68398 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

income on the Property under the Lease 

prior to the sale (or over the full five 

years) is less than (ii) the Property’s 

value as of the date of the Contribution 

plus a 5% compounded rate of return on 

that value, then (iii) ARINC will 

contribute to the Plan the difference 

necessary to provide the 5% return. The 

calculation of the Make Whole Payment 

will take into account the status of any 

Monetization of the lease payments as of 

the time of sale or five-year anniversary 

of the Contribution. 

(j) If the Plan desires to sell or convey 

the Property or its interest therein 

during the Lease Term, the Plan must 

first offer ARINC the right to purchase 

or otherwise acquire the Property or 

such interest therein on such terms and 

conditions as the Plan proposes to 

market the Property or such interest 

therein for sale (the Right of First Offer). 

If ARINC fails to exercise such right to 

purchase, the Plan generally is free to 

sell the Property to a third party. The 

right of first offer shall terminate upon 

the commencement of the exercise by 

the Plan of its remedies under the Lease 

as the result of a monetary event of 

default by ARINC as described in the 

Lease that continues uncured following 

notice and the expiration of applicable 

cure periods (and a second notice and 

cure period provided fifteen (15) days 

before the loss of such right on account 

of such default); 

(k) The Plan pays no commissions or 

fees in connection with the 

Contribution, the Lease, the Repurchase, 

or the Monetization of the Property. 

This condition does not preclude the 

Plan from paying the ongoing costs 

associated with the holding of the 

Property that are not the responsibility 

of ARINC under the Lease; 

(l) Subject to ARINC’s Right of First 

Offer, the Plan retains the right to sell 

or assign, in whole or in part, any of its 

Property interests to any third party 

purchaser; and 

(m) ARINC indemnifies the Plan with 

respect to all liability for hazardous 

substances released on the Property 

prior to the execution and closing of the 

Contribution of the Property. 

Section III. Definitions 

(a) The term ‘‘Independent Fiduciary’’

means a fiduciary who is:

(1) independent of and unrelated to 

ARINC or its affiliates, and 

(2) appointed to act on behalf of the 

Plan for all purposes related to, but not 

limited to (i) the in-kind contribution of 

the Property by ARINC to the Plan, and 

(ii) other transactions between the Plan 

and ARINC related to the Property. 

For purposes of this exemption, a 

fiduciary will not be deemed to be 

independent of and unrelated to ARINC 

if: 

(1) such fiduciary directly or 

indirectly controls, is controlled by or is 

under common control with ARINC, 

(2) such fiduciary directly or 

indirectly receives any compensation or 

other consideration in connection with 

any transaction described in this 

exemption; except that an Independent 

Fiduciary may receive compensation for 

acting as an Independent Fiduciary from 

ARINC in connection with the 

transactions contemplated herein if the 

amount or payment of such 

compensation is not contingent upon or 

in any way affected by the Independent 

Fiduciary’s ultimate decision, and 

(3) the annual gross revenue received 

by such fiduciary, during any year of its 

engagement, from ARINC and its 

affiliates exceeds 5 percent (5%) of the 

fiduciary’s annual gross revenue from 

all sources for its prior tax year. 

(b) The term ‘‘affiliate’’ means: 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person; 

(2) Any officer, director, employee, 

relative, or partner of any such person; 

and 

(3) Any corporation or partnership of 

which such person is an officer, 

director, partner, or employee. 

(c) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual.

Signed at Washington, DC, this 19th day of 

November 2004. 

Ivan L. Strasfeld, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor.

[FR Doc. 04–26067 Filed 11–23–04; 8:45 am] 

BILLING CODE 4510–29–P

DEPARTMENT OF LABOR

Emergency Benefits Security 

Administration 

[Prohibited Transaction Exemption 2004–

20; Exemption Application No. D–11098, et 

al.] 

Grant of Individual Exemption; 

Comerica Bank

AGENCY: Employee Benefits Security 

Administration, Labor.

ACTION: Grant of individual exemptions.

SUMMARY: This document contains 

exemptions issued by the Department of 

Labor (the Department) from certain of 

the prohibited transaction restrictions of 

the Employee Retirement Income 

Security Act of 1974 (the Act) and/or 

the Internal Revenue Code of 1986 (the 

Code). 

A notice was published in the Federal 

Register of the pendency before the 

Department of a proposal to grant such 

exemption. The notice set forth a 

summary of facts and representations 

contained in the application for 

exemption and referred interested 

persons to the application for a 

complete statement of the facts and 

representations. The application has 

been available for public inspection at 

the Department in Washington, DC. The 

notice also invited interested persons to 

submit comments on the requested 

exemption to the Department. In 

addition the notice stated that any 

interested person might submit a 

written request that a public hearing be 

held (where appropriate). The applicant 

has represented that it has complied 

with the requirements of the notification 

to interested persons. No requests for a 

hearing were received by the 

Department. Public comments were 

received by the Department as described 

in the granted exemption. 

The notice of proposed exemption 

was issued and the exemption is being 

granted solely by the Department 

because, 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 proposed to the Secretary of 

Labor. 

Statutory Findings 

In accordance with section 4089a) of 

the Act and/or section 4975(c)(2) of the 

Code and the procedures set forth in 29 

CFR part 2570, subpart B (55 FR 32836, 

32847, August 10, 1990) and based upon 

the entire record, the Department makes 

the following findings: 

(a) The exemption is administratively 

feasible; 

(b) The exemption is in the interests 

of the plan and its participants and 

beneficiaries; and 

(c) The exemption is protective of the 

rights of the participants and 

beneficiaries of the plan.

Comerica Bank 

Located in Detroit, Michigan 

[Prohibited Transaction Exemption 2004–20; 

Exemption Application No. D–11098]

Exemption 

Section I. Exemption for Receipt of Fees 

The restrictions of sections 406(a) and 

406(b) of the Act and the sanctions 

resulting from the application of section 

4975 of the Code, by reason of section

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 68399

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

shall not apply to the receipt of fees by 

Comerica Bank and its affiliates 

(Comerica) from the Munder Funds (the 

Funds), open-end investment 

companies registered under the 

Investment Company Act of 1940 (the 

1940 Act), for acting as an investment 

adviser for the Funds which are not 

investment advisory services 

(‘‘Secondary Services’’ as defined in 

Section III(h) below) in connection with 

the purchase and sale of shares of the 

Funds by certain defined benefit and 

defined contribution pension plans and 

funded employee welfare benefit plans 

(Client Plans) for which Comerica serves 

as fiduciary with investment discretion, 

provided that the following conditions 

and the General Conditions set forth in 

Section II are met: 

(a) No sales commissions, redemption 

fees, or other fees are paid by the Client 

Plans in connection with the purchase 

or sale of shares of the Funds. 

(b) The price paid or received by a 

Client Plan for shares in a Fund is the 

net asset value per share, as defined in 

Section III(e), at the time of the 

transaction, and is the same price that 

would have been paid or received for 

the shares by any other investor at that 

time. 

(c) Comercia, including any officer or 

director of Comerica, does not purchase 

or sell shares of the Funds from or to 

any Client Plan. 

(d) Each Client Plan receives a credit, 

through a cash rebate of such Plan’s 

proportionate share of all fees charged 

to the Funds by Comerica for 

investment advisory services, including 

any investment advisory fees paid by 

Comerica to third-party subadvisers. 

Cash rebates for investment advisory 

services provided to the Client Funds 

are received by a Plan on or before the 

date Comerica charges the Client Plan 

for plan-level investment management 

services. Comerica management fees 

and Munder advisory fees are paid in 

arrears for services provided to the 

Client Plans and the Funds, 

respectively. The crediting of all such 

fees is audited by Comerica through a 

system of internal controls to verify the 

proper crediting of the fees to each 

Client Plan. 

(e) Comerica will supply, annually 

and upon request, to the second 

fiduciary acting for a Client Plan, who 

is independent of and unrelated to 

Comerica (the Second Fiduciary), all 

information reasonably necessary for 

such fiduciary to verify that the fee 

credit calculation is correct and any 

additional information that the Second 

Fiduciary may require to determine that 

the conditions of this exemption are 

being met by Comerica. 

(f) For each Client Plan, the combined 

total of all fees received by Comerica for 

the provision of services to a Client 

Plan, and in connection with the 

provisions of services to the Funds in 

which the Client Plan may invest, is not 

in excess of ‘‘reasonable compensation’’

within the meaning of section 408(b)(2) 

of ERISA. 

(g) Comerica does not receive any fees 

payable pursuant to Rule 12b–1 under 

the 1940 Act in connection with the 

transactions. 

(h) The Client Plans are not employee 

benefit plans sponsored or maintained 

by Comerica.

(i) The Second Fiduciary receives, in 

advance of any initial investment by the 

Client Plan in a Fund, full and detailed 

written disclosure of information 

concerning the Fund, including, but not 

limited to: 

(1) A current prospectus for each 

Fund in which a Client Plan is 

considering investing; 

(2) A statement describing the fees for 

investment advisory or similar services 

and any Secondary Services as defined 

in Section III(h), and all other fees to be 

charged to or paid by the Client Plan 

and by the Funds, including the nature 

and extent of any differential between 

the rates of such fees; 

(3) The reasons why Comerica may 

consider such investment to be 

appropriate for the Client Plan; A 

statement describing whether there are 

any limitations applicable to Comerica 

with respect to which assets of a Client 

Plan may be invested in the Funds, and 

if so, the nature of such limitations; and 

upon the request of the Second 

Fiduciary, a copy of the proposed 

exemption and/or a copy of the final 

exemption once such documents are 

published in the Federal Register. 

(j) After consideration of the 

information described in paragraph (i) 

above, the Second Fiduciary authorizes 

in writing the investment of assets of the 

Client Plan in each particular Fund, the 

fees to be paid by such Fund to 

Comerica, and the cash rebate to the 

Client Plan of fees received by Comerica 

from the Funds for investment advisory 

services. 

(k) All authorizations made by a 

Second Fiduciary regarding investments 

in a Fund and the fees paid to Comerica 

are subject to an annual reauthorization 

wherein any such prior authorization 

referred to in paragraph (j) above shall 

be terminable at will by the Client Plan, 

without penalty to the Plan, upon 

receipt by Comerica of written notice of 

termination. A form expressly providing 

an election to terminate the 

authorization described in paragraph (j) 

above (the Termination Form) with 

instructions on the use of the form must 

be supplied to the Second Fiduciary no 

less than annually. However, if the 

Termination Form has been provided to 

the Second Fiduciary pursuant to 

paragraph (m) below, then the 

Termination Form need not be provided 

again for an annual reauthorization 

pursuant to this paragraph unless at 

least six months have elapsed since the 

form was provided in connection with 

the additional service or fee increase. 

The instructions for the Termination 

Form must include the following 

information: 

(1) The authorization is terminable at 

will by any of the Client Plans, without 

penalty to such Client Plans, upon 

receipt by Comerica of written notice 

from the Second Fiduciary; and 

(2) Failure by the Second Fiduciary to 

return the Termination Form on behalf 

of a Client Plan will result in continued 

authorization of Comerica to engage in 

the transactions described in paragraph 

(j) above on behalf of the Client Plan. 

(3) A copy of the Termination Form 

will be sent to the Second Fiduciary for 

the Client Plan upon request. 

(1) The Second Fiduciary receives full 

written disclosure, prior to the effective 

date, in a Fund prospectus or otherwise, 

of any increases in the rates of fees 

charged by Comerica to the Funds for 

investment advisory services even 

though such fees will be rebated as 

required by paragraph (d) above. 

(m) In the event that Comerica 

provides an additional Secondary 

Service to a Fund for which a fee is 

charged or there is an increase in the 

rate of any fee paid by the Funds to 

Comerica for any Secondary Services 

that results from either an increase in 

the rate of such fee or a decrease in the 

number or kind of services performed 

by Comerica for such fees in connection 

with a previously authorized Secondary 

Service, Comerica will, at least 30 days 

in advance of the implementation of 

such additional service for which a fee 

is charged or fee increase, provide 

written notice (that is separate from the 

prospectus of the Fund) to the Second 

Fiduciary explaining the nature and the 

amount of the additional services or of 

the effective increase in fees of the 

affected Fund. Such notice shall be 

accompanied by the Termination Form. 

(n) On an annual basis, Comerica 

provides the Second Fiduciary of a 

Client Plan investing in the Funds with: 

A copy of the current prospectus for the 

Funds and, upon such Second 

Fiduciary’s request, a copy of the 

Statement of Additional Information for 

such Funds that contains a description

68400 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

of all fees paid by the Funds to 

Comerica (including fees for investment 

advisory service); 

(2) A copy of the annual financial 

disclosure report of the Funds in which 

such Client Plan is invested, which 

includes information about the Fund 

portfolios, within 60 days of the 

preparation of the report; and 

(3) Oral or written responses to 

inquiries of the Second Fiduciary as 

they arise. 

(o) All dealings between the Client 

Plans and the Funds are on a basis no 

less favorable to the client Plans than 

dealings with other shareholders of the 

Funds.

Section II. General Conditions 

(a) Comerica maintains for a period of 

six years the records necessary to enable 

the persons described in paragraph (b) 

of Section II to determine whether the 

conditions of this exemption have been 

met, except that: a prohibited 

transaction will not be considered to 

have occurred if, due to circumstances 

beyond the control of Comerica, the 

records are lost or destroyed prior to the 

end of the six-year period, and no party 

in interest other than Comerica shall be 

subject to the civil penalty that may be 

assessed under section 502(i) of ERISA 

or to the taxes imposed by section 

4975(a) and (b) of the Code if the 

records are not maintained or not 

available for examination as required by 

paragraph (b) below. 

(b)(1) Except as provided in paragraph 

(b)(2) below and notwithstanding any 

provisions of sections 504(a)(2) and (b) 

or ERISA, the records referred to in 

paragraph (a) of Section II are 

unconditionally available at their 

customary location for examination 

during normal business hours by: (1) 

Any duly authorized employee or 

representative of the Department of 

Labor or the Internal Revenue Service; 

(ii) Any fiduciary of a Client Plan who 

has authority to acquire or dispose of 

shares of the Funds owned by the Client 

Plan, or any duly authorized employee 

or representative of such fiduciary; and 

(iii) Any participant or beneficiary of a 

Client Plan or duly authorized employee 

or representative of such participant or 

beneficiary. 

(2) None of the persons described in 

subparagraph (b)(1)(ii) and (iii) above 

shall be authorized to examine trade 

secrets of Comerica, or commercial or 

financial information, which is 

privileged or confidential. 

Section III—Definitions 

For purposes of this exemption: 

(a) ‘‘Comerica’’ means Comerica Bank, 

a Michigan banking corporation, and 

any affiliate thereof (as affiliate is 

defined below in paragraph (b) of this 

section). 

(b) an ‘‘affiliate’’ of a person includes: 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person; 

(2) Any officer, director, employee, 

relative, or partner in any such person; 

and 

(3) Any corporation or partnership of 

which such person is an officer, 

director, partner, or employee. 

(c) ‘‘Control’’ means the power to 

exercise a controlling influence over the 

management or policies of a person 

other than an individual. 

(d) The term ‘‘Fund’’ or ‘‘Funds’’ shall 

include the Munder Funds, each series 

thereof, or any other diversified openend investment company registered 

under the 1940 Act for which Comerica 

serves as an investment adviser and may 

also serve as a Fund accountant, transfer 

agent or provide some other Secondary 

Service (as defined below in paragraph 

(h) of Section III) which has been 

approved by such Funds. 

(e) ‘‘Net asset value’’ means the 

amount for purposes of pricing all 

purchases and sales, calculated by 

dividing the value of all securities, 

determined by a method as set forth in 

a Fund’s prospectus and statement of 

additional information, and other assets 

belonging to the Fund or portfolio of the 

Fund, less the liabilities charged to each 

such portfolio or Fund, by the number 

of outstanding shares.

(f) ‘‘Relatives’’ means a ‘‘relative’’ as 

that term is defined in section 3(15) of 

ERISA (or a ‘‘member for the family’’ as 

that term is defined in section 4975(e)(6) 

of the Code), or a brother, a sister, or a 

spouse of a brother or a sister. 

(g) ‘‘Second Fiduciary’’ means a 

fiduciary of a Client Plan who is 

independent of and unrelated to 

Comerica. For purposes of this 

exemption, the Second Fiduciary will 

not be deemed to be independent of and 

unrelated to Comerica if: 

(1) Such fiduciary directly or 

indirectly controls, is controlled by, or 

is under common control with 

Comerica; 

(2) Such fiduciary, or any officer, 

director partner, employee, or relative of 

the fiduciary is an officer, director, 

partner, or employee of Comerica (or is 

a relative of such persons); or 

(3) Such fiduciary directly or 

indirectly receives any compensation or 

other consideration for his or her own 

personal account in connection with 

any transaction described in this 

exemption. 

If an officer, director, partner, or 

employee of Comerica (or relative of 

such persons), is a director of such 

Second Fiduciary, and if he or she 

abstains from participation in (i) the 

choice of the Client Plan’s investment 

adviser, (ii) the approval of any such 

purchase or sale between the Client Plan 

the Funds, and (iii) the approval of any 

change in fees charged to or paid by the 

Client Plan in connection with any of 

the transactions described in Section I 

and Section II above, then subparagraph 

(g)(2) of Section III shall not apply. 

(h) ‘‘Secondary Service’’ means a 

service other than an investment 

management, investment advisory, or 

similar services which is provided by 

Comerica to the Funds including but not 

limited to) custodian services, transfer 

and dividend disbursing agent services, 

administrator or sub-administrator 

services, accounting services, and 

shareholder servicing agent services. 

However, for purposes of this 

exemption, the term ‘‘Secondary 

Service’’ will not include any brokerage 

services provided to the Funds by 

Comerica for the execution of securities 

transactions engaged in by the Funds. 

(i) ‘‘Termination form’’ means the 

form supplied to the second Fiduciary 

that expressly provides an election to 

the Second Fiduciary to terminate on 

behalf of a Client Plan the authorization 

described in paragraph (j) of Section I 

above. Such Termination Form maybe 

used at will by the Second Fiduciary to 

terminate an authorization without 

penalty to the Plan and to notify 

Comerica in writing to effect a 

termination by selling the shares of the 

funds held by the Client Plan requesting 

such termination within one business 

day following receipt by Comerica of the 

form provided that if, due to 

circumstances beyond the control of 

Comerica, the sale cannot be executed 

within one business day, Comerica shall 

have one additional business day to 

complete such sale.

DATES: This exemption is effective on or 

after November 24, 2004. 

The Department received no 

comments or requests for a public 

hearing. After giving full consideration 

to the entire record, the Department has 

decided to grant the exemption. For a 

more complete statement of the facts 

and representations supporting he 

Department’s decision to grant this 

exemption, refer to the notice of 

proposed exemption published on 

September 10, 2004, at 69 FR 54804.

For information regarding the matters 

described herein, interested persons are 

encouraged to obtain copies of the 

exemption application file (Exemption

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 68401

Application No. D–11098) the 

Department is maintaining in this case. 

The complete application file 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 Further Information Contact: Ms. 

Wendy McColough of the Department, 

telephone (202) 693–8561. This is not a 

toll-free number.

Camino Medical Group, Inc. matching 

401(k) Plan (the 401(k) Plan) and the 

Camino Medical Group, Inc. 

Employee Retirement Plan (the 

Retirement Plan; together, the Plans) 

Located in Sunnyvale, California.

[Prohibited Transaction Exemption 2004–21; 

Exemption Application Nos. D–11160 & D–

11161, respectively]

Exemption 

The restrictions of sections 406(a), 

406(b)(1) and (b)(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) through (E) of 

the Code, shall not reply to (1) the 

leasing (the New Lease) of a medical 

treatment center (the Treatment Center) 

by the Retirement Plan to Camino 

Medical Group, Inc. (CMG), the sponsor 

of the Retirement Plan and a party in 

interest with respect to such Retirement 

Plan; and (2) the exercise, by CMG, of 

options to renew the New Lease for two 

additional terms. 

This exemption is subject to the 

following conditions: 

(a) The terms and conditions of the 

New Lease are no less favorable to the 

Retirement Plan than those obtainable 

by the Retirement Plan under similar 

circumstances when negotiated at arm’s 

length with unrelated third parties. 

(b) The Retirement Plan is represented 

for all purposes under the New Lease, 

and during each renewal term, by a 

qualified, independent fiduciary. 

(c) The Retirement Plan’s 

independent fiduciary has negotiated, 

reviewed, and approved the terms and 

conditions of the New Lease and the 

options to renew the New Lease on 

behalf of the Retirement Plan and has 

determined that the transactions are 

appropriate investments for the 

Retirement Plan and are in the best 

interests of the Retirement Plan and its 

participants and beneficiaries. 

(d) The rent paid to the Retirement 

Plan under the New Lease, and during 

each renewal term, is no less than the 

fair market rental value of the Treatment 

Center, as established by a qualified, 

independent appraiser. 

(e) The rent is subject to adjustment 

at the commencement of the second 

year of the term of the New Lease and 

each year thereafter by way of an 

independent appraisal. A qualified, 

independent appraiser is selected by the 

independent fiduciary to conduct the 

appraisal. If the appraised fair market 

rent of the Treatment Center is greater 

than that of the current base rent, then 

the base rent is revised to reflect the 

appraised increased in fair market rent. 

If the appraised fair market rent of the 

Treatment Center is less than or equal 

to the current base rent, then the base 

rent remains the same. 

(f) The New Lease is triple net and 

requires all expenses for maintenance, 

taxes, utilities and insurance to be paid 

by CMG, as lessee. 

(g) The Retirement Plan’s 

independent fiduciary monitors 

compliance with the terms of the New 

Lease and the conditions of the 

exemption throughout the duration of 

the New Lease and each renewal term, 

and is responsible for legally enforcing 

the payment of the rent and the proper 

performance of all other obligations of 

CMG under the terms of the New Lease. 

(h) The Retirement Plan’s 

independent fiduciary expressly 

approves any renewal of the New Lease 

beyond the initial term. 

(i) CMG provides the Retirement 

Plan’s independent fiduciary with 

documentation that the rent has been 

paid on a monthly basis. 

(j) At all times throughout the 

duration of the New Lease and each 

renewal term, the fair market value of 

the Treatment Center does not exceed 

25 percent of the value of the total assets 

of the Retirement Plan. 

(k) CMG files a Form 5330 with the 

Internal Revenue Service (the Service) 

and pays all applicable excise taxes, if 

any, within 90 days of the publication, 

in the Federal Register, of the grant 

notice with respect to the leasing of the 

Treatment Center by the Plans to CMG 

prior to July 1, 2003.

(1) To the extent CMG owes the 401(k) 

Plan or the Retirement Plan additional 

rent by reason of the past leasing of the 

Treatment Center, (i) the independent 

fiduciary makes all such 

determinations, including the payment 

of reasonable interest; and (ii) CMG 

makes such payments to the Plans. 

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 July 

20, 2004, at 69 FR 43438. 

Extension of Comment Period 

The notice of proposed exemption 

invited interested persons to submit 

comments or requests for a hearing to 

the Department by September 3, 2004. 

The applicant agreed to provide notice 

to interested persons by first class mail 

within ten days of the date that the 

proposal appeared in the Federal 

Register. CMG had valid addresses for 

all but 28 interested persons, all of 

whom were former employees of CMG 

with interests in one or both Plans. CMG 

submitted those 28 names to a 

commercial locating service, and 

received addresses for 23 of them. 

Notice was sent by first class mail to all 

but the 5 ‘‘missing’’ interested persons 

on July 26, 2004. 

CMG submitted the Social Security 

Numbers of the 5 ‘‘missing’’ interested 

persons to a second commercial locating 

service. The notice was sent by first 

class mail to the last known address 

provided by the second commercial 

locating service for these five 

individuals on July 29, 2004. 

On September 2, 2004, the applicant 

decided to extend the comment period 

until September 10, 2004. The need for 

the extension arose because the 

applicant changed legal representation 

with respect to this exemption and 

therefore required additional time to 

provide its comments to the 

Department. 

Written Comments 

During the comment period, the 

Department received one written 

comment with respect to the proposed 

exemption, and no requests for public 

hearing. The comment, which was 

submitted by CMG, is intended to (1) 

inform the Department of certain 

historical substantive and procedural 

matters related to the exemption; (2) 

request retroactive relief with respect to 

the exemption; and (3) correct minor 

errors in the proposal. In this regard, 

CMG has provided the following 

additional information in order to 

update the proposed exemption and to 

support its request for retroactive relief: 

1. History of Lease of Treatment 

Center by CMG. Representation 9 of the 

Summary of Facts and Representations 

(the Summary) states, in relevant part, 

that the 401(k) Plan and Advanced 

Infusion Systems (AIS), an unrelated 

party, entered into a new lease for the 

Treatment Center for a 5 year term, from 

March 1, 1993 through February 28, 

1998. Representation 10 of the Summary 

further states, in pertinent part, that 

before the end of the lease term, the 

Administrative Committee for the Plans 

(the Administrative Committee) and AIS

68402 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

engaged in discussions relating to the 

renewal of the lease of the Treatment 

Center and that the Administrative 

Committee anticipated that AID would 

renew the lease. However, 

Representation 10 of the Summary 

states that at the end of February 1998, 

AIS chose not to renew its lease and 

vacated the premises, and that on March 

1, 1998, CMG stepped into the shoes of 

AIS in order to continue the flow of 

rental income and the provision of 

infusion therapy to the CMG patients. 

CMG confirms that, in regard to the 

history of its lease of the Treatment 

Center, an unrelated third party which 

was leasing the Treatment Center 

unexpectedly abandoned the Treatment 

Center at the end of February 1998 and 

did not renew its lease. CMG explains 

that it believed the most prudent course 

of action was for it to immediately lease 

the Treatment Center (a medical clinic) 

from the 401(k) Plan. CMG opines that 

in leasing the Treatment Center it could 

(a) continue to provide its patients with 

infusion therapy for AIDS patients, and 

(b) continue to provide the 401(k) Plan 

with $9,500 in monthly rental income. 

CMG notes that it was informed that it 

might take months for the 401(k) Plan to 

find a tenant for the medical clinic. 

CMG states that it did not consider it 

prudent, either financially for the 401(k) 

Plan or with regard to treating its 

patients, to have the Treatment Center 

empty for that period of time.

Notwithstanding the exigent 

circumstances precipitating CMG’s 

leasing of the Treatment Center from the 

401(k) Plan in 1998 and CMG’s goodwill 

intentions, the Department wishes to 

emphasize that the lease became a 

prohibited transaction in violation of 

the Act at the moment CMB assumed 

lessee responsibilities. Due to the 

absence of adequate independent 

safeguards existing at the inception of 

the lease, CMB has represented that it 

will file a Form 5330 with the Service 

and pay all applicable excise taxes that 

may be due by virtue of its prohibited 

leasing arrangement with the 401(k) 

Plan and subsequently, with the 

Retirement Plan. 

2. Attorney’s Concealment of Lack of 

Action on Application for Exemption.

CMG states that although it instructed 

its attorney to apply for a prohibited 

transaction exemption immediately to 

cover its lease of the Treatment Center 

on March 1, 1998, the attorney did not 

file an application for an exemption 

until December 1999. CMG explains that 

after the initial filing, the attorney did 

not follow up with requests by the 

Department for additional information. 

Consequently, CMG states, a second 

application was required to be made. 

CMG represents that the second 

application was filed in November 2001, 

almost two years after the first 

application was filed. CMG notes that 

even after filing the second application, 

the attorney did not comply promptly 

with the Department’s request for 

additional information, resulting in 

additional delay publishing in the 

proposed exemption in the Federal 

Register. CMG represents that it had no 

knowledge, or ability to know, of the 

attorney’s dilatory actions since the fact 

that the attorney was not proceeding on 

this matter was not disclosed to CMG. 

CMG states that it was assured at all 

times that each of the exemption 

requests was in progress. 

The Department can take no remedial 

action to remedy any harm CMG may 

have suffered. The Department notes 

that any grievance CMG may have 

against its former counsel should be 

addressed in the appropriate legal 

forum. 

3. Retroactive Effect of Exemption.

Representation 14 of the Summary 

states in relevant part that—

Due to the lack of oversight by a qualified, 

independent fiduciary with full investment 

discretion to review, approve and monitor 

the past and continuing leasing arrangements 

between the Plans and CMG, and the absence 

of contemporaneous independent appraisals 

establishing the fair market value or the fair 

market rental value of the Treatment Center 

at the inception of each lease or at the time 

of the sale of the Treatment Center by the 

401(k) Plan to the Retirement Plan, the 

Department is not prepared to provide 

exemptive relief with respect to such 

transactions.

CMG notes that ERISA Technical 

Release 85–1 (TR 85–1) provides that if 

the applicant has acted in good faith 

(evidenced by an independent fiduciary 

or appraisal) and there was no loss to 

the plan in question the Department 

may favorably consider making a 

prohibited transaction exemption 

retroactive. CMG explains that all the 

conditions set out in TR 85–1 for a 

retroactive exemption are present in this 

case. Consequently, CMG requests that 

the exemption be made retroactive to 

November 1998, which is the date of the 

first appraisal of the fair market rental 

value of the Treatment Center after it 

was leased by CMG. CMG explains that 

the appraisal was done by a qualified 

independent appraiser, Hulberg & 

Associates (Hulberg), under the 

direction of two independent 

fiduciaries. 

CMG further explains that the first 

lease agreement covering the lease of the 

Treatment Center to CMG was dated 

March 1, 1999. The fair market rental 

value of that lease was also determined 

by Hulberg, under the direction of the 

same independent trustees. The March 

1999 lease provided for rental increases 

(if any) each year based on an annual 

appraisal by the independent appraiser 

of market rents. Because the rental 

market went up and then went down for 

several years, under the lease agreement 

CMG states that it paid in excess of 

market rates each year except one. CMG 

also maintains that not only was there 

no loss to participants in the rental 

transaction, there was a significant gain. 

In July 2003, CMG explains that a 

second lease was signed for the 

Treatment Center. In that case, the 

independent fiduciary was Thomas J. 

Nault and the independent appraiser 

chosen by Mr. Nault was also Hulberg. 

CMG indicates that Mr. Nault has 

continued to serve on behalf of the 

Retirement Plan as the independent 

fiduciary. 

CMG maintains that in both leases 

covering the Treatment Center, there 

was an independent appraisal of the fair 

market rental value of such property. 

Also, CMG asserts that the appraisals 

were under the direct supervision of 

independent fiduciaries. Although CMG 

believes the conditions are present for 

the exemption to be made retroactive to 

November 1998, at the very minimum, 

CMG suggest that the exemption be 

made retroactive to March 1, 1999, or 

July 1, 2003, the commencement dates 

of the leases, or retroactive to March 

2003, the date of Mr. Nault’s 

appointment as independent trustee for 

the Retirement Plan. 

As an additional factor, CMG requests 

that the Department consider that prior 

to Mr. Nault’s assumption of 

independent fiduciary duties, at all 

times since the Treatment Center was 

leased to CMG, Wells Fargo Bank, N.A. 

(Wells Fargo), has been the trustee of the 

Retirement Plan. Although the bank was 

and is a directed trustee, CMG states 

that it has provided the Department 

with a letter from Wells Fargo which 

states that the bank reviewed the 

Treatment Center’s lease appraisal for 

reasonableness and adjusted the 

monthly rental income, accordingly. 

CMG notes that Wells Fargo also stated 

that it reviewed the terms of the leases 

to ensure compliance and to ensure that 

lease payments were received and 

deposited to the trust in a timely 

manner each month.

In response to CMG’s comment, the 

Department wishes to emphasize that 

further distinctions must be made to the 

independent fiduciary and independent 

appraisal criteria set forth in TR 85–1. 

This is because the safeguards 

implemented for a prospective 

exemption must be in place for a

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 68403

1 In this regard, the lease had actually been 

entered into by CMG and the 401(k) Plan, the 

previous owner of the Treatment Center on March 

1, 1998. However, that lease, which was executed 

by the Retirement Plan (the current owner of the 

Treatment Center) and CMG, was not reduced to 

writing until March 1, 1999.

retroactive exemption. In this regard, 

the Department does not believe the 

lease can be made retroactive to March 

1, 1999,1 due to the lack of adequate 

independent safeguards. Specifically, 

there was no contemporaneous 

appraisal or other objective means to 

establish the fair market rental value of 

the Treatment Center at the inception of 

the 1999 lease, despite the fact that 

CMG has, for the most part, paid the 

CMG Plans more than fair market value 

rent. The Department notes that the only 

written independent appraisal of the 

Treatment Center existing at that time 

was issued by Hulberg on December 20, 

1998. The appraisal, which was 

commissioned primarily for the sale of 

the Treatment Center by the 401(k) Plan 

to the Retirement Plan reflected, among 

other things, the fair market rental value 

of the Treatment Center as of November 

24, 1998. Due to its relative staleness 

and the absence of documentation in the 

application file showing that an updated 

appraisal was obtained on the date the 

parties entered into the 1999 lease, the 

1998 appraisal could not be utilized to 

substantiate the fair market value of the 

Treatment Center at the inception of the 

1999 lease. Further, although Wells 

Fargo may have represented the 

interests of the 401(k) Plan and later the 

Retirement Plan, the Department notes 

that there is not indication that the bank 

ever possessed ‘‘full’’ discretion as an 

independent fiduciary with respect to 

the approval and monitoring the leasing 

of Treatment Center or advising CMG 

that it would be engaged in a prohibited 

transaction.

Similarly, it appears that the lease 

cannot be made retroactive to March 1, 

2003. This is the date that Mr. Nault was 

appointed as the Retirement Plan’s 

successor independent fiduciary. Again, 

the Department believes that 

independent safeguards to protect the 

interests of the Retirement Plan and its 

participants and beneficiaries were 

lacking. Although Mr. Nault was then 

serving as the independent fiduciary, 

his appointment could not be utilized to 

validate the lease, which was already in 

existence. 

With respect to the July 1, 2003, 

retroactivity date, Mr. Nault has 

provided the Department with certain 

additional information. In a letter dated 

October 7, 2004, Mr. Nault states that a 

new lease (i.e., the ‘‘New Lease’’ referred 

to above in the operative language) of 

the Treatment Center was executed 

between CMG and the Retirement Plan 

on July 1, 2003, at the time the New 

Lease was executed, he explains that he 

relied on other objective means of 

valuation to determine the fair market 

rental value of the Treatment Center at 

the time this lease was executed. Such 

objective means included several 

discussions with Hulberg in order to 

ascertain the fair market rental value of 

the Treatment Center and due diligence 

conducted from the time of his 

independent fiduciary appointment 

onward. Specifically, Mr. Nault explains 

that during his discussions with 

Hulberg, he reviewed rental statistics for 

the Sunnyvale-San Jose area that clearly 

showed that the rent being paid for the 

Treatment Center was above market. 

Further, as part of his own due 

diligence, Mr. Nault states that he drove 

around the area to check the vacancy 

information he received from Hulberg, 

he did an online analysis of rents and 

market conditions to ascertain rent 

levels in the area, and researched the 

effect of the 2001 implosion of Dot-Com 

businesses on the office vacancy rate in 

that area. Mr. Nault states that his 

findings at the time the New Lease was 

executed indicated that CMG was 

paying above market rent prior to such 

lease. Consequently, Mr. Nault 

represents that the rental amount being 

paid by CMB under the New Lease 

provides that the rent will be changed 

only if the amount that CMG is paying 

falls below market value.

Although there was no 

contemporaneous, written appraisal of 

the Treatment Center at the inception of 

the New Lease, the Department believes 

that Mr. Nault has demonstrated that he 

utilized an objective means of valuation 

of the Treatment Center immediately 

prior to, and at the time of, the New 

Lease by analyzing the prevailing 

market conditions. In addition, the 

Department notes that for assistance, 

Mr. Nault obtained significant guidance 

from Hulberg, the Retirement Plan’s 

independent appraiser. Therefore, the 

Department believes that adequate 

independent safeguards existed at the 

inception of the New Lease. 

Accordingly, the Department has 

determined that the exemption should 

be made retroactive to July 1, 2003. 

In addition, in order that the operative 

language of the exemption may be 

consistent with the July 1, 2003, 

effective date, the Department has 

modified conditions (f), (k) and (l) of the 

final exemption to read as follows:

(f) The New Lease is triple net and requires 

all expenses for maintenance, taxes, utilities 

and insurance to be paid by CMG, as lessee. 

(k) CMG files a Form 5330 with the 

Internal Revenue Service (the Service) and 

pays all applicable excise taxes, if any, 

within 90 days of the publication, in the 

Federal Register, of the grant notice with 

respect to the leasing of the Treatment Center 

by the Plans to CMG prior to July 1, 2003. 

(l) To the extent CMG owes the 401(k) Plan 

or the Retirement Plan additional rent by 

reason of the past leasing of the Treatment 

Center, (i) the independent fiduciary makes 

all such determinations, including the 

payment of reasonable interest; and (ii) CMG 

makes such payments to the Plans.

4. Miscellaneous Comments. CMG 

notes that the caption of the proposed 

exemption states, in relevant part, that 

the Plans are located in Santa Clara, 

California. CMG clarifies that the Plans 

are located in ‘‘Sunnyvale (County of 

Santa Clara), California.’’

In addition, Representation 1 of the 

Summary states, in pertinent part, that 

CMG is a ‘‘not-for-profit’’ organization. 

CMG explains that it is a ‘‘for-profit’’

organization and that the Palo Alto 

Medical Foundation, of which CMG is 

an affiliate, is a ‘‘not-for-profit’’

organization. 

Further, Representation 13 of the 

Summary states, in relevant part, that 

CMG presently leases the Treatment 

Center and pays a monthly rental of 

$1,456. CMG notes that the monthly 

rental which it currently pays the 

Retirement Plan for its lease of the 

Treatment Center is $14,256. 

In response to the foregoing 

comments, the Department notes the 

clarifications to the proposed 

exemption. 

Accordingly, after giving full 

consideration to the entire record, 

including the comment letter, the 

Department has determined to grant the 

exemption as modified herein. For 

further information regarding the 

comment, additional information 

provided by the independent fiduciary, 

and other matters discussed herein, 

interested persons are encouraged to 

obtain copies of the exemption 

application file (Exemption Application 

Nos. D–11160 and D–11161) the 

Department is maintaining in this case. 

The complete application file, as well as 

all supplemental submissions received 

by the Department, are made available 

for public inspection in the Public 

Disclosure Room of the Pension and 

Welfare Benefits Administration, Room 

N–1513, U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210. 

For Further Information Contact: Ms. 

Anna M.N. Mpras of the Department, 

telephone (202) 693–8565. (This is not 

a toll-free number.)

68404 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Notices 

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 in Washington, DC, this 19th day of 

November, 2004. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

Department of Labor.

[FR Doc. 04–26068 Filed 11–23–04; 8:45 am] 

BILLING CODE 4510–29–M

DEPARTMENT OF LABOR

Occupational Safety and Health 

Administration 

[Docket No. ICR 1218–0075(2005)] 

Fire Brigades Standard; Extension of 

the Office of Management and 

Budget’s (OMB) Approval of 

Information Collection (Paperwork) 

Requirements

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor.

ACTION: Request for public comment.

SUMMARY: OSHA solicits public 

comment concerning its request for an 

extension of the information collection 

requirements contained in the Fire 

Brigades Standard (29 CFR 1910.156).

DATES: Comments must be submitted by 

the following dates: 

Hard Copy: Your comments must be 

submitted (postmarked or received) by 

January 24, 2005. 

Facsimile and electronic 

transmission: Your comments must be 

received by January 24, 2005.

ADDRESSES: You may submit comments, 

identified by OSHA Docket No. ICR–

1218–0075(2005), by any of the 

following methods: 

Regular mail, express delivery, hand 

delivery, and messenger service: Submit 

your comments and attachments to the 

OSHA Docket Office, Room N–2625, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210; telephone (202) 693–2350 

(OSHA’s TTY number is (877) 889–

5627). OSHA Docket Office and 

Department of Labor hours are 8:15 a.m. 

to 4:45 p.m., e.t. 

Facsimile: If your comments are 10 

pages or fewer in length, including 

attachments, you may fax them to the 

OSHA Docket Office at (202) 693–1648. 

Electronic: You may submit 

comments through the Internet at http:/

/ecomments.osha.gov. Follow 

instructions on the OSHA Web page for 

submitting comments. 

Docket: For access to the docket to 

read or download comments or 

background materials, such as the 

complete Information Collection 

Request (ICR) (containing the 

Supporting Statement, OMB–83–I Form, 

and attachments), go to OSHA’s Web 

page at http://www.OSHA.gov. In 

addition, comments, submissions and 

the ICR are available for inspection and 

copying at the OSHA Docket Office at 

the address above. You may also contact 

Theda Kenney at the address below to 

obtain a copy of the ICR. 

(For additional information on 

submitting comments, please see the 

‘‘Public Participation’’ heading in the 

SUPPLEMENTARY INFORMATION section of 

this document.)

FOR FURTHER INFORMATION CONTACT:

Theda Kenney, Directorate of Standards 

and Guidance, OSHA, Room N–3609, 

200 Constitution Avenue, NW., 

Washington, DC 20210, telephone: (202) 

693–2222.

SUPPLEMENTARY INFORMATION: 

I. Public Participation—Submission of 

Comments on This Notice and Internet 

Access to Comments and Submissions 

You may submit comments and 

supporting materials in response to this 

notice by (1) hard copy, (2) FAX 

transmission (facsimile), or (3) 

electronically through the OSHA Web 

page. Because of security related 

problems, there may be a significant 

delay in the receipt of comments by 

regular mail. Please contact the OSHA 

Docket Office at (202) 693–2350 (TTY 

(877) 889–5627) for information about 

security procedures concerning the 

delivery of submissions by express 

delivery, hand delivery and courier 

service. 

All comments, submissions and 

background documents are available for 

inspection and copying at the OSHA 

Docket Office at the above address. 

Comments and submissions posted on 

OSHA’s Web page are available at

http://www.OSHA.gov. Contact the 

OSHA Docket Office for information 

about materials not available through 

the OSHA Web page and for assistance 

using the Web page to locate docket 

submissions. 

Electronic copies of this Federal 

Register notice as well as other relevant 

documents are available on OSHA’s 

Web page. 

II. Background 

The Department of Labor, as part of its 

continuing effort to reduce paperwork 

and respondent (i.e., employer) burden, 

conducts a preclearance consultation 

program to provide the public with an 

opportunity to comment on proposed 

and continuing information collection 

requirements in accordance with the 

Paperwork Reduction Act of 1995 

(PRA–95) (44 U.S.C. 3506(c)(2)(A)). 

This program ensures that 

information is in the desired format, 

reporting burden (time and costs) is 

minimal, collection instruments are 

clearly understood, and OSHA’s 

estimate of the information collection 

burden is accurate. The Occupational 

Safety and Health Act of 1970 (the Act) 

(29 U.S.C. 651 et seq.) authorizes 

information collection by employers as 

necessary or appropriate for 

enforcement of the Act or for developing 

information regarding the causes and 

prevention of occupational injuries, 

illnesses, and accidents (29 U.S.C. 657). 

Although OSHA does not mandate 

that employers establish fire brigades, if 

they do so, they must comply with the 

provisions of the Standard. The 

provisions of the Standard, including 

the paperwork requirements, apply to 

fire brigades, industrial fire 

departments, and private or contract fire 

departments, but not to airport crashrescue units or forest fire-fighting 

operations. Paragraphs (b)(1), (b)(2), 

(c)(2), and (c)(4) contain the paperwork 

requirements of the Standard.