75088 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Notices 

1A minor correction was made to the title of the 

final exemption in a notice published in the 

Federal Register on May 23, 1980, (45 FR 35040).

2Section 102 of the Reorganization Plan No. 4 of 

1978 (5 U.S.C. App. 1 [1996]) generally transferred 

the authority of the Secretary of the Treasury to 

issue administrative exemptions under section 4975 

of the Code to the Secretary of Labor.

DEPARTMENT OF LABOR

Employee Benefits Security 

Administration 

[Application Number D–11046] 

Proposed Amendment to Prohibited 

Transaction Exemption 80–26 (PTE 80–

26) For Certain Interest Free Loans to 

Employee Benefit Plans

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor.

ACTION: Notice of Proposed Amendment 

to PTE 80–26. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

a proposed amendment to PTE 80–26. 

PTE 80–26 is a class exemption that 

permits parties in interest with respect 

to employee benefit plans to make 

certain interest free loans to such plans, 

provided the conditions of the 

exemption are met. The proposed 

amendment, if adopted, would affect all 

employee benefit plans, the participants 

and beneficiaries of such plans, and 

parties in interest with respect to those 

plans engaging in the described 

transactions.

DATES: If adopted, the proposed 

amendment would be effective as of the 

date the granted amendment is 

published in the Federal Register. 

Written comments and requests for a 

public hearing should be received by 

the Department on or before January 31, 

2005.

ADDRESSES: All written comments and 

requests for a public hearing (preferably 

three copies) should be addressed to the 

U.S. Department of Labor, Office of 

Exemption Determinations, Employee 

Benefits Security Administration, Room 

N–5649, 200 Constitution Avenue, NW., 

Washington, DC 20210, (attention: PTE 

80–26 Amendment). Interested persons 

are also invited to submit comments 

and/or hearing requests to the Employee 

Benefits Security Administration via email to moffitt.betty@dol.gov or by fax 

to (202)219–0204 by the end of the 

comment period.

FOR FURTHER INFORMATION CONTACT:

Christopher Motta, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor, (202) 693–8554 

(this is not a toll-free number).

SUPPLEMENTARY INFORMATION: Notice is 

hereby given of the pendency before the 

Department of a proposed amendment 

to PTE 80–26 (45 FR 28545, April 29, 

1980, as amended at 65 FR 17540, April 

3, 2000; and 67 FR 9485, March 1, 

2002).1 PTE 80–26 provides an 

exemption from the restrictions of 

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

406(b)(2) of the Employee Retirement 

Income Security Act of 1974 (ERISA or 

the Act) and from the taxes imposed by 

section 4975(a) and (b) of the Internal 

Revenue Code of 1986 (the Code), by 

reason of section 4975(c)(1)(B) and (D) 

of the Code.

The Department is proposing the 

amendment on its own motion pursuant 

to section 408(a) of ERISA and section 

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

accordance with the procedures set 

forth in 29 CFR Part 2570, Subpart B (55 

FR 32836, 32847, August 10, 1990).2

A. General Background 

The prohibited transaction provisions 

of the Act generally prohibit 

transactions between a plan and a party 

in interest (including a fiduciary) with 

respect to such plan. Specifically, 

section 406(a)(1)(B) and (D) of the Act 

provides that a fiduciary with respect to 

a plan shall not cause the plan to engage 

in a transaction, if he knows or should 

know that such transaction constitutes a 

direct or indirect-

(B) lending of money or other 

extension of credit between the plan 

and a party in interest; or 

(D) transfer to, or use by or for the 

benefit of, a party in interest, of any 

assets of the plan. 

Accordingly, unless a statutory or 

administrative exemption is applicable, 

loans, including interest free loans, to a 

plan from a party in interest and the 

repayment of such loans are prohibited.

In addition, section 406(b)(2) of the 

Act provides that a fiduciary with 

respect to a plan shall not, in his 

individual or any other capacity act in 

a transaction involving the plan on 

behalf of a party (or represent a party) 

whose interests are adverse to the 

interests of the plan or the interests of 

its participants or beneficiaries. 

B. Description of Existing Relief 

Section I of PTE 80–26 permits the 

lending of money or other extension of 

credit from a party in interest or 

disqualified person to an employee 

benefit plan, and the repayment of such 

loan or other extension of credit in 

accordance with its terms or other 

written modifications thereof, if: 

(a) No interest or other fee is charged 

to the plan, and no discount for 

payment in cash is relinquished by the 

plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or 

extension of credit are used only—

(1) For the payment of ordinary 

operating expenses of the plan, 

including the payment of benefits in 

accordance with the terms of the plan 

and periodic premiums under an 

insurance or annuity contract, or 

(2) For a period of no more than three 

days, for a purpose incidental to the 

ordinary operation of the plan; 

(c) The loan or extension of credit is 

unsecured; and 

(d) The loan or extension of credit is 

not directly or indirectly made by an 

employee benefit plan. 

On April 3, 2000, PTE 80–26 was 

amended to permit, from November 1, 

1999 through December 31, 2000, the 

lending of money or other extension of 

credit from a party in interest or 

disqualified person to an employee 

benefit plan, and the repayment of such 

loan or other extension of credit in 

accordance with its terms or written 

modifications thereof, provided that, 

among other requirements, the proceeds 

of the loan or extension of credit are 

used only for a purpose incidental to the 

ordinary operation of the plan which 

arises in connection with the inability of 

the plan to liquidate, or otherwise 

access its assets or access data, as a 

result of a ‘‘Y2K problem.’’ This 

amendment also added a new section to 

the class exemption that provided a 

definition of the term ‘‘Y2K problem.’’

On March 1, 2002, PTE 80–26 was 

amended to permit, from September 11, 

2001 through January 9, 2002, the 

lending of money or other extension of 

credit from a party in interest or 

disqualified person to an employee 

benefit plan, and the repayment of such 

loan or other extension of credit in 

accordance with its terms or written 

modifications thereof, provided that, 

among another requirements, the 

proceeds of the loan or extension of 

credit were used only for a purpose 

incidental to the ordinary operation of 

the plan which arose in connection with 

difficulties encountered by the plan in 

liquidating, or otherwise accessing its 

assets, or accessing its data in a timely 

manner as a direct or indirect result of 

the September 11, 2001 disruption. This 

amendment also added a definition of 

the term ‘‘September 11, 2001 

disruption’’ to the class exemption. 

C. Discussion of the Proposed 

Exemption 

The Department, on its own motion, 

proposes to amend PTE 80–26 by 

removing the three-day limitation that is 

Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Notices 75089

imposed on the lending of money or 

other extension of credit for purposes 

incidental to the ordinary operation of 

the plan. In this regard, the Department 

recognizes that a plan may benefit if 

permitted to enter into an interest-free 

loan with a party in interest or 

disqualified person for a purpose 

incidental to the ordinary operation of 

the plan in instances where the duration 

of the loan exceeds three days. 

Specifically, the Department believes 

that the conditions currently contained 

in the class exemption are sufficient to 

ensure that such loans would pose little, 

if any, risk of abuse or loss to the plan 

and its participants and beneficiaries. 

Accordingly, the Department believes 

that, with respect to an interest-free loan 

having a duration of more than three 

days that is entered into under the class 

exemption for a purpose incidental to 

the ordinary operation of a plan, the 

plan would be adequately protected to 

the extent that, among other things: no 

interest or other fee is charged to the 

plan; no discount for payment in cash 

is relinquished by the plan; and each 

loan or extension of credit is unsecured. 

Consistent with the Department’s view 

that loans described in section 408(b)(3) 

of ERISA and/or section 4975(d)(3) of 

the Code are not within the scope of 

PTE 80–26, such loans are expressly 

excluded from the relief described 

herein. 

This proposed amendment 

incorporates the clarification described 

in PTE 2002–13 (67 FR 9483 (Mar. 1, 

2002)). In this regard, the proposed 

exemption specifically defines the terms 

‘‘employee benefit plan’’ and ‘‘plan’’ as 

an employee benefit plan described in 

ERISA section 3(3) and/or a plan 

described in section 4975(e)(1) of the 

Code. 

The Department notes that ERISA’s 

general standards of fiduciary conduct 

apply to the decision of an independent 

fiduciary to enter into an interest free 

loan and any related transactions. 

Section 404 requires a fiduciary, among 

other things, to discharge his duties 

respecting a plan solely in the interest 

of the plan’s participants and 

beneficiaries and in a prudent fashion. 

Accordingly, the plan fiduciary must act 

prudently with respect to the decision 

to enter into the loan and any related 

transactions. In this regard, the 

proposed removal of the three-day 

limitation from PTE 80–26 should not 

be viewed as an approval by the 

Department of any transactions that may 

give rise to the need for a loan or other 

extension of credit. The Department is 

not providing any relief under this 

proposal for any violation of ERISA 

which may arise in connection with a 

transaction involving an interest free 

loan, notwithstanding that such loan 

otherwise complies with the conditions 

of this proposed exemption.

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 ERISA and section 4975(c)(2) 

of the Code does not relieve a fiduciary, 

or other party in interest or disqualified 

person with respect to a plan, from 

certain other provisions of ERISA and 

the Code, including any prohibited 

transaction provisions to which the 

exemption does not apply and the 

general fiduciary responsibility 

provisions of section 404 of ERISA 

which require, among other things, that 

a fiduciary act prudently and discharge 

his or her duties respecting the plan 

solely in the interests of the participants 

and beneficiaries of the plan. 

Additionally, the fact that a transaction 

is the subject of an exemption does not 

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 does not extend to 

transactions prohibited under section 

406(b)(1) and (3) of the Act or section 

4975(c)(1)(E) or (F) of the Code; 

(3) Before an exemption may be 

granted under section 408(a) of ERISA 

and 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; 

(4) If granted, the proposed 

amendment is applicable to a particular 

transaction only if the transaction 

satisfies the conditions specified in the 

exemption; and 

(5) The proposed amendment, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of ERISA and 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. 

Written Comments and Hearing Request 

The Department invites all interested 

persons to submit written comments or 

requests for a public hearing on the 

proposed amendment to the address and 

within the time period set forth above. 

All comments received will be made a 

part of the record. Comments and 

requests for a hearing should state the 

reasons for the writer’s interest in the 

proposed exemption. Comments 

received will be available for public 

inspection at the above address.

Proposed Amendment 

Under section 408(a) of the Act and 

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

accordance with the procedures set 

forth in 29 CFR 2570, Subpart B (55 FR 

32836, 32847, August 10, 1990), the 

Department proposes to amend PTE 80–

26 as set forth below: 

Section I. Retroactive General 

Exemption 

If this proposed class exemption is 

granted, effective January 1, 1975 until 

the date of publication of the final 

exemption in the Federal Register, the 

restrictions of section 406(a)(1)(B) and 

(D) and section 406(b)(2) of the Act, and 

the taxes imposed by section 4975(a) 

and (b) of the Code, by reason of section 

4975(c)(1)(B) and (D) of the Code, shall 

not apply to the lending of money or 

other extension of credit from a party in 

interest or disqualified person to an 

employee benefit plan, nor to the 

repayment of such loan or other 

extension of credit in accordance with 

its terms or written modifications 

thereof, if: 

(a) No interest or other fee is charged 

to the plan, and no discount for 

payment in cash is relinquished by the 

plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or 

extension of credit are used only—

(1) for the payment of ordinary 

operating expenses of the plan, 

including the payment of benefits in 

accordance with the terms of the plan 

and periodic premiums under an 

insurance or annuity contract, or 

(2) for a period of no more than three 

business days, for a purpose incidental 

to the ordinary operation of the plan; 

(c) The loan or extension of credit is 

unsecured; and 

(d) The loan or extension of credit is 

not directly or indirectly made by an 

employee benefit plan. 

Section II: Temporary Exemption 

Effective November 1, 1999 through 

December 31, 2000, the restrictions of 

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

406(b)(2) of the Act, and the taxes 

imposed by section 4975(a) and (b) of 

the Code, by reason of section 

4975(c)(1)(B) and (D) of the Code, shall 

not apply to the lending of money or 

other extension of credit from a party in 

interest or disqualified person to an 

employee benefit plan, nor to the 

75090 Federal Register / Vol. 69, No. 240 / Wednesday, December 15, 2004 / Notices 

repayment of such loan or other 

extension of credit in accordance with 

its terms or written modifications 

thereof, if: 

(a) No interest or other fee is charged 

to the plan, and no discount for 

payment in cash is relinquished by the 

plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or 

extension of credit are used only for a 

purpose incidental to the ordinary 

operation of the plan which arises in 

connection with the plan’s inability to 

liquidate, or otherwise access its assets 

or access data as a result of a Y2K 

problem. 

(c) The loan or extension of credit is 

unsecured; 

(d) The loan or extension of credit is 

not directly or indirectly made by an 

employee benefit plan; and 

(e) The loan or extension of credit 

begins on or after November 1, 1999 and 

is repaid or terminated no later than 

December 31, 2000. 

Section III. September 11, 2001 Market 

Disruption Exemption 

Effective September 11, 2001 through 

January 9, 2002, the restrictions of 

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

406(b)(2) of the Act, and the taxes 

imposed by section 4975(a) and (b) of 

the Code, by reason of section 

4975(c)(1)(B) and (D) of the Code, shall 

not apply to the lending of money or 

other extension of credit from a party in 

interest or disqualified person to an 

employee benefit plan, nor to the 

repayment of such loan or other 

extension of credit in accordance with 

its terms or written modifications 

thereof, if: 

(a) No interest or other fee is charged 

to the plan, and no discount for 

payment in cash is relinquished by the 

plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or 

extension of credit are used only for a 

purpose incidental to the ordinary 

operation of the plan which arises in 

connection with difficulties 

encountered by the plan in liquidating, 

or otherwise accessing its assets, or 

accessing its data in a timely manner as 

a direct or indirect result of the 

September 11, 2001 disruption; 

(c) The loan or extension of credit is 

unsecured; 

(d) The loan or extension of credit is 

not directly or indirectly made by an 

employee benefit plan; and 

(e) The loan or extension of credit 

begins on or after September 11, 2001, 

and is repaid or terminated no later than 

January 9, 2002. 

Section IV. Prospective General 

Exemption 

If this proposed class exemption is 

granted, effective as of the date 

following the date of publication of the 

final exemption in the Federal Register, 

the restrictions of section 406(a)(1)(B) 

and (D) and section 406(b)(2) of the Act, 

and the taxes imposed by section 

4975(a) and (b) of the Code, by reason 

of section 4975(c)(1)(B) and (D) of the 

Code, shall not apply to the lending of 

money or other extension of credit from 

a party in interest or disqualified person 

to an employee benefit plan, nor to the 

repayment of such loan or other 

extension of credit in accordance with 

its terms or written modifications 

thereof, if: 

(a) No interest or other fee is charged 

to the plan, and no discount for 

payment in cash is relinquished by the 

plan, in connection with the loan or 

extension of credit; 

(b) The proceeds of the loan or 

extension of credit are used only—

(1) for the payment of ordinary 

operating expenses of the plan, 

including the payment of benefits in 

accordance with the terms of the plan 

and periodic premiums under an 

insurance or annuity contract, or 

(2) for a purpose incidental to the 

ordinary operation of the plan; 

(c) The loan or extension of credit is 

unsecured; 

(d) The loan or extension of credit is 

not directly or indirectly made by an 

employee benefit plan; and 

(3) The loan is not described in 

section 408(b)(3) of ERISA or section 

4975(d)(3) of the Code. 

Section V: Definitions 

(a) For purposes of section II, a ‘‘Y2K 

problem’’ is a disruption of computer 

operations resulting from a computer 

system’s inability to process data 

because such system recognizes years 

only by the last two digits, causing a 

‘‘00’’ entry to be read as the year ‘‘1900’’

rather than the year ‘‘2000.’’

(b) For purposes of section III, the 

‘‘September 11, 2001 disruption’’ is the 

disruption to the United States financial 

and securities markets and/or the 

operation of persons providing 

administrative services to employee 

benefit plans, resulting from the acts of 

terrorism that occurred on September 

11, 2001. 

(c) For purposes of this exemption, 

the terms ‘‘employee benefit plan’’ and 

‘‘plan’’ refer to an employee benefit plan 

described in ERISA section 3(3) and/or 

a plan described in section 4975(e)(1) of 

the Code.

Signed at Washington, DC, this 10th day of 

December, 2004. 

Ivan L. Strasfeld, 

Director, Office of Exemption Determinations, 

Employee Benefits Security Administration 

U.S. Department of Labor.

[FR Doc. 04–27451 Filed 12–14–04; 8:45 am] 

BILLING CODE 4520–29–P

NUCLEAR REGULATORY 

COMMISSION 

Sunshine Act Meeting

AGENCY HOLDING THE MEETING: Nuclear 

Regulatory Commission

DATE: Week of December 13, 2004.

PLACE: Commissioners’ Conference 

Room, 11555 Rockville Pike, Rockville, 

Maryland.

STATUS: Public and Closed.

ADDITIONAL MATTERS TO BE CONSIDERED: 

Week of December 13, 2004

Tuesday, December 14, 2004

12:55 p.m. Affirmation Session 

(Public Meeting) (Tentative) 

A. Hydro Resources, Inc. Petition for 

Review of LBP–04–23 (Final 

Environmental Impact Statement 

Supplementation) (Tentative) 

b. State of Alaska Department of 

Transportation and Public Facilities 

(Confirmatory Order Modifying 

License); Intervenor’s Motion for 

Reconsideration of CLI–04–26 

(Tentative) 

c. Final Amendments to 10 CFR Part 

50, Appendix E, Relating to (1) Nuclear 

Regulatory Commission Review of 

Changes to Emergency Action Levels, 

Paragraph IV.B and (2) Exercise 

Requirements for Co-Located Licensees, 

Paragraph IV.F.2 (Tentative) 

1 p.m. Briefing on Emergency 

Preparedness Program Initiatives (Public 

Meeting) (Contact: Nader Mamish, 301–

415–1086) 

This meeting will be webcast live at 

the Web address—http://www.nrc.gov.

The schedule for Commission 

meetings is subject to change on short 

notice. To verify the status of meetings 

call (recording)—(301) 415–1292. 

Contact person for more information: 

Dave Gamberoni, (301) 415–1651.

* * * * *

The NRC Commission Meeting 

Schedule can be found on the Internet 

at: http://www.nrc.gov/what-we-do/

policy-making/schedule.html.

* * * * *

The NRC provides reasonable 

accommodation to individuals with 

disabilities where appropriate. If you 

need a reasonable accommodation to