term Disability Benefit— 

Under this benefit enhancement, the 

current $150 maximum weekly benefit 

amount (under ‘‘Option A’’ of the STD 

program) would be increased to $175. 

Neither the amount of STD benefits, nor 

eligibility for such benefits, will be 

restricted or reduced as a result of this 

new enhancement; 

(c) Long-Term Disability Accelerated 

Death Benefit—The LTD benefit under 

the Plan will be enhanced by providing 

a new, previously unavailable, 

accelerated survivorship benefit to the 

beneficiaries of LTD-eligible employees. 

Under this benefit improvement, when 

an employee on LTD has a life 

expectancy of 6 months or less, the 

employee’s beneficiaries will be eligible 

to receive a benefit payment equal to the 

LTD program’s death benefit, i.e., 3 

months of LTD benefit payments; 

(d) LTD Child Care Expense Benefit— 

Employees eligible for LTD benefits 

would be entitled to additional child 

care benefits under the LTD program. 

The enhanced expense allowance would 

be increased from the current level of 

$250 per month to $350 per month; 

(e) LTD Dependent/Elder Care 

Benefit—The enhanced LTD program 

would include additional benefits to 

cover the personal care costs of nonchild dependents (e.g., elderly parents) 

during the period of the employee’s 

disability. The enhanced expense 

allowance would be increased from the 

current level of $250 per month to $350 

per month; and 

(f) LTD Worksite Modification 

Benefit—The enhanced LTD program 

would include a provision for an 

increase in the worksite modification 

benefit to $1,500 from the current 

$1,000 amount. The worksite 

modification benefit will defray the cost 

of workplace modifications that can 

enable a disabled employee to remain at 

work or return to work. 

6. The Plan’s life and disability 

benefits are now insured by Unum, 

which currently has an ‘‘A’’ rating from 

A. M. Best. The applicants represent 

that if the Plan chooses another insurer 

in the future, that insurer will have a 

financial strength rating of ‘‘A’’ or better 

from A. M. Best. The applicants 

anticipate that, upon the granting of the 

exemption proposed herein, Unum will 

enter into reinsurance agreements with 

Royal Assurance. 

Unum will continue to insure the 

Plan, with the enhanced new benefits. 

However, Unum will reinsure up to 

100% of the risk with Royal Assurance. 

The percentage of the risk to be insured 

will be specified in the reinsurance 

agreements between Unum and Royal 

Assurance. The reinsurance agreements 

between Unum and Royal Assurance 

will be indemnity reinsurance only, so 

that Unum will not be relieved of its 

liability to the Plan should Royal 

Assurance be unwilling or unable to 

cover any liability arising from the 

reinsurance arrangement. 

The Plan will pay no more than 

adequate consideration for the 

insurance contracts with Unum or any 

successor insurer. The formula used to 

calculate premiums by Unum or any 

successor insurer 15 will be similar to 

formulae used by other insurers 

providing life insurance coverage under 

similar programs. Furthermore, the 

premium charge calculated in 

accordance with the formula will be 

reasonable and will be comparable to 

the premium charged by the insurer 

providing coverage under the Plan and 

its competitors with the same or a better 

rating providing the same coverage 

under comparable programs. 

7. In connection with this exemption 

request, Milliman, Inc. (Milliman) has 

been engaged as the independent 

fiduciary (Independent Fiduciary) on 

behalf of the Plan. Milliman is an 

international firm of consultants and 

actuaries with expertise in all facets of 

employee benefits, including insurance. 

William J. Thompson, FSA, MAAA (Mr. 

Thompson), a Principal and Consulting 

Actuary employed by Milliman, has 

represented Milliman for purposes of 

making the Independent Fiduciary 

representations. Milliman’s consultants 

are frequently retained to advise 

corporations on the insurance 

arrangements underlying their benefit 

programs and have considerable 

expertise in the area of reinsurance and 

captive insurers. 

8. For purposes of demonstrating 

independence, the Independent 

Fiduciary has represented that: 

(a) It is not an Affiliate of Unum, 

Royal Assurance, or any of the other 

applicants; 

(b) Neither the Independent Fiduciary 

nor Mr. Thompson is an officer, 


jlentini on DSK4TPTVN1PROD with NOTICES
59444 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 

16 In this regard, the applicants make the 

following representation regarding a successor 

independent fiduciary. Specifically, should it 

becomes necessary in the future to appoint a 

successor independent fiduciary to replace 

Milliman and Mr. Thompson, the Applicants will 

notify the Department sixty (60) days in advance of 

the appointment of the successor fiduciary. Any 

such successor will have the responsibilities, 

experience and independence similar to those of 

Milliman and Mr. Thompson. 

director, employee of, or partner in 

Unum, Royal Assurance, or any of the 

other applicants; 

(c) The Independent Fiduciary is not 

a corporation in which Unum, Royal 

Assurance, or any of the other 

applicants, has an ownership interest or 

is a partner; 

(d) The Independent Fiduciary does 

not have an ownership interest in Royal 

Assurance, any of the other applicants, 

or Unum, or in any Affiliate of those 

firms; 

(e) The Independent Fiduciary was 

not a fiduciary with respect to the Plan 

prior to its appointment for this 

transaction; 

(f) The Independent Fiduciary has 

acknowledged in writing its acceptance 

of fiduciary obligations and has agreed 

not to participate in any decision with 

respect to any transaction in which it 

has an interest that might affect their 

fiduciary duty; 

(g) The gross income received by the 

Independent Fiduciary and Mr. 

Thompson (both separately and 

combined) from Royal Assurance, the 

other applicants, Unum, or their 

Affiliates (including amounts received 

for services as Independent Fiduciary 

for representing the interests of the Plan 

with respect to the exemption 

transaction, for monitoring compliance 

with the terms and conditions of any 

administrative exemption granted by the 

Department, and for taking whatever 

actions may be necessary and 

appropriate to safeguard the interests of 

the Plan and its participants and 

beneficiaries), does not exceed one 

percent of the gross annual income of 

the Independent Fiduciary from all 

sources for the prior fiscal year; and 

(h) The Independent Fiduciary did 

not acquire any property from, sell 

property to, or borrow funds from, Royal 

Assurance, any of the other applicants, 

Unum, or their Affiliates. 

9. The Independent Fiduciary 

represents that Royal Assurance is 

licensed in the State of Arizona since 

December 3, 2008 to reinsure life and 

disability insurance business. The 

Independent Fiduciary confirmed that 

Royal Assurance has undergone an 

examination by Saslow Lufkin & Buggy, 

LLP, an independent certified public 

accountant, for its 2008 taxable year. 

The Independent Fiduciary reviewed 

their audited financial report and is 

satisfied that there are no issues to be 

resolved. In addition, the Independent 

Fiduciary had an opportunity to review 

the unaudited financial statements of 

Royal Assurance for the 2009 taxable 

year, and found no evidence to 

contradict the view that the unaudited 

statements present fairly, in all material 

respects, the financial position of Royal 

Assurance as of December 31, 2009. The 

Independent Fiduciary further 

represents that future reserves will be 

reviewed by a qualified independent 

actuary approved by the State of 

Arizona. 

10. The Independent Fiduciary has 

concluded that, as a result of the 

reinsurance agreement described in 

representation 6, above, the Plan’s risks 

will be 100% covered by Unum, a 

carrier with a current rating of ‘‘A’’ by 

A. M. Best, even if Royal Assurance 

were unable or unwilling to cover the 

Plans’ liabilities it is assuming as a 

result of the reinsurance agreement. The 

Independent Fiduciary represents that it 

has reviewed the terms of the proposed 

reinsurance agreement between Unum 

and Royal Assurance, and has 

concurred that the agreement provides 

that Royal Assurance’s risk would revert 

back to Unum at no further cost to the 

Plan should Royal Assurance be unable 

or unwilling to pay the benefits. 

11. The Independent Fiduciary has 

represented that it reviewed the Plan’s 

benefits before the reinsurance 

transaction and the benefits to be 

implemented following the reinsurance 

transaction. After conducting this 

review, the Independent Fiduciary 

concluded that there would be an 

immediate benefit, in the form of the 

various benefit enhancements set forth 

above in Representation 5, to the Plan’s 

participants from the reinsurance 

transaction. In reaching its conclusion, 

the Independent Fiduciary notes, inter 

alia, that the R+L Companies have 

represented that the benefit 

enhancements described in 

Representation 5 would be provided at 

no additional cost or obligation to 

employees covered by the Plan, and 

would cover all employees affected by 

the proposed transaction. 

12. The Independent Fiduciary has 

made the following representations 

concerning the determination of the 

initial premium to the Plan under the 

proposed arrangement. It concluded that 

the Plan is paying no more than 

adequate consideration for the Unum 

life and disability insurance contracts. 

In reaching this conclusion, the 

Independent Fiduciary noted that the 

current rates have been in place since 

1998 for the disability program, and 

2003 for the life program. As such, the 

Plan has accepted these rate levels as 

reasonable for several years, and the 

rates will not be increased upon 

implementation of the reinsurance 

transaction even though the benefits 

will be enhanced. The Independent 

Fiduciary reviewed documentation of 

historical claims and premium 

experience, as well as the current rate 

table. The Independent Fiduciary has 

stated that the retention being charged 

by the fronting carriers produces 

anticipated loss ratios for the life and 

disability business that are within 

typical marketplace levels for larger 

groups. The Independent Fiduciary also 

noted that, if full credibility was given 

to the life and disability experience of 

the R+L Companies, and using the 

carrier’s anticipated loss ratios, the 

premium rates in recent years would be 

lower than the rates being charged. 

However, the Independent Fiduciary 

stated that, in its opinion, there is 

enough volatility in the life and LTD 

experience that the credibility being 

assigned to the business as a whole is 

reasonable. 

13. The current Independent 

Fidiciary, Milliman, will represent the 

interests of the Plan as the independent 

fiduciary at all times,16 will monitor 

compliance by the parties with the 

terms and conditions of the proposed 

reinsurance transaction, and will take 

whatever action is necessary and 

appropriate to safeguard the interests of 

the Plan and of its participants and 

beneficiaries. 

14. The applicants represent that the 

proposed reinsurance transaction will 

meet the following conditions of PTE 

79–41 covering direct insurance 

transactions: 

(a) The applicants represent that Mr. 

Roberts is the owner, either directly or 

indirectly, of 50 percent or more of the 

combined voting power of all classes of 

stock entitled to vote of the captive, 

Royal Assurance; accordingly, the 

applicants represent that Royal 

Assurance is a party in interest with 

respect to the Plan for purposes of 

section 3(14)(G) of the Act; 

(b) Royal Assurance is licensed to 

conduct reinsurance transactions by the 

State of Arizona. The law under which 

Royal Assurance is licensed requires 

that an actuarial review of reserves be 

conducted annually by an independent 

firm of actuaries and reported to the 

appropriate regulatory authority; 

(c) Royal Assurance has undergone an 

examination by the independent 

certified public accountant firm of 

Saslow Lufkin & Buggy, LLP for its last 

completed taxable year; 


jlentini on DSK4TPTVN1PROD with NOTICES
Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Notices 59445 

17The proposal of this exemption should not be 

interpreted as an endorsement by the Department 

of the transactions described herein. The 

Department notes that the fiduciary responsibility 

provisions of Part 4 of Title I of the Act apply to 

the fiduciary’s decision to engage in the reinsurance 

arrangement. Specifically, section 404(a)(1) of the 

Act requires, among other things, that a plan 

fiduciary act prudently, solely in the interest of the 

plan’s participants and beneficiaries, and for the 

exclusive purpose of providing benefits to 

participants and beneficiaries when making 

investment decisions on behalf of the plan. In this 

regard, the Department is not providing any opinion 

as to whether a particular insurance or investment 

product, strategy or arrangement would be 

considered prudent or in the best interests of a plan, 

as required by section 404 of the Act. The 

determination of the prudence of a particular 

product or arrangement must be made by a plan 

fiduciary after appropriate consideration to those 

facts and circumstances that, given the scope of 

such fiduciary’s investment duties, the fiduciary 

knows or should know are relevant to the particular 

product or arrangement involved, including the 

plan’s potential exposure to losses and the role a 

particular insurance or investment product plays in 

that portion of the plan’s investment portfolio with 

respect to which the fiduciary has investment 

duties and responsibilities (see 29 CFR 2550.404a– 

1). 

(d) Royal Assurance has received a 

Certificate of Authority from its 

domiciliary state (Arizona), which has 

neither been revoked nor suspended; 

(e) The Plan will pay no more than 

adequate consideration for the 

insurance. In addition, in the initial year 

of the proposed reinsurance transaction, 

there will be an immediate and 

objectively determined benefit to the 

Plan’s participants and beneficiaries in 

the form of increased benefits; and 

(f) No commissions will be paid by 

the Plan with respect to the reinsurance 

arrangement with Royal Assurance, as 

described herein. 

In addition, the Plan’s interests will 

be represented by a qualified, 

Independent Fiduciary (i.e., Milliman or 

its successor), who has initially 

determined that the proposed 

reinsurance transactions will be in the 

interest of, and protective of, the Plan 

and its participants and beneficiaries. 

The Independent Fiduciary will also 

confirm on an annual basis that the Plan 

is paying a rate comparable to that 

which would be charged by a 

comparably-rated insurer for a program 

of the approximate size of the Plan with 

comparable claims experience. 

15. In summary, the applicants 

represent that the proposed reinsurance 

transactions will meet the criteria of 

section 408(a) of the Act because: 

(a) The Plan’s participants and 

beneficiaries are afforded insurance 

protection by Unum, a carrier with a 

current rating of ‘‘A’’ from A. M. Best, 

at competitive market rates arrived at 

through arm’s length negotiations; 

(b) Unum will enter into a reinsurance 

agreement with Royal Assurance, a 

sound, viable insurance company which 

has been in business since 2008; 

(c) The protections described in 

Representation 14, above, provided to 

the Plan and its participants and 

beneficiaries under the proposed 

reinsurance transactions are based on 

those required for direct insurance by a 

‘‘captive’’ insurer, under the conditions 

of PTE 79–41 (notwithstanding certain 

other requirements related to, among 

other things, the amount of gross 

premiums or annuity considerations 

received from customers who are not 

related to, or affiliated with the 

insurer); 17

(d) The Independent Fiduciary has 

reviewed the proposed reinsurance 

transaction and has determined that the 

transaction is appropriate for, and in the 

interests of, the Plan and that there will 

be an immediate benefit to the Plan’s 

participants as a result thereof by reason 

of an improvement in benefits under the 

terms of the Plan; and 

(e) The Independent Fiduciary will 

monitor compliance by the parties with 

the terms and conditions of the 

exemption, and will take whatever 

action is necessary and appropriate to 

safeguard the interests of the Plans and 

of their participants and beneficiaries. 

Notice To Interested Persons: A copy 

of this Notice of Proposed Exemption 

(the Notice) shall be provided to all 

interested persons via first-class mail 

within thirty (30) days of the date of 

publication of the Notice in the Federal 

Register. Comments and requests for a 

hearing are due no later than sixty (60) 

days after publication of the Notice in 

the Federal Register. 

For Further Information Contact: Mr. 

Gary Lefkowitz of the Department at 

(202) 693–8546. 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 21st day of 

August 2011. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2011–24656 Filed 9–23–11; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Withdrawal of Proposed Exemption 

From Certain Prohibited Transaction 

Restrictions 

In the Federal Register dated May 5, 

2011 (76 FR 25719), the Department of 

Labor (the Department) published a 

notice of proposed exemption from the 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 and from certain taxes 

imposed by the Internal Revenue Code 

of 1986. The notice concerned an 

application, D–11639, filed on behalf of 

Wolverine Bronze Company Profit 

Sharing Plan and Trust (the Plan) and 

BDR Oil, LLC located in Roseville, 

Michigan, involving the proposed sale, 

for cash at fair market value, of a note 

receivable and royalty interests 


jlentini on DSK4TPTVN1PROD with NOTICES