51182 Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 

1Because the New Chrysler VEBA Plan will not 

be qualified under section 401 of the Internal 

Revenue Code of 1986, there is no jurisdiction 

under Title II of the Act pursuant to section 4975 

of the Code. However, there is jurisdiction under 

Title I of the Act. 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

[TA–W–70,089] 

Glenn Springs Holdings, Inc., a 

Subsidiary of Occidental Petroleum 

Corporation, New Castle, DE; Notice of 

Negative Determination Regarding 

Application for Reconsideration 

By application dated August 19, 2009, 

a company official requested 

administrative reconsideration of the 

Department’s negative determination 

regarding eligibility for workers and 

former workers of the subject firm to 

apply for Trade Adjustment Assistance 

(TAA). The denial notice was signed on 

July 24, 2009 and published in the 

Federal Register on September 2, 2009 

(74 FR 45478). 

Pursuant to 29 CFR 90.18(c) 

reconsideration may be granted under 

the following circumstances: 

(1) If it appears on the basis of facts 

not previously considered that the 

determination complained of was 

erroneous; 

(2) If it appears that the determination 

complained of was based on a mistake 

in the determination of facts not 

previously considered; or 

(3) If in the opinion of the Certifying 

Officer, a misinterpretation of facts or of 

the law justified reconsideration of the 

decision. 

The TAA petition filed on behalf of 

workers at Glenn Springs Holdings, Inc., 

a subsidiary of Occidental Petroleum 

Corporation, New Castle, Delaware was 

based on the finding that imports of 

services like or directly competitive 

with services provided by workers of 

the subject firm did not contribute to 

worker separations at the subject firm 

during the relevant period. The 

investigation revealed that workers of 

the subject firm were engaged in 

refining facility’s water, removing 

sludge from machines, repairing the 

building’s electrical system, distributing 

the anhydrous potassium hydroxide and 

closing the facility. The subject firm did 

not import nor acquire services from a 

foreign country and also did not shift 

the provision of these services to a 

foreign country. 

In the request for reconsideration, the 

petitioner stated that workers of the 

subject firm were previously certified 

eligible for TAA based on increased 

imports of chlorine. The petitioner 

further stated that even though 

production of chlorine did not occur at 

the subject facility in the relevant 

period, workers of the subject firm were 

retained by the subject firm to 

effectively close the plant. The 

petitioner appears to allege that because 

workers of the subject firm were 

previously certified eligible for TAA 

and the workers of the current petition 

were the part of that worker group but 

stayed employed beyond the expiration 

date of the previous certification, the 

workers of the subject firm should be 

granted another TAA certification. 

The workers of Glenn Springs 

Holdings, Inc., a subsidiary of 

Occidental Petroleum Corporation, New 

Castle, Delaware were previously 

certified eligible for TAA under petition 

numbers TA–W–58,508, which expired 

on January 12, 2008. The investigation 

revealed that at that time workers of the 

subject firm were engaged in production 

of chlorine and the employment 

declines at the subject facility were 

attributed to increased imports of 

chlorine. However, the current 

investigation revealed that production 

of chlorine at the subject firm ceased 

during November 2007. 

When assessing eligibility for TAA, 

the Department exclusively considers 

worker activities during the relevant 

time period (from one year prior to the 

date of the petition). Therefore, events 

occurring in 2007 are outside of the 

relevant period and are not considered 

in this investigation. 

The investigation revealed that 

workers of the subject firm were 

engaged in refining facility’s water, 

removing sludge from machines, 

repairing the building’s electrical 

system, distributing the anhydrous 

potassium hydroxide and closing the 

facility during the relevant period. 

These functions, as described above, 

were not imported, or shifted abroad nor 

were the service acquired from a foreign 

country during the relevant period. 

Therefore, criteria II.A. and II.B. of 

Section 222(a) of the Act were not met. 

Furthermore, with the respect to Section 

222(c) of the Act, the investigation 

revealed that criterion 2 was not met 

because the workers did not supply a 

service that was used by a firm with 

TAA-certified workers in the production 

of an article or supply of a service that 

was a basis for TAA certification. 

The petitioner did not supply facts 

not previously considered; nor provide 

additional documentation indicating 

that there was either (1) a mistake in the 

determination of facts not previously 

considered or (2) a misinterpretation of 

facts or of the law justifying 

reconsideration of the initial 

determination. 

After careful review of the request for 

reconsideration, the Department 

determines that 29 CFR 90.18(c) has not 

been met. 

Conclusion 

After review of the application and 

investigative findings, I conclude that 

there has been no error or 

misinterpretation of the law or of the 

facts which would justify 

reconsideration of the Department of 

Labor’s prior decision. Accordingly, the 

application is denied. 

Signed at Washington, DC, this 22nd day 

of September 2009. 

Elliott S. Kushner, 

Certifying Officer, Division of Trade 

Adjustment Assistance. 

[FR Doc. E9–23910 Filed 10–2–09; 8:45 am] 

BILLING CODE 4510–FN–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application No. L–11566] 

Notice of Proposed Individual 

Exemption Involving Chrysler LLC, 

Located in Auburn Hills, MI 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of proposed individual 

exemption. 

This document contains a notice of 

pendency before the Department of 

Labor (the Department) of a proposed 

individual exemption from certain 

prohibited transaction restrictions of the 

Employee Retirement Income Security 

Act of 1974 (the Act or ERISA). The 

transactions involve the UAW Chrysler 

Retiree Medical Benefits Plan (the New 

Chrysler VEBA Plan) and its associated 

UAW Retiree Medical Benefits Trust 

(the VEBA Trust) (collectively the 

VEBA).1 The proposed exemption, if 

granted, would affect the VEBA, its 

participants and beneficiaries. 

Effective Date: If granted, this 

proposed exemption will be effective as 

of June 10, 2009. 

DATES: Written comments and requests 

for a public hearing on the proposed 

exemption should be submitted to the 

Department within 45 days from the 

date of publication of this Federal 

Register Notice. 

ADDRESSES: All written comments and 

requests for a public hearing concerning 

the proposed exemption should be sent 

to the Office of Exemption 


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Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 51183 

2The Summary of Facts and Representations is 

based on the Applicant’s representations and does 

not reflect the views of the Department. 

3 In re Chrysler LLC, et al., No. 09B 50002 

(Document 3073), slip op. (Bankr. S.D.N.Y. May 31, 

2009). 

4Specifically, the New Chrysler VEBA Plan will 

provide retiree medical benefits to members of the 

‘‘Class’’ and the ‘‘Covered Group’’ as defined in the 

Settlement Agreement and in Section VI. of this 

exemption. 

Determinations, Employee Benefits 

Security Administration, Room N–5700, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington 

DC 20210, Attention: Application No. 

L–11566. 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: 

chrysler@dol.gov, or by FAX to (202) 

219–0204 by the end of the scheduled 

comment period. The application for 

exemption and the comments received 

will be available for public inspection in 

the Public Documents Room of the 

Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1513, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

FOR FURTHER INFORMATION CONTACT: 

Brian J. Buyniski or Warren Blinder, 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration, U.S. Department of 

Labor, telephone (202) 693–8566. (This 

is not a toll-free number). 

SUPPLEMENTARY INFORMATION: This 

document contains a notice of proposed 

individual exemption from the 

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

406(a)(1)(B), 406(a)(1)(D), 406(a)(1)(E), 

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

407(a) of ERISA. The proposed 

exemption has been requested in an 

application filed by New Chrysler 

pursuant to section 408(a) of ERISA and 

in accordance with the procedures set 

forth in 29 CFR 2570, Subpart B (55 FR 

32836, August 10, 1990). Effective 

December 31, 1978, section 102 of 

Reorganization Plan No. 4 of 1978, (43 

FR 47713, October 17, 1978) transferred 

the authority of the Secretary of the 

Treasury to issue exemptions of the type 

requested to the Secretary of Labor. 

Accordingly, this proposed exemption 

is being issued solely by the 

Department. 

Summary of Facts and 

Representations2

The Applicant 

Prior to filing for bankruptcy 

protection under chapter 11 of Title 11 

of the United States Code (the 

Bankruptcy Code) on April 30, 2009, 

Chrysler LLC (Chrysler LLC), a Delaware 

limited liability company, was an 

American automobile manufacturer 

headquartered in Auburn Hills, 

Michigan, first organized as Chrysler 

Corporation in 1925. Chrysler LLC 

manufactured, assembled, and sold cars, 

trucks, and related automotive parts and 

accessories primarily in the United 

States, Canada, and Mexico. It supplied 

passenger cars, SUVs, sports tourers, 

minivans, and pickups. The company 

also purchased and distributed 

passenger cars manufactured by 

Mitsubishi Motor Manufacturing of 

America. Prior to filing for bankruptcy 

protection, Chrysler LLC employed 

approximately 55,000 hourly and 

salaried employees worldwide, about 

70% of whom were based in the United 

States. As of the date of the exemption 

application filing, Chrysler LLC had 32 

manufacturing and assembly facilities, 

23 of which (or 69% of the vehicle 

production) are located in the United 

States, and 24 parts depots, 20 of which 

are in this country. Chrysler’s business 

interests touched all 50 states, as well as 

Canada, Mexico, Europe and Asia. 

Chrysler LLC has an expansive dealer 

network, with over 3,200 dealerships in 

the United States selling Chrysler cars 

and trucks (or 60% of the global dealer 

network). Seventy-two percent of 

Chrysler LLC’s sales were in the United 

States, and it purchased 78% of its parts 

and materials from U.S.-based suppliers. 

For the twelve months ended December 

31, 2008, Chrysler LLC recorded 

revenue of more than $48.5 billion and 

had assets of approximately $39.3 

billion and liabilities totaling $55.2 

billion. During the same period, 

Chrysler LLC had a net loss of 

approximately $16.8 billion. 

From 1998 to 2007, Chrysler and its 

subsidiaries were part of the German 

based DaimlerChrysler AG (now 

Daimler AG). Under DaimlerChrysler, 

the company was named 

‘‘DaimlerChrysler Motors Company 

LLC’’, with its U.S. operations generally 

referred to as the ‘‘Chrysler Group’’. On 

May 14, 2007, DaimlerChrysler 

announced the sale of 80.1% of Chrysler 

Group to American private equity firm 

Cerberus Capital Management, L.P., 

with Daimler continuing to hold a 

19.9% stake. The deal was finalized on 

August 3, 2007, and upon completion of 

the sale, the company was renamed 

Chrysler LLC. On April 27, 2009, 

Daimler AG signed a binding agreement 

to give up its 19.9% remaining stake in 

Chrysler LLC to Cerberus Capital 

Management and pay as much as $600 

million into the automaker’s pension 

fund. 

On May 31, 2009, in the course of the 

bankruptcy proceeding (the Bankruptcy 

Proceeding), the United States 

Bankruptcy Court for the Southern 

District of New York (the Bankruptcy 

Court) issued an opinion granting 

Chrysler LLC’s motion for authority to 

sell, pursuant to section 363 of the 

Bankruptcy Code, substantially all of its 

assets to an entity called New Chrysler 

(New Chrysler).3 New Chrysler is a 

Delaware limited liability company 

formed by Fiat North America LLC, a 

subsidiary of Fiat S.p.A (Fiat). New 

Chrysler expects to remain 

headquartered in Auburn Hills, 

Michigan, and expects to employ most 

of Chrysler’s approximately 55,000 

hourly and salaried employees 

worldwide, 70% or 38,500 of whom 

were based in the United States and still 

manufactures, assembles, and sells cars, 

trucks, and related automotive parts and 

accessories in the United States, Europe, 

Canada, and Mexico. Pursuant to the 

UAW Retiree Settlement Agreement 

between New Chrysler and the UAW 

(the Settlement Agreement), the UAW 

Chrysler Retiree Medical Benefits Plan 

(the New Chrysler VEBA Plan) will be 

established to provide retiree medical 

benefits to certain Chrysler-UAW 

represented employees and retirees, and 

their spouses and dependents.4

Background 

Throughout much of 2007, Chrysler 

LLC and the UAW engaged in extended 

discussions concerning the impact of 

rising health care costs on Chrysler 

LLC’s financial condition. During these 

discussions, Chrysler LLC asserted that 

it had the right to unilaterally modify 

the retiree health benefits under the 

Chrysler Health Care Program for 

Hourly Employees and that, if no 

agreement was reached to address the 

economic burden of its retiree health 

obligation, Chrysler LLC would do so 

unilaterally. The UAW disagreed with 

Chrysler LLC’s position and asserted 

that retiree benefits were vested and that 

Chrysler LLC did not have the right to 

modify them unilaterally. In 2007, the 

UAW along with respective class 

representatives of plaintiff class 

members in UAW v. Chrysler LLC (the 

‘‘English’’ Case) filed a lawsuit 

challenging Chrysler LLC’s position and 

sought a permanent injunction 

prohibiting such termination or 

modification. After an extensive review 

by the UAW and Class Counsel (Class 

Counsel) of Chrysler LLC’s ability to 

continue providing retiree health care 

benefits, the parties entered into a 

Settlement Agreement (English 

Settlement Agreement) on March 30, 

2008, providing, among other things, 


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51184 Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 

5 In 2007 and 2009, Chrysler LLC agreed to 

provide certain retiree medical benefits specified in 

certain memoranda of understanding between 

Chrysler, the UAW and the class representatives. 

Chrysler LLC and the UAW, along with respective 

class representatives of plaintiff class members in 

UAW v. Chrysler, LLC, Civ. Act. No. 2:07–cv–14310 

(E.D. Mich, complaint filed October 11, 2007) (the 

‘‘English’’ Case) entered into a separate settlement 

agreement in 2007, which provided for Chrysler 

LLC to make certain deposits and remittances to the 

UAW Retiree Medical Benefits Trust for the 

provision of retiree medical benefits. 

In light of the Bankruptcy Proceeding, the 

settlement in the English case is of no further effect. 

Although not a party to the Bankruptcy Proceeding 

or the Modified Settlement Agreement described in 

this exemption application, the firm of Stember, 

Feinstein, Doyle & Payne, LLC, as Class Counsel in 

the English case, was engaged to render an opinion 

on the fairness, from a financial point of view, of 

the consideration to be received by Chrysler LLC in 

connection with the sale of assets to New Chrysler 

(the Sale), and also to review the Modified 

Settlement Agreement described in this exemption 

application. Class Counsel concurs that it is fair, 

reasonable and in the best interest of the former 

class members, and supports the request by New 

Chrysler for an individual exemption request. 

6 In connection with the Bankruptcy Proceeding, 

Chrysler LLC’s non-U.S. direct and indirect 

subsidiaries have not sought relief under chapter 11 

of the Bankruptcy Code or any other insolvency 

laws. Chrysler LLC’s Mexican, Canadian and other 

international operations are also not part of any 

bankruptcy filing. 

7None of the debtor’s equity holders received an 

interest in New Chrysler. 

8See In Re Chrysler LLC, et. al., Case No. 09B 

50002 (Document 3073), slip op.(Bankr.S.D.N.Y. 

May 31, 2009)), the order authorizing the sale of 

substantially all of the debtor’s assets free and clear 

of all liens, claims, interests, and encumbrances. 

that Chrysler LLC transfer responsibility 

and funding for retiree health care 

benefits to a voluntary employee 

benefits association.5

The English Settlement Agreement 

provided that on the later of January 1, 

2010, or final court approval of the 

Settlement Agreement, Chrysler LLC 

would continue to provide retiree 

medical benefits for class members, 

known as the ‘‘Covered Group’’, under 

the old Chrysler Plan and would 

transfer certain assets to the VEBA Trust 

to provide the Class and Covered Group 

with post-retirement medical benefits. 

The English Settlement Agreement 

modified existing retiree medical 

benefits and Chrysler LLC was obligated 

to provide benefits until January 1, 

2010, and then funding of the benefits 

would be shifted to the VEBA Trust. 

Under the English Settlement 

Agreement, Chrysler LLC’s obligation to 

provide post-retirement medical 

benefits to the Class and Covered Group 

would be terminated. The Trust would 

be established and maintained not by 

Chrysler LLC, but by an employees’ 

beneficiary association consisting of the 

population described in the English 

Settlement Agreement and administered 

by an independent committee 

(‘‘Committee’’). A Plan, to be funded 

exclusively through the VEBA Trust, 

would be solely responsible for the 

payment of post-retirement medical 

benefits to members of the Class and 

Covered Group on and after January 1, 

2010. 

In September of 2008, a sharp 

downturn in sales significantly affected 

Chrysler LLC. Soon thereafter, Chrysler 

LLC focused its attention on acquiring a 

merger partner, but talks were put on 

hold while the company sought 

government funds to prevent 

bankruptcy. In December of 2008, 

Chrysler LLC received a $4 billion loan 

from the United States Treasury 

Department to fund their operations 

through the liquidity crunch. At the 

same time that Chrysler LLC was 

pursuing government assistance, it 

continued its efforts to secure a strategic 

partner that could assist it in achieving 

its long-term viability goals. Pursuant to 

the terms of the loan, Chrysler LLC was 

required to submit a plan showing that 

it was able to achieve and sustain longterm viability, energy efficiency, 

rationalization of costs and 

competitiveness in the U.S. 

marketplace, which would indicate 

Chrysler LLC’s ability to repay the 

financing. 

These long-term production goals led 

Chrysler LLC to announce that they 

were going to form a global alliance 

with Fiat S.p.A. On January 20, 2009, 

Fiat and Chrysler LLC announced that 

they had a non-binding term sheet to 

form a global alliance. Under the terms 

of the potential agreement, Fiat could 

take a 35% stake in Chrysler LLC and 

gain access to its North American dealer 

network in exchange for providing 

Chrysler LLC with the platform to build 

smaller, more fuel-efficient vehicles in 

the US and reciprocal access to Fiat’s 

global distribution network. Fiat is an 

Italian automobile manufacturer, engine 

manufacturer, and financial and 

industrial group based in Turin. As of 

2009, Fiat is the world’s 6th largest 

carmaker as well as Italy’s largest 

carmaker. 

Bankruptcy 

In light of deteriorating market 

conditions and a growing liquidity crisis 

that would make it impossible for 

Chrysler LLC to continue operations, 

Chrysler LLC and 26 of its domestic 

direct and indirect subsidiaries, filed a 

bankruptcy action under chapter 11 of 

Title 11 of the United States Code (the 

‘‘Bankruptcy Code’’) on April 30, 2009 

with the Bankruptcy Court and 

announced a plan for a partnership with 

Italian automaker Fiat.6 As noted 

previously, the Bankruptcy Court 

approved a sale under Section 363 of 

Title 11 of the U.S. Code by which New 

Chrysler succeeded to certain assets and 

liabilities of Chrysler LLC (‘‘Section 363 

Sale’’). The Bankruptcy Court also 

approved the Modified Settlement 

Agreement. The section 363 Sale closed, 

and the Modified Settlement Agreement 

was executed, on June 10, 2009. The 

assets in the Section 363 Sale were sold 

free and clear of liens, claims, interests, 

and encumbrances. 

Through the Bankruptcy Proceeding, 

New Chrysler acquired certain core 

assets from Chrysler LLC in exchange 

for the assumption of certain liabilities 

of Chrysler LLC and a cash payment to 

Chrysler LLC pursuant to the Master 

Transaction Agreement, dated as of 

April 30, 2009 as subsequently amended 

(collectively with other ancillary and 

supporting documents, the ‘‘MTA’’). 

Pursuant to the MTA, Chrysler LLC 

transferred substantially all of its 

operating assets to New Chrysler, and in 

exchange for those assets, New Chrysler 

assumed certain liabilities of Chrysler 

LLC and paid Chrysler LLC $2 billion in 

cash. New Chrysler is jointly owned by 

Fiat, the US Treasury, the Governments 

of Canada and Ontario (the Canadian 

Government) and the VEBA Trust. The 

transaction is expected to strengthen 

New Chrysler’s viability for the long 

term with access to Fiat’s existing 

technology, including competitive 

platforms, powertrain, and vehicles to 

be produced at New Chrysler’s 

manufacturing sites. The transaction is 

also expected to allow Fiat and New 

Chrysler to each take advantage of the 

other’s distribution networks in key 

growth markets and to optimize fully 

their respective manufacturing footprint 

and global supplier base. 

Pursuant to the Plan of 

Reorganization, New Chrysler, a 

Delaware limited liability company, was 

formed by Fiat North America, LLC, as 

an alliance entity 7 for the acquisition of 

the assets from Chrysler LLC generally 

free and clear of claims of Chrysler 

LLC’s creditors.8 Upon the closing of the 

sale, the government entities will hold 

12.31% (The U.S. Treasury will hold 

9.85% and the Canadian Government 

will hold 2.46%), the New Chrysler 

VEBA Plan will hold 67.69%, and Fiat 

will hold 20% of the total value of 

shares (the Shares). Upon reaching 

certain milestones, fully explained later 

in this exemption, Fiat’s interest will 

increase to 35%, with the right to 

acquire an additional 16% by buying 

certain shares of New Chrysler. Fiat will 

not be able to get control of New 

Chrysler until the outstanding debts to 


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Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 51185 

the U.S. Treasury and Canada are paid 

in full. After the Sale, New Chrysler 

became the new legal entity, Chrysler 

Group LLC. The claims of Chrysler 

LLC’s unsecured creditors were not 

assumed by New Chrysler through the 

Bankruptcy Proceeding unless expressly 

provided for in the MTA. Among the 

claims that were not assumed by New 

Chrysler, was the obligation owed by 

Chrysler LLC to provide retiree medical 

benefits pursuant to the Memorandum 

of Understanding Post-Retirement 

Medical Care, dated October 12, 2007, 

between Chrysler and the UAW and the 

Memorandum of Understanding PostRetirement Medical Care, dated April 

29, 2009, between Chrysler and the 

UAW (together, the ‘‘MOUs’’), as well as 

the English Settlement Agreement 

reached in UAW v. Chrysler, LLC, Civ. 

Act. No. 2:07–cv–14310 (E.D. Mich. 

complaint filed October 11, 2007). 

New Chrysler represents that the 

Bankruptcy Proceeding and related Sale 

are critical to the survival of the 

business previously conducted by 

Chrysler LLC. New Chrysler’s 

emergence from bankruptcy was 

dependent on the achievement of a 

number of interrelated agreements 

among its creditors, lenders, interested 

government agencies, and unionized 

employees. To avoid the devastation to 

the global economy that would be 

caused if Chrysler’s business were to 

fail, the governments of the United 

States, Canada, and the Province of 

Ontario have offered to fund a new 

venture, New Chrysler, that will 

combine substantially all of Chrysler 

LLC’s core operating assets with 

advanced automotive technology, 

distribution, procurement capabilities, 

and management services of Fiat or its 

subsidiaries to create an ongoing viable 

automobile company. Under these 

extraordinary and urgent circumstances, 

the governments are prepared to 

subsidize the restructured New Chrysler 

to ensure that a viable automobile 

manufacturing industry remains in 

North America. Knowing how quickly 

New Chrysler’s prospects could 

deteriorate, however, the governments 

have placed stringent conditions on 

their commitment. Those stringent 

conditions include the conditions 

related to the exemption transaction, 

which is an integral component of that 

larger picture. 

The UAW asserted during the 

Bankruptcy Proceeding, and New 

Chrysler denied, that New Chrysler was 

bound by the MOUs as a successor to 

Chrysler LLC and that it was, therefore, 

responsible for providing the retiree 

medical benefits contemplated. After 

due consideration of the factual and 

legal arguments regarding this issue, as 

well as the costs, risks, and delays 

associated with litigating the issue, New 

Chrysler and the UAW agreed to enter 

into a settlement agreement, that was 

presented to the Bankruptcy Court for 

approval after notice was provided to 

affected parties. Ultimately, the 

Modified Settlement Agreement was 

approved by the Bankruptcy Court and 

the initial steps towards implementing 

the transactions that are at the heart of 

this application began to occur as 

contemplated in that agreement. 

After several months of arms length 

negotiations, the UAW has asserted that, 

after due consideration of the issues 

involved and seeking to avoid 

protracted litigation on the matter, it 

entered into a Modified Settlement 

Agreement with New Chrysler under 

which New Chrysler agreed to provide 

retiree medical benefits to a defined 

group of current UAW retirees who 

were formerly employed by Chrysler 

LLC as well as a defined group of 

current active employees (once retired) 

of New Chrysler who are covered under 

a collective bargaining agreement 

between New Chrysler and the UAW 

(collectively, the ‘‘Covered Group’’). The 

medical benefit coverage for New 

Chrysler active employees prior to their 

retirement is not within the scope of 

this Modified Settlement Agreement 

and shall continue to be provided in 

accordance with the terms of the 

applicable collective bargaining 

agreement and health care benefit plan. 

The Modified Settlement Agreement 

is another part of the complete and 

integrated arm’s-length transactions 

involving multiple parties, including 

New Chrysler, Fiat, the Treasury 

Department, the Canadian Government, 

and the UAW. Throughout the 2009 

negotiations over the terms of the 

Settlement Agreement, the parties 

engaged in extended discussions 

concerning the impact of rising health 

care costs on New Chrysler’s financial 

viability. In this regard, the UAW has 

completed its due diligence utilizing 

professional financial and legal advisors 

with respect to the Modified Settlement 

Agreement and determined that it is 

fair, reasonable and in the best interest 

of the Covered Group. 

On June 10, 2009, 41 days after filing 

for bankruptcy protection, the sale of 

most of Chrysler LLC’s assets to New 

Chrysler was completed. As discussed 

in more detail below, Fiat will initially 

own a minority 20% stake of New 

Chrysler with the option of taking 

additional equity up to a 35% stake if 

certain operational and capitalization 

goals are achieved. 

Ownership of New Chrysler 

Following the bankruptcy proceeding 

and the sale of the assets from Chrysler 

LLC to New Chrysler, initial ownership 

of New Chrysler will be broken into two 

classes of membership interests, Class A 

(800,000 interests) and Class B (200,000 

interests). Fiat will initially own the 

200,000 Class B membership interests, 

representing 20% of the voting and 

economic interest of New Chrysler; the 

United States Treasury Department will 

own 98,461 Class A membership 

interests; the Canadian Government will 

together own 24,615 Class A 

membership interests, and the VEBA 

Trust will own 676,924 Class A 

membership interests (the Class A 

membership interests initially owned by 

the Trust are referred to herein as the 

‘‘Shares’’), in each case, subject to the 

applicable terms and conditions 

described below. 

Initially, the Class A and Class B 

membership interests generally are 

identical except that the Class B 

membership interests may ultimately 

represent a greater percentage of the 

outstanding equity interest in New 

Chrysler upon the occurrence of certain 

Class B events (discussed below). Fiat 

has several other options to acquire 

additional Class A membership interests 

(also discussed below) except that, until 

the U.S. Treasury loan and the Canadian 

loan to New Chrysler have been repaid 

in full, Fiat may not acquire additional 

membership interests if such exercise or 

acquisition would cause the total 

interest held by Fiat and its affiliates to 

exceed 49.9 percent. At a future date, 

the earlier of January 1, 2013, or the date 

of any New Chrysler Initial Public 

Offering (IPO), each outstanding Class B 

membership interest will be 

automatically converted to Class A 

membership interests, thereby reducing 

the Class B membership to zero. 

Pursuant to the New Chrysler 

Operating Agreement (the Operating 

Agreement), beginning on June 10, 2009, 

and ending on December 31, 2012, the 

occurrence of three events (the ‘‘Class B 

events’’) would cause the value of Class 

B membership interests held by Fiat to 

increase by 5% for each event, thereby 

increasing Fiat’s interest up to a 

maximum of 15% for all three events, 

without any new issuance of shares. The 

Class B events are as follows: 

(1) If New Chrysler receives 

government approvals for the 

production of an engine based on the 

Fiat’s fully integrated robotized engine 

family to be manufactured in the U.S. 

and delivers a commitment to begin 

commercial production of the engine as 

soon as commercially practicable; 


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51186 Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 

9 VEBA Holdco means one or more Delaware 

limited liability companies and/or corporations to 

which the VEBA Trust transferred all or part of the 

Membership Interests issued to the VEBA Trust 

pursuant to the Equity Subscription Agreement. 

(2) if New Chrysler records 

cumulative revenues reported in the 

quarterly financial statements in an 

amount specified in the New Chrysler 

Operating Agreement attributable to the 

company’s sales made outside of the 

NAFTA Countries following the date of 

the Operating Agreement and if New 

Chrysler executes one or more franchise 

agreements covering in the aggregate at 

least 90% of the total Fiat group 

automobile dealers in Latin America 

pursuant to which such dealers will 

carry New Chrysler products; 

(3) if New Chrysler receives ecological 

event governmental approvals for a car 

based on Fiat platform technology that 

has fuel efficiency measured by miles 

per gallon of at least 40 combined miles 

per gallon fuel economy and delivers a 

commitment to begin assembly in 

commercial quantities in a production 

facility located in the U.S. as soon as 

commercially practicable. 

According to the terms of the 

Operating Agreement, in the event that 

Fiat determines that a Class B event has 

occurred prior to January 1, 2013, it 

must submit written notice to New 

Chrysler. After supplying written notice, 

such event shall be deemed to have 

irrevocably occurred unless the 

company supplies written notice of 

objection. If an objection is raised, then 

New Chrysler and Fiat will attempt in 

good faith to resolve the dispute. If no 

agreement is reached, then the parties 

will enter into binding arbitration. 

Accordingly, the 200,000 Class B 

membership interests held by Fiat will 

increase to thirty-five percent (35%) of 

the voting and economic interest of New 

Chrysler and the 800,000 Class A 

membership interests held by the 

Treasury Department, the Canadian 

Government and the VEBA Trust will be 

diluted to sixty-five percent (65%) of 

the voting and economic interest of New 

Chrysler. 

On the earlier of January 1, 2013 or 

any New Chrysler IPO, each outstanding 

Class B membership interest will be 

exchanged for Class A membership 

interests in an amount such that the 

proportional interest of Fiat in New 

Chrysler is unchanged. 

Alternative and Incremental Call 

Options 

If one or more of the Class B events 

does not occur prior to January 1, 2013, 

Fiat will have the option beginning on 

January 1, 2013 and ending on June 30, 

2016, to purchase from New Chrysler 

5% of the Class A membership interests 

for each Class B event that has not 

occurred (the Alternative Call Option). 

The price will be calculated pursuant to 

a formula, the use of which depends 

upon whether or not New Chrysler has 

completed an IPO before Fiat exercises 

any call options, and which has been 

designed to approximate the fair market 

value of the interests at the time of 

exercise. Fiat additionally has the 

option to purchase from the Company 

Class A membership interests in an 

aggregate amount of up to 16% of the 

outstanding membership interests (the 

‘‘Incremental Call Option’’). The time 

frame for Fiat to exercise this option is 

the same as for the Alternative Call 

Option (January 1, 2013 through June 

30, 2016). 

Call Option Agreement 

Initially, New Chrysler will not be 

publicly traded, though there are 

mechanisms for the VEBA Trust to sell 

the Shares under certain conditions to 

other parties prior to New Chrysler 

becoming a publicly traded company. 

The VEBA Trust, Fiat, the Treasury 

Department and the Canadian 

Government agreed to provide Fiat with 

additional incentives to encourage Fiat 

to take action that will increase the 

aggregate value of the parties’ 

investment in New Chrysler. Thus, in 

accordance with the Call Option 

Agreement, between July 1, 2012 and 

June 1, 2016, Fiat has the option to 

purchase from the VEBA Trust up to 

40% of the VEBA Trust’s equity 

interests in New Chrysler. These 

interests consist of the 676,924 Class A 

membership interests issued to the 

VEBA Trust by New Chrysler on 

closing, less any interests that the VEBA 

Trust has already disposed of under the 

Equity Recapture Agreement (as more 

fully discussed below) at the time of 

exercise. Fiat may purchase no more 

than 20% of such interests within any 

six-month period. Fiat’s ability to 

exercise its rights under the Call Option 

Agreement is limited by the requirement 

that, until New Chrysler has repaid its 

loan from the United States Treasury 

and the Canadian Government in full, 

Fiat may not own more than 49.9% of 

the outstanding equity interests in New 

Chrysler. 

The exercise price will be determined 

pursuant to a formula which is designed 

to arrive at the fair market value of the 

interests. The exercise price may be 

adjusted if, upon exercise, the VEBA 

Trust elects to transfer to Fiat interests 

in one or more entities through which, 

for tax and administrative purposes, the 

VEBA Trust holds membership interests 

(each such entity, a ‘‘VEBA HoldCo’’).9

Transfer of VEBA HoldCo interests, 

rather than direct transfer of 

membership interests, would prevent 

Fiat from obtaining a step-up in tax 

basis. Thus, Fiat might be required to 

recognize additional gain upon a 

subsequent disposition, beyond any 

gain attributable to the period in which 

Fiat owns the membership interests. 

The Call Option Agreement provides for 

a reduction in price to compensate for 

this increased tax liability, offset by any 

positive tax attributes for Fiat (e.g., net 

operating losses) caused by receiving 

interests in the VEBA HoldCo rather 

than membership interests directly. If 

Fiat, the VEBA, and the United States 

Treasury cannot agree on the amount of 

such an adjustment, each has a right to 

appoint an arbitrator to a panel of three 

arbitrators who will determine the 

amount of the adjustment. 

First Offer Right and Equity Recapture 

Agreement 

In addition to the Call Options, Fiat 

will have the first right to purchase all 

or a part of the Shares (the ‘‘First Offer 

Right’’) if a third party has offered to 

purchase some or all of the Shares 

beginning two (2) years after the Closing 

Date as defined in the New Chrysler 

Operating Agreement. When the 

Committee receives the proposed Sale 

offer after the start of the First Offer 

Right period, the Committee must issue 

written notice to Fiat, the Treasury 

Department, the Canadian Government, 

and New Chrysler stating its intention to 

sell some or all of the Shares, the 

number of such Shares, the price and 

terms the Committee proposes to be 

paid for such Shares, and other material 

terms of the proposed Sale (the ‘‘First 

Notice’’). For thirty (30) days after the 

issuance of the First Notice, Fiat will 

have the irrevocable non-transferable 

First Offer Right to purchase all or a 

portion of the Shares subject to the 

proposed Sale, at the price and under 

the terms and conditions of such 

proposed Sale. 

Also under the New Chrysler 

Operating Agreement, at any time prior 

to an initial public offering of New 

Chrysler, holders of 75% of outstanding 

membership interests in New Chrysler 

may decide to transfer a majority of 

membership interests to a third party. In 

that event, those holders may also 

require all holders of membership 

interests to transfer their interests on the 

same terms and for the same 

consideration (the ‘‘Drag-Along Right’’). 

The VEBA Trust may elect to transfer 

membership interests directly or to 

transfer interests in one or more VEBA 

Holdcos; if the VEBA Trust transfers 

interests in VEBA Holdcos, then 


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consideration paid the VEBA Trust 

pursuant to such a transaction would be 

adjusted for the same equitable taxrelated factors described above under 

the Call Option Agreement. On behalf of 

the VEBA Trust, the Independent 

Fiduciary would negotiate in good faith 

with the New Chrysler Board of 

Directors (the ‘‘Board’’) over the amount 

of any adjustment in price resulting 

from the transfer of interests in a VEBA 

HoldCo. If the Board and the 

Independent Fiduciary could not come 

to an agreed-upon resolution, the 

Independent Fiduciary would appoint 

one of the three members of a board of 

arbitrators who would determine the 

amount of the adjustment. The second 

arbitrator would be appointed by the 

Board, and the third would be agreed 

upon by the Board and the Independent 

Fiduciary, or, failing such agreement, 

appointed by the administering 

authority for the American Arbitration 

Association. 

In addition to the above-described 

agreements, and as a condition to the 

Treasury Department’s agreement to 

provide financing for New Chrysler, the 

VEBA Trust has entered into a separate 

agreement with the Treasury 

Department referred to as an Equity 

Recapture Agreement. Under the terms 

of the Equity Recapture Agreement, if 

the VEBA realizes from the sale of the 

Shares a total value of more than the 

threshold amount of $4.25 billion, 

increased at nine percent (9%) per 

annum starting on January 1, 2010 (the 

‘‘Threshold Amount’’), the VEBA agrees 

to pay to the Treasury Department the 

proceeds received in excess of the 

Threshold Amount plus any remaining 

Shares still held by the VEBA (the 

‘‘Contingent Value Right’’). The nine 

percent (9%) per annum cap on the 

increase is derived from actuarial 

assumptions that were used to 

determine the amount of appreciation 

required to provide the anticipated 

benefits under the Plan. In addition, the 

Treasury Department has the right, at 

any time, to purchase all outstanding 

Shares held by the VEBA Trust for an 

amount equal to the Threshold Amount 

less the amount of any proceeds already 

received by the VEBA Trust in respect 

of any of the Shares. This right expires 

upon the earlier of its exercise and the 

VEBA Trust’s surrender of all remaining 

New Chrysler interests held by the 

VEBA Trust to the Treasury Department. 

If on December 31, 2014, December 

31, 2016, or December 31, 2018, the 

VEBA Trust’s Shares are not equal to the 

value of the Threshold Amount, and the 

VEBA Trust or a VEBA Trust-controlled 

affiliate continues to hold Shares, the 

VEBA Trust is obligated under the 

Equity Recapture Agreement to transfer 

a portion of such Shares to the Treasury 

Department. The value of the transferred 

Shares will equal a set percentage of the 

Black Scholes value of the Treasury 

Department’s Contingent Value Right. 

The applicable percentages of the value 

of the Contingent Value Right to be 

transferred on each of December 31, 

2014, December 31, 2016, and December 

31, 2018, are 33%, 50%, and 100%, 

respectively. The amounts transferred 

on prior Interim Settlement Dates are 

subtracted from the amount to be 

transferred on each Interim Settlement 

Date. 

The Black Scholes value of the 

Contingent Value Right will be 

determined using the following 

assumptions: (1) A Share price based on 

the average over the prior 60 days of 

trading; (2) a time to maturity equal to 

ten years, seven years, or five years, on 

December 31, 2014, December 31, 2016, 

and December 31, 2018, respectively; (3) 

an exercise price based on an implied 

future stock price equivalent to the 

Threshold Amount on the applicable 

maturity date; and (4) a risk free interest 

rate equal to the rate for a U.S. Treasury 

Note for a term equal to the assumed 

time to maturity. 

If New Chrysler stock is not publicly 

traded on an Interim Settlement Date, 

the U.S. Treasury and the VEBA will 

each appoint an independent nationally 

recognized investment bank to conduct 

a separate appraisal of the value of the 

Contingent Value Right. If the separate 

appraisals yield values within 10% of 

each other, those values will be 

averaged. If the separate appraisals are 

more than 10% apart, the VEBA and the 

U.S. Treasury will appoint a third 

independent appraiser, whose 

determination will be averaged with the 

determination closest to that of the third 

independent appraiser. 

Establishment of the New VEBA Plan 

and Trust 

The Modified Settlement Agreement 

provides that, upon the 

‘‘Implementation Date’’, the retiree 

medical benefit obligations to the 

‘‘Covered Group’’ will become fixed and 

such obligations will be transferred to 

the New Chrysler VEBA Plan and the 

VEBA Trust, which has been established 

to fund benefits under the Plan. The 

New Chrysler VEBA Plan and the VEBA 

Trust shall, as of the Implementation 

Date, be the employee welfare benefit 

plan and trust that are exclusively 

responsible for all retiree medical 

benefits with respect to the Class and 

the Covered Group. The UAW Chrysler 

Retirees Employees Beneficiary 

Association, an employee organization 

within the meaning of section 3(4) of 

ERISA (‘‘Chrysler Retiree EBA’’), acting 

through the Committee, will establish 

and maintain the New Chrysler VEBA 

Plan, subject to ERISA, to provide 

retiree health benefits to the Class and 

Covered Group after the Implementation 

Date, which will be December 31, 2009. 

Prior to the Section 363 Sale, the Old 

Chrysler Plan provided retiree health 

benefits to the Class and the Covered 

Group; following the closing of the 

Section 363 Sale, the New Chrysler Plan 

(‘‘New Chrysler VEBA Plan’’) assumed 

responsibility for the provision of the 

benefits with respect to claims incurred 

on or before the Implementation Date. 

The New Chrysler VEBA Plan will be 

responsible for benefit claims incurred 

after the Implementation Date. It is 

anticipated that there will be 

approximately 120,000 participants and 

beneficiaries of the New Chrysler VEBA 

Plan beginning on January 1, 2010. 

After the Implementation Date, the 

Committee will have sole responsibility 

to determine the scope and level of 

retiree health benefits available to the 

Class and Covered Group under the 

New Chrysler VEBA Plan. The 

Committee may raise or lower the level 

of retiree health care benefits available 

to the Class and Covered Group. In 

exercising its authority over benefit 

design, the Committee shall be guided 

by the principle that the New Chrysler 

VEBA Plan should provide substantial 

health benefits for the duration of the 

lives of all participants and beneficiaries 

in the Plan. 

The UAW Chrysler Retirees EBA 

along with the UAW General Motors 

Company Retirees EBA and the UAW 

Ford Retirees EBA, each acting through 

the Committee, established the VEBA 

Trust on October 16, 2008. The VEBA 

Trust will be the funding source for the 

New Chrysler VEBA Plan. The VEBA 

Trust is the subject of a trust agreement 

between the trustee and the Committee, 

acting on behalf of the respective EBAs. 

The VEBA Trust is intended to be taxexempt under section 501(c)(9) of the 

Internal Revenue Code, as amended, 

and, as a trust holding assets of plans 

subject to ERISA, will itself be subject 

to ERISA’s fiduciary responsibility 

standards. 

The VEBA Trust will have three 

separate retiree accounts, designed to 

segregate payments attributable to 

General Motors (GM), Ford, and 

Chrysler, pursuant to the terms of each 

company’s settlement agreement with 

the UAW and each respective class. 

Each retiree account will be a separate, 

dedicated account, to be used for the 

sole purpose of funding benefits 

provided under the separate plans, 


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10Under ERISA section 403(a)(1), a plan may 

expressly provide that a trustee is subject to the 

direction of a named fiduciary who is not a trustee, 

in which case the trustee shall be subject to proper 

directions of such fiduciary which are made in 

accordance with the terms of the plan and which 

are not contrary to the Act. 29 U.S.C. 1103(a)(1). 

providing health benefits to the retirees 

of GM, Ford and Chrysler, and defraying 

the reasonable expenses of each plan. 

Each retiree account will contain a 

separate sub-account maintained to hold 

any employer security. Assets from one 

retiree account may not offset the 

liabilities or defray the expenses 

attributable to another retiree account. 

The VEBA Trust was structured in this 

way to allow for the pooled investment 

of assets and to provide economies of 

scale to the respective plans’ 

investments, while maintaining a 

separate plan for each three retiree 

classes. Unless the Committee decides 

to establish segregated investment 

vehicles for specific separate retiree 

accounts, the assets of the separate 

retiree accounts, other than any 

employer security sub-account, will be 

invested on a pooled basis within the 

VEBA Trust (provided that the interest 

of each account remains separately 

accounted for). 

The Modified Settlement Agreement 

itself contemplates three separate and 

distinct funding sources for the VEBA 

Trust: (1) Assets held under a preexisting internal Chrysler VEBA (the 

‘‘Preexisting Internal VEBA’’) that are 

attributable to the UAW retirees covered 

under the Modified Settlement 

Agreement—such assets were valued at 

$1,589,500,000 as of March 31, 2009, 

and those assets, plus the earnings 

thereon, are expected to be contributed 

to the VEBA Trust on or about January 

1, 2010; (2) the Shares, which will 

represent sixty-seven and sixty-nine 

one-hundredths percent (67.69%) of the 

fully diluted ownership of New Chrysler 

as of the consummation of the Sale; and 

(3) a note issued by New Chrysler with 

a principal amount of $4,587,000,000 

and an implicit interest rate of nine 

percent (9%) (the ‘‘Note’’) payable in 

fixed annual installments pursuant to 

the following schedule: 

(i) Payment of $315 million on July 15, 

2010 

(ii) Payment of $300 million on July 15, 

2011 

(iii) Payment of $400 million on July 15, 

2012 

(iv) Payment of $600 million on July 15, 

2013 

(v) Payment of $650 million on July 15, 

2014 

(vi) Payment of $650 million on July 15, 

2015 

(vii) Payment of $650 million on July 

15, 2016 

(viii) Payment of $650 million on July 

15, 2017 

(ix) Payment of $823.8 million on July 

15, 2018 

(x) Payment of $823.8 million on July 

15, 2019 

(xi) Payment of $823.8 million on July 

15, 2020 

(xii) Payment of $823.8 million on July 

15, 2021 

(xiii) Payment of $823.8 million on July 

15, 2022 

(xiv) Final Payment of $827.1 million on 

July 15, 2023 

The Shares and the Note were 

contributed to the VEBA Trust on the 

closing date of the Sale, which was June 

10, 2009. 

The Trustee, State Street Bank and 

Trust Company, shall hold the assets 

and income of the Trust in accordance 

with the terms of the New Chrysler 

VEBA Plan. According to the applicant, 

the Trustee has no discretionary 

authority with respect to the investment 

of assets held in the VEBA Trust, and 

must exercise its power in accordance 

with the instructions of the Independent 

Fiduciary with respect to any employer 

security, and in all other cases the 

instructions of the Committee or any 

investment manager that may be 

appointed by the Committee.10 Subject 

to the direction of the Independent 

Fiduciary with respect to any employer 

security, the Trustee shall make 

payments from the VEBA Trust Fund to 

pay benefits under the Plans as directed 

by the Committee or its designee. 

According to the terms of the Trust 

agreement, the Trustee may be removed 

by the Committee at any time upon 

thirty (30) days’ advance written notice. 

The Committee 

The Committee will serve as Plan 

Administrator and will be a named 

fiduciary of the New Chrysler VEBA 

Plan. The Committee will determine the 

benefits to be provided under the Plan, 

including, without limitation, which 

participants will receive benefits, in 

what form, and in what amount, and the 

contributions that the participants will 

be required to make to help defray the 

cost of their coverage. The Committee, 

acting on behalf of the EBAs, shall be 

responsible for the implementation, 

amendment and overall operation of the 

VEBA Trust and the establishment, 

amendment, maintenance, and 

administration of the Plans (i.e., 

Chrysler, Ford and GM). Subject to the 

provisions of the VEBA Trust and 

applicable laws, the Committee shall 

have sole, absolute and discretionary 

authority to adopt such rules and 

provisions and take all actions that it 

deems desirable for the administration 

of the VEBA Trust, and to interpret the 

terms of the Plans and VEBA Trust. The 

Committee shall be guided by the 

principle that the Plans should provide 

substantial health benefits for the 

duration of the lives of all participants 

and beneficiaries. 

The Committee consists of eleven (11) 

individuals, five (5) appointed by the 

UAW and six (6) who are Independent 

Members. Independent Member terms 

shall be for three (3)-year periods, 

except the initial terms of four (4) of the 

six (6) original Independent Members, 

two (2) of whom shall have an initial 

term of two (2) years, and two of whom 

shall have an initial term of one (1) year. 

An Independent Member may serve 

more than one term. Neither Chrysler 

LLC nor New Chrysler has any 

appointment power, and the Committee 

will function independently of both. 

The initial Independent Members were 

approved by the district court in the 

English case. No member of the 

Committee may be a current or former 

officer, director or employee of Old GM 

(i.e., prior to bankruptcy), New GM, 

Ford, Chrysler LLC or New Chrysler, 

except that a retiree who was 

represented by the UAW in his or her 

employment with either Old GM, New 

GM, Ford, Chrysler LLC, or New 

Chrysler or an employee of any such 

company who is on leave from the 

company and is represented by the 

UAW, may be a UAW Member. None of 

the Independent Members nor any of 

their family members, employers or 

partners may have any financial or 

institutional relationship with either 

Old GM, New GM, Ford, Chrysler LLC, 

or New Chrysler if such relationship 

could reasonably be expected to impair 

such Independent Member’s exercise of 

independent judgment. 

An Independent Member may be 

removed or replaced, and a successor 

designated, at any time by an affirmative 

vote of nine (9) of the other members of 

the Committee. In the event of a vacancy 

of an Independent Member position, 

whether by expiration of a term, 

resignation, removal, incapacity, or 

death of an Independent Member, a 

successor Independent Member shall be 

elected by the affirmative vote of nine 

(9) Members, and when possible, such 

successor Independent Member shall be 

elected prior to the expiration of the 

term, resignation, removal, incapacity, 

or death of the Independent Member 

being replaced. The UAW Members 

shall serve at the discretion of the UAW 

International President, and may be 

removed or replaced, and a successor 

designated, at any time by written 


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11The sub-account is maintained by the Trustee 

within each Separate Retiree Account to hold 

separately any Employer Security and any proceeds 

from the disposition of any Employer Security. 

12 Generally, the Committee will remain 

responsible for corporate and tax matters relating to 

the creation and maintenance (e.g., corporate and 

tax filings and elections, annual reports, etc.) of one 

or more ‘‘passive,’’ wholly owned title-holding 

LLCs that will actually take legal title to the New 

Chrysler interests on behalf of the VEBA. These 

holding entities are contemplated in the various 

transaction documents, will elect to be taxed as ‘‘C’’ 

corporations, and will exist primarily for tax 

reasons (relating to VEBA tax qualification and 

unrelated business income tax considerations). 

13The Department notes that candidates for the 

position of Independent Fiduciary to the New 

Chrysler VEBA Plan may be affiliated with entities 

that provide services to Old GM, New GM, Ford, 

Chrysler LLC or New Chrysler or their affiliates. It 

is the responsibility of the Committee to determine 

whether such affiliations are likely to affect the 

judgment of the candidate in performing its services 

as Independent Fiduciary. 

14Cause is defined in the Independent Fiduciary 

Agreement as: (i) Any disqualifying event described 

in ERISA section 411; (ii) determination by any 

court, arbitrator or government regulatory body that 

the Independent Fiduciary has violated any civil or 

criminal law (including, but not limited to, 

securities, antitrust or ERISA) in connection with 

the performance of its responsibilities to the VEBA 

Trust (For purposes of avoidance of doubt in 

connection with this and the subsequent 

subparagraph, a ‘‘determination’’ shall mean any 

written judgment, order or decree; court-approved 

settlement; arbitration award; or enforcement action 

of a government regulatory body or SRO, in the 

form of a written sanction, claim, demand or 

opinion, whether or not appealable); (iii) 

determination by any court, arbitrator or 

government regulatory body that the Independent 

Fiduciary has materially breached the terms of its 

engagement, whether or not appealable; (iv) any 

action by the Independent Fiduciary that results in 

imposition of a civil or criminal sanction, any 

prohibited transaction excise tax, or any civil 

judgment or award of damages, on the VEBA Trust, 

the Committee, the trustee, or their respective 

employees, officers directors or owners (whether or 

not subject to indemnity by the Independent 

Fiduciary, an insurer, or any other person); (v) 

termination, resignation, or death of the 

Independent Fiduciary principal or officer assigned 

to serve as the relationship principal with respect 

to the VEBA Trust, or the inability of such person 

to perform his or her duties for a continuous period 

of more than 30 days; (vi) any change of ownership 

of the Independent Fiduciary that constitutes an 

‘‘assignment’’ of the Independent Fiduciary’s 

contract with the VEBA Trust, within the meaning 

of the Investment Advisers Act; (vii) failure of the 

Independent Fiduciary to qualify as an ‘‘investment 

manager’’ within the meaning of ERISA section 

3(38); (viii) any change in the clientele, business or 

ownership of the Independent Fiduciary that results 

in an actual conflict of interest; (ix) failure of the 

Independent Fiduciary to take into account the 

legitimate needs of the VEBA Trust for liquidity to 

pay benefits; (x) violation of any conditions 

imposed on the Independent Fiduciary under the 

terms of the prohibited transaction exemption 

issued by the Department; (xi) any other action or 

inaction of the Independent Fiduciary that the 

Committee determines to be a material breach of the 

Independent Fiduciary’s agreement or any law, or 

is likely to result in an irreconcilable conflict; (xii) 

any circumstance that leads the Committee to 

reasonably conclude that the termination of the 

Independent Fiduciary and replacement by a 

successor Independent Fiduciary is in the financial 

interest of the VEBA Trust, provided that the 

Committee documents the reasons for the 

termination. 

notice from the UAW International 

President to the Committee. 

A majority of the Members of the 

Committee then in office shall 

constitute a quorum for the purpose of 

transacting any business; provided that 

at least one Independent Member and 

one UAW Member are present. Each 

Member of the Committee present at the 

meeting shall have one vote. All actions 

of the Committee shall be by majority 

vote of the entire Committee, provided 

that at least one Independent Member 

and one Union Member must be a 

Member in the majority for any 

Committee action to take effect. 

Independent Fiduciary 

Pursuant to the Trust Agreement of 

the VEBA Trust, the Committee, in its 

sole discretion, will appoint an 

Independent Fiduciary to manage the 

Employer Security Sub-Account 

following the consummation of the 

Section 363 Sale.11 The Independent 

Fiduciary shall be a bank, trust 

company or registered investment 

adviser under the Investment Advisers 

Act of 1940, as amended. The 

Independent Fiduciary will be a 

‘‘named fiduciary’’ and ‘‘investment 

manager’’ as defined in ERISA and shall 

act on behalf of the New Chrysler VEBA 

Plan and VEBA Trust in connection 

with the discretionary management and 

disposition (but not the acquisition) of 

all employer securities contributed to 

the VEBA Trust by New Chrysler 

including, as currently relevant, the 

Notes and the Shares (including 

valuation of the Shares), the Call Option 

and any other employer securities held 

by the VEBA Trust. The exercise of any 

discretionary rights appurtenant to the 

Shares, the Note, or the Call Options 

(excluding the VEBA Trust’s acceptance 

of the contribution of such Shares, and 

Note) shall be directed by the 

Independent Fiduciary. In effect, the 

parties anticipate that the Independent 

Fiduciary will ‘‘step into the shoes’’ of 

the VEBA Trust in connection with the 

Trust’s exercise of its rights and 

responsibilities as owner of the Notes 

and the Shares, with the sole exception 

of the Trust’s right to appoint (with the 

approval of the UAW) a director to the 

New Chrysler Board.12 The appointment 

of the Independent Fiduciary to perform 

these functions is a contractual 

obligation of the VEBA Trust. In 

addition, the Committee believes it is 

appropriate and desirable to appoint an 

Independent Fiduciary with specialized 

expertise as investment manager for 

purposes of the protections afforded by 

ERISA section 405(d). Additionally, 

under the Shareholder Rights 

Agreement, the New Chrysler VEBA 

Plan must vote its Membership Interest 

in New Chrysler in accordance with the 

recommendations of the independent 

directors of New Chrysler, in proportion 

to those recommendations. Therefore, 

the Independent Fiduciary will have no 

responsibility for the voting of the 

Membership Interests. 

The Independent Fiduciary must be 

independent of and unrelated to 

Chrysler LLC, New Chrysler, the UAW 

and the Committee or their affiliates. 

This provision will be violated if (1) 

such fiduciary directly or indirectly 

controls, is controlled by, or is under 

common control with Chrysler LLC, 

New Chrysler, the UAW, the Committee 

or their affiliates, (2) such fiduciary 

directly or indirectly receives any 

compensation or other consideration 

from Chrysler LLC, New Chrysler, the 

UAW or any Committee member in his 

or her individual capacity in connection 

with any transaction described in this 

exemption (except that an independent 

fiduciary may receive compensation 

from the Committee or the New Chrysler 

VEBA Plan for services provided to the 

New Chrysler VEBA Plan in connection 

with the transactions discussed 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 

the fiduciary, in any fiscal year, from 

Chrysler LLC, New Chrysler, the UAW 

or a member of the Committee in his or 

her individual capacity, exceeds 3% of 

the fiduciary’s annual gross revenue 

from all sources (for federal income tax 

purposes) for its prior tax year.13

The Independent Fiduciary may be 

removed by the Committee on 30 days 

written notice only for cause.14 The 

removal will be effective as specified in 

the written notice, provided that the 

Independent Fiduciary has been given 

notice of the appointment of a successor 

independent fiduciary. No successor 

will be appointed in the event the New 

Chrysler VEBA Plan ceases to hold any 

employer security. In the event that the 

New Chrysler VEBA Plan subsequently 

acquires or holds an employer security 

and no appointment of a successor 

independent fiduciary has been made, 

any court of competent jurisdiction 

may, upon application by the retiring 

independent fiduciary, appoint a 

successor after such notice to the 

Committee and the retiring independent 

fiduciary. 


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15Unless otherwise indicated, all references 

herein to regulations are to regulations found in 29 

CFR and all references to statutory sections are to 

provisions of the Employee Retirement Income 

Security Act of 1974, as amended (‘‘ERISA’’), as 

codified in Title 29 of the United States Code. 

Following the second anniversary of 

the Closing Date, under the New 

Chrysler Operating Agreement, the 

VEBA Trust and other holders of Shares 

may transfer their interests in New 

Chrysler to third parties. Under the 

Trust Agreement, the Independent 

Fiduciary would exercise the VEBA 

Trust’s right to make such transfers. 

Before transferring New Chrysler 

Membership Interests to a third party, 

non-Fiat holders must afford Fiat a right 

of first offer, and other holders a right 

of second offer, whereby Fiat or the 

other holders could purchase the 

interests to be transferred on the same 

terms as the terms offered to the third 

party. With respect to employer 

securities held by the VEBA Trust, the 

Independent Fiduciary would have the 

responsibility to afford Fiat the right of 

first offer and other holders the right of 

second offer according to the terms of 

the New Chrysler Operating Agreement. 

The rights of the VEBA Trust under 

the Shareholders Agreement and the 

Registration Rights Agreement are rights 

concerning the management and 

disposition of employer securities, and 

as such, according to the terms of the 

VEBA Trust, will be exercised by the 

Independent Fiduciary. The 

Independent Fiduciary will determine 

when and whether to exercise certain 

registration rights. 

The Committee delegated to a 

subcommittee (i.e., three Committee 

members) the responsibility to retain an 

Independent Fiduciary on behalf of the 

New Chrysler VEBA Plan. The 

subcommittee initially determined to 

proceed with the assumption that the 

interests of each plan whose assets are 

held by the VEBA Trust would be best 

served by seeking to retain a single 

qualified Independent Fiduciary to 

represent all three plans (providing 

health benefits, respectively, to retirees 

of Chrysler, GM, and Ford). However, 

the subcommittee recognizes the 

possibility that engaging multiple 

Independent Fiduciaries may turn out to 

be the better option. 

The subcommittee intends, as part of 

the interview process for potential 

candidates for the Independent 

Fiduciary appointment, to question the 

candidates on the nature and likelihood 

of potential conflicts of interest, the 

appropriate means of monitoring and 

communicating actual or potential 

conflicts, including whether the 

candidates currently have formal 

conflict monitoring procedures, and 

mechanisms for dealing with actual or 

potential conflicts as they are identified. 

After reviewing the candidates’ 

qualifications, capacity to represent all 

three plans, willingness to do so, and 

other relevant factors, in consultation 

with counsel, the subcommittee 

anticipates making a final determination 

as to whether to hire one Independent 

Fiduciary or multiple Independent 

Fiduciaries. 

The subcommittee will work with the 

Independent Fiduciary candidate(s) to 

develop procedures to identify, 

minimize and address conflicts of 

interest as they arise. Specifically, in the 

event that a single Independent 

Fiduciary is appointed, the 

subcommittee will engage a ‘‘conflicts 

monitor’’ to (i) develop a process for 

identifying potential conflicts, (ii) to 

regularly review the Independent 

Fiduciary reports, investment banker 

reports, and public information 

regarding the companies, to identify the 

presence of factors that could lead to a 

conflict, and (iii) further question the 

Independent Fiduciary when 

appropriate. 

Additionally, the subcommittee will 

be prepared to replace the Independent 

Fiduciary in the event of an actual and 

irreconcilable conflict of interest. 

Finally, the subcommittee will require 

the Independent Fiduciary to adopt a 

written policy regarding conflicts of 

interest. Such policy will require that, 

as part of the Independent Fiduciary’s 

periodic reporting to the Committee, the 

Independent Fiduciary includes a 

discussion of actual or potential 

conflicts identified by the Independent 

Fiduciary and options for avoiding or 

resolving the conflict. 

A separate investment bank will be 

retained with respect to each of the 

three plans comprising the VEBA Trust. 

The investment bank’s initial 

recommendations would be made solely 

with the goal of maximizing the returns 

for the single plan that owns the 

securities for which the investment 

bank is responsible. If the Independent 

Fiduciary deviated from such initial 

recommendations, it would find it 

necessary to explain why it deviated 

from a recommendation; additionally, 

such a deviation would be a way for the 

Committee or its designee to flag 

possible conflicts of interest in advance. 

Any contract between the Independent 

Fiduciary and an investment banker 

will include an acknowledgement by 

the investment banker that the 

investment banker’s ultimate client is an 

ERISA plan. 

Board of Directors 

In addition to the VEBA Trust’s 

ownership interest in New Chrysler, for 

so long as the VEBA Trust remains a 

member of, and retains at least a fifteen 

percent (15%) interest in, New Chrysler, 

the VEBA Trust shall have the right 

exercised by the Committee to designate 

one representative to the New Chrysler 

Board of Directors (the ‘‘Board’’), subject 

to the prior written consent of the UAW. 

Pursuant to the New Chrysler Operating 

Agreement, the Board will initially 

consist of nine (9) members; three (3) of 

whom will be appointed by Fiat, three 

(3) of whom will be appointed by the 

Treasury Department (which three 

directors will in turn appoint a fourth 

director (the ‘‘Final Director’’)), one (1) 

of whom will be appointed by the 

Canadian Government, and one (1) of 

whom will be appointed by the VEBA 

Trust (as described above). In addition, 

for so long as the VEBA Trust owns any 

membership interests in New Chrysler, 

the VEBA Trust has agreed to vote its 

membership interests in accordance 

with the recommendations of the 

independent directors of the Board, in 

proportion to such recommendations. 

Fiat will have the right to appoint four 

(4) directors once it obtains an aggregate 

ownership interest of thirty-five percent 

(35%) or more in New Chrysler and the 

Final Director will resign once Fiat 

obtains the right to appoint a fourth 

director. 

Administrative Exemptive Relief 

New Chrysler’s financial 

circumstances preclude it from paying 

cash to the New Chrysler VEBA Plan. As 

explained above, the Bankruptcy 

Proceeding and related Sale were vital 

for the survival of the business 

previously conducted by Chrysler and 

this exemption request is critical to the 

larger overall transaction. Certain 

transactions called for or necessitated by 

the Settlement Agreement between New 

Chrysler and the New Chrylser VEBA 

Plan are prohibited by the restrictions of 

406 of ERISA.15 Accordingly, the 

Applicant requests an administrative 

exemption from the Department with 

respect to: (1) The acquisition by the 

New Chrysler VEBA Plan of the Shares 

and the Note from New Chrysler; (2) the 

holding by the New Chrysler VEBA Plan 

of the Shares and the Note; (3) the 

management of the Shares and Note by 

an Independent Fiduciary; and (4) the 

asset transfers to and from the New 

Chrysler VEBA Plan necessitated by the 

transition of benefits payment 

responsibility from one plan to another, 

or due to mistaken deposits into the 

New Chrysler VEBA Plan. The 

Applicant explains that the contribution 

of the Shares and the Note to the VEBA 


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16An Employer Security is any obligation, note, 

warrant, bond, debenture, stock or other security 

within the meaning of section 407(d)(1) of ERISA 

issued by an employer or an affiliate that is 

acquired or held by the VEBA Trust (or arising from 

any such security through conversion) pursuant to 

a deposit or transfer under one of the Settlements 

with Chrysler, GM, and Ford, the acquisition or 

holding of which (i) is not prohibited by sections 

406(a)(1)(E) or 406(a)(2) of ERISA, or (ii) is the 

subject of a prohibited transaction exemption 

provided under section 408(a) of ERISA. 

17Under sections 5 and 6 of the Modified 

Settlement Agreement, claims incurred before the 

Implementation Date will be paid by New Chrysler, 

an affiliate of New Chrysler or the Preexisting 

Internal VEBA, as applicable, in accordance with 

the terms of the New Chrysler VEBA Plan. 

Trust would violate sections 

406(a)(1)(A), (B), and (E), 406(a)(2), and 

407(a), and 406(b) of the Act. In 

addition, the Applicant requests 

exemptive relief from the prohibitions 

of sections 406(a)(1)(B) and 406(a)(1)(D) 

of ERISA for certain payments and 

reimbursements between New Chrysler, 

the Existing Internal VEBA, and the 

New Chrysler VEBA Plan, and for the 

return of mistaken deposits to the New 

Chrysler VEBA Plan. 

Section 406(a)(1)(E) 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 acquisition, on behalf 

of the plan, of any employer security in 

violation of section 407(a). Section 

406(a)(2) of the Act prohibits a fiduciary 

who has authority or discretionary 

control of plan assets to permit the plan 

to hold any employer security if he 

knows or should know that holding 

such security violates section 407(a). 

Section 407(a)(1) of the Act states that 

a plan may not acquire or hold any 

employer security which is not a 

qualifying employer security. Section 

407(a)(2) of the Act states that a plan 

may not acquire any qualifying 

employer security (or qualifying 

employer real property) if immediately 

after such acquisition the aggregate fair 

market value of the employer securities 

(and employer real property) held by the 

plan exceeds 10% of the fair market 

value of the assets of the plan. Section 

407(d)(5) of the Act defines the term 

‘‘qualifying employer security’’ to mean 

an employer security which is a stock, 

a marketable obligation, or an interest in 

certain publicly traded partnerships. 

After December 17, 1987, in the case of 

a plan, other than an eligible individual 

account plan, an employer security will 

be considered a qualifying employer 

security only if such employer security 

satisfies the requirements of section 

407(f)(1) of the Act. Section 407(f)(1) of 

the Act states that stock satisfies the 

requirements of this paragraph if, 

immediately following the acquisition 

of such stock no more than 25% of the 

aggregate amount of stock of the same 

class issued and outstanding at the time 

of acquisition is held by the plan, and 

at least 50% of the aggregate amount of 

such stock is held by persons 

independent of the issuer. 

In this regard, since the New Chrysler 

Note and Shares are not qualifying 

employer securities within the meaning 

of § 407(d)(5) 16 of ERISA, New Chrysler 

is applying for a prohibited transaction 

exemption to permit the New Chrysler 

VEBA Plan to acquire and hold such 

New Chrysler Note and Shares. 

Similarly, if employer securities and 

employer real property would exceed 

10% of the total assets in the New VEBA 

immediately after transfer of the New 

Chrysler Shares and Note to the New 

Chrysler VEBA Plan, the applicant 

requests an exemption for the 

acquisition and holding of such Note 

and Shares. Thus, an exemption is 

specifically needed because the 

transactions that are intended to 

adequately fund the New Chrysler 

VEBA Plan will result in violations of 

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

and (2) of the Act. 

Additionally, the Department has 

proposed relief from section 

406(a)(1)(A) for the disposition of the 

Shares, in the event that the Shares are 

sold in a transaction involving a party 

in interest. Section 406(a)(1)(A) 

prohibits the sale, exchange or leasing of 

any property between a plan and a party 

in interest. 

Benefit Payments and Reimbursements 

The Applicant requests exemptive 

relief from the prohibitions of sections 

406(a)(1)(B) and 406(a)(1)(D) of ERISA 

for certain payments and 

reimbursements between New Chrysler, 

any affiliate of New Chrysler, the 

Existing Internal VEBA and the New 

Chrysler VEBA Plan. 

ERISA section 406(a)(1)(B) prohibits a 

fiduciary from causing a plan to engage 

in a transaction if he knows or should 

know that such transaction constitutes a 

direct or indirect lending of money or 

other extension of credit between a plan 

and a party in interest. ERISA section 

406(a)(1)(D) prohibits a fiduciary from 

causing a plan to engage in a transaction 

if he knows or should know that such 

transaction constitutes a direct or 

indirect transfer to, or use by or for the 

benefit of, a party in interest, of any 

assets of the plan. 

Prior to the Implementation Date, 

New Chrysler will provide benefits to, 

among others, individuals who 

ultimately will be covered by the New 

Chrysler VEBA Plan. The New Chrysler 

VEBA Plan will have sole responsibility 

and be the exclusive source of funds for 

the payment of retiree medical benefits 

to the Class and Covered Group, with 

respect to benefit claims incurred on 

and after the Implementation Date. 

Under certain circumstances 

connected to the transition, New 

Chrysler, any affiliate of New Chrysler, 

the Existing Internal VEBA and the New 

Chrysler VEBA Plan may arguably 

extend credit or transfer plan assets to 

one another in order to pay benefit 

claims that are the legal responsibility of 

the other party (the ‘‘Responsible 

Party’’).17 The Applicant asserts that 

mispayments and reimbursements are 

likely to occur in the normal course due 

to the administrative realities of health 

care payments and the shifting of 

medical benefit responsibilities between 

New Chrysler, any affiliate of New 

Chrysler, the Existing Internal VEBA 

and the New Chrysler VEBA Plan in a 

short period of time. 

In the event of a mispayment, the 

Responsible Party will reimburse the 

payor for such benefits, plus interest. 

According to the Applicant, payment by 

a payor of benefits for claims incurred 

after benefit responsibility has been 

transferred arguably is an extension of 

credit between the payor and the 

responsible party that is prohibited 

under section 406(a)(1)(B). Payment by 

the Responsible Party to the payor as 

reimbursement for these paid claims 

arguably is a transfer of plan assets to 

a party in interest that is prohibited 

under 406(a)(1)(D). 

Deposits by Mistake 

The Applicant likewise seeks relief 

from section 406(a)(1)(D) of ERISA for 

return of mistaken deposits to the New 

Chrysler VEBA Plan, with interest. 

Under the last paragraph of section 9 

of the Modified Settlement Agreement, 

any deposit made to the New Chrysler 

VEBA Plan by mistake will be returned 

(with earnings) within 30 days of notice 

to the Committee of the mistake, to the 

extent permitted by law. The Applicant 

is concerned that this could be viewed 

as involving a prohibited transfer of 

plan assets to a party in interest. 

Accordingly, the Applicant requests 

exemptive relief for this transaction. 

Statutory Findings 

The Applicant makes the following 

statements regarding the Department’s 

required findings under section 408(a) 

of ERISA that the exemption is 

administratively feasible, in the 

interests of the New Chrysler VEBA 


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51192 Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 

Plan and of its participants and 

beneficiaries, and protective of the 

rights of New Chrysler VEBA Plan 

participants and beneficiaries. 

The exemption transactions are 

administratively feasible because they 

are relatively simple and straightforward, easy to monitor, and involve 

the management of the Securities by the 

Independent Fiduciary. 

The exemption transactions are in the 

interest of the New Chrysler VEBA 

Plan’s participants and beneficiaries and 

protective of their rights because a 

retiree welfare plan with assets 

consisting of employer securities is 

preferable to a plan that is unfunded or 

underfunded. The Independent 

Fiduciary will represent the interests of 

the participants and beneficiaries of the 

New Chrysler VEBA Plan by exercising 

the sole discretion regarding the 

management and disposition of the New 

Chrysler Shares and Note. 

Notification of 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). 

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 exemption, 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 exemption, if 

granted, will be subject to the express 

condition that the material facts and 

representations contained in the 

application are true and complete, and 

that the application accurately describes 

all material terms of the transaction 

which is the subject of the exemption. 

Proposed Exemption 

Based on the facts and representations 

set forth in the application, the 

Department is considering granting the 

following 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), as follows: 

Section I. Covered Transactions 

(a) If the exemption is granted, the 

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

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

407(a) of the Act shall not apply, 

effective June 10, 2009 to: 

(1) The acquisition by the UAW Chrysler 

Retiree Medical Benefits Plan (New Chrysler 

VEBA Plan) and its associated UAW Retiree 

Medical Benefits Trust (the VEBA Trust) of 

676,924 New Chrysler Shares (the Shares) 

and a note issued by New Chrysler with a 

principal amount of $4,587,000,000 and an 

implicit interest rate of nine percent (9%) 

(the Note) transferred by New Chrysler and 

deposited in the Chrysler Employer Security 

Sub-Account of the Chrysler Separate Retiree 

Account of the VEBA Trust; 

(2) The holding of the Shares and the Note 

by the New Chrysler VEBA Plan in the 

Chrysler Employer Security Sub-Account of 

the Chrysler Separate Retiree Account of the 

VEBA Trust; 

(3) The disposition of the Shares and the 

Note; 

(4) The sale by the New Chrysler VEBA 

Plan to Fiat S.p.A (Fiat) of Shares pursuant 

to the exercise by Fiat of the Call Option 

Agreement and/or the First Offer Right 

described in the New Chrysler Operating 

Agreement. 

(b) If the exemption is granted, the 

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

406(a)(1)(D), 406(b)(1) and 406(b)(2) of 

ERISA shall not apply, effective June 10, 

2009, to: 

(1) The payment by New Chrysler, the 

Existing Internal VEBA, the New Chrysler 

VEBA Plan, or any affiliate of New Chrysler 

of a benefit claim that was the responsibility 

and legal obligation, under the terms of the 

applicable plan documents, of one of the 

other parties listed in this paragraph; and 

(2) The reimbursement by New Chrysler, 

the Existing Internal VEBA, the New Chrysler 

VEBA Plan, or any affiliate of New Chrysler, 

of a benefit claim that was paid by another 

party listed in this paragraph, which was not 

legally responsible for the payment of such 

claim, plus interest. 

(c) If the exemption is granted, the 

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

406(a)(1)(D), 406(b)(1) and 406(b)(2) of 

ERISA shall not apply, effective June 10, 

2009, to the return to New Chrysler of 

assets deposited or transferred to the 

New Chrysler VEBA Plan by mistake, 

plus interest. 

Section II. Conditions Applicable to 

Section I(a) 

(a) The Committee appoints a 

qualified Independent Fiduciary to act 

on behalf of the New Chrysler VEBA 

Plan for all purposes related to the 

transfer of the Shares and Note to the 

Plan for the duration of the Plan’s 

holding of the Shares and Note, except 

for the voting of the Shares. Such 

Independent Fiduciary will have sole 

discretionary responsibility relating to 

the holding, disposition and ongoing 

management of the Shares and the Note. 

The Independent Fiduciary will 

determine, before taking any of the 

actions regarding the Shares and the 

Note, that each such action or 

transaction is in the interest of the New 

Chrysler VEBA Plan. 

(b) In the event that the same 

Independent Fiduciary is appointed to 

represent the interests of one or more of 

the other plans comprising the VEBA 

Trust (i.e., the UAW General Motors 

Retiree Medical Benefits Plan and/or the 

UAW Ford Retiree Medical Benefits 

Plan) with respect to employer 

securities deposited into the Trust, the 

Committee takes the following steps to 

identify, monitor and address any 

conflict of interest that may arise with 

respect to the Independent Fiduciary’s 

performance of its responsibilities: 

(i) The Committee appoints a 

‘‘conflicts monitor’’ to: (1) Develop a 

process for identifying potential 

conflicts; (2) regularly review the 

Independent Fiduciary reports, 

investment banker reports, and public 

information regarding the companies, to 

identify the presence of factors that 

could lead to a conflict; and (3) further 

question the Independent Fiduciary 

when appropriate. 


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18OPEB means Other Post-Employment Benefits, 

and typically includes retiree healthcare benefits, 

life insurance, tuition assistance, day care, legal 

services and the like. The OPEB discount rate is a 

rate used to discount projected future OPEB 

benefits payment cash flows to determine the 

present value of the OPEB obligation. 

(ii) The Committee adopts procedures 

to facilitate prompt replacement of the 

Independent Fiduciary if the Committee 

in its sole discretion determines such 

replacement is necessary due to a 

conflict of interest. 

(iii) The Committee requires the 

Independent Fiduciary to adopt a 

written policy regarding conflicts of 

interest. Such policy shall require that, 

as part of the Independent Fiduciary’s 

periodic reporting to the Committee, the 

Independent Fiduciary includes a 

discussion of actual or potential 

conflicts identified by the Independent 

Fiduciary and options for avoiding or 

resolving the conflict. 

(c) The Independent Fiduciary 

authorizes the Trustee of the New 

Chrysler VEBA Plan to dispose of the 

Shares and the Note only after the 

Independent Fiduciary determines, at 

the time of the transaction, that the 

transaction is feasible, in the interest of 

the New Chrysler VEBA Plan, and 

protective of the participants and 

beneficiaries of the Plan. 

(d) The Independent Fiduciary 

negotiates and approves on behalf of the 

New Chrysler VEBA Plan any 

transactions between the New Chrysler 

VEBA Plan and any party in interest 

involving the Shares or the Note that 

may be necessary in connection with 

the subject transactions (including but 

not limited to the registration of the 

securities contributed to the New 

Chrysler VEBA Plan). 

(e) Any contract between the 

Independent Fiduciary and an 

investment banker includes an 

acknowledgement by the investment 

banker that the investment banker’s 

ultimate client is an ERISA plan. 

(f) The Independent Fiduciary 

discharges its duties consistent with the 

terms of the New Chrysler VEBA Plan, 

the Trust Agreement, the Independent 

Fiduciary Agreement, and any other 

documents governing the employer 

securities, such as the registration rights 

agreement. 

(g) The New Chrysler VEBA Plan 

incurs no fees, costs or other charges 

(other than described in the VEBA Trust 

agreement and the Modified Settlement 

Agreement) as a result of the 

transactions exempted herein. 

(h) The terms of any transaction 

exempted herein are no less favorable to 

the New Chrysler VEBA Plan than the 

terms negotiated at arms’ length under 

similar circumstances between 

unrelated parties. 

Section III. Conditions Applicable to 

Section I(b) 

(a) The Committee and the New 

Chrysler VEBA Plan’s third party 

administrator will review the benefits 

paid during the transition period and 

determine the dollar amount of 

mispayments made, subject to the 

review of the VEBA Trust’s independent 

auditor. The results of this review will 

be made available to New Chrysler. 

(b) New Chrysler and their respective 

plans’ third party administrator(s) will 

review the benefits paid during the 

transition period and determine the 

dollar amount of mispayments made, 

subject to the review of the respective 

plans’ independent auditor. The results 

of this review will be made available to 

the Committee. 

(c) Interest on any reimbursed 

mispayment will accrue from the date of 

the mispayment to the date of the 

reimbursement. 

(d) Interest will be determined using 

the applicable OPEB discount rate.18

(e) If there is a dispute as to the 

amount of a reimbursement requested, 

the parties will enter into an alternative 

dispute resolution procedure as defined 

in section VI.(e) of this exemption. 

Section IV. Conditions Applicable to 

Section I(c) 

(a) New Chrysler must make a claim 

to the Committee regarding the specific 

deposit or transfer made in error or 

made in an amount greater than that to 

which the New Chrysler VEBA Plan was 

entitled. 

(b) The claim is made within the 

Verification Time Period, as defined in 

Section VI(s) of this exemption. 

(c) Interest on any mistaken deposit or 

transfer will accrue from the date of the 

mistaken payment to the date of the 

repayment. 

(d) Interest will be determined using 

the applicable OPEB discount rate. 

(e) If there is a dispute as to the 

amount of a mistaken payment, the 

parties will enter into an alternative 

dispute resolution procedure as defined 

in section VI.(e) of this exemption. 

Section V. Conditions Applicable to 

Section I(a), (b), (c) 

(a) The Committee and the 

Independent Fiduciary maintain for a 

period of six (6) years from the date the 

Note or any Shares are transferred to the 

New Chrysler VEBA Plan the records 

necessary to enable the persons 

described in paragraph (b) below to 

determine whether conditions of this 

exemption have been met, except that (i) 

a separate prohibited transaction will 

not be considered to have occurred if, 

due to circumstances beyond the control 

of the Committee and/or the 

Independent Fiduciary, the records are 

lost or destroyed prior to the end of the 

six-year period, and (ii) no party in 

interest other than the Committee or the 

Independent Fiduciary shall be subject 

to the civil penalty that may be assessed 

under section 502(i) if the records are 

not maintained, or are not available for 

examination as required by paragraph 

(b) below; and 

(b)(1) Except as provided in section 

(2) of this paragraph and 

notwithstanding any provisions of 

subsections Section (a)(2) and (b) of 

ERISA section 504, the records referred 

to in paragraph (a) above shall be 

unconditionally available at their 

customary location during normal 

business hours to: 

(A) Any duly authorized employee or 

representative of the Department or the 

Internal Revenue Service; 

(B) the UAW or any duly authorized 

representative of the UAW; 

(C) New Chrysler or any duly 

authorized representative of New 

Chrysler; and 

(D) Fiat or any duly authorized 

representative of Fiat; and 

(E) the Independent Fiduciary or any 

duly authorized representative of the 

Independent Fiduciary; 

(F) The Committee or any duly 

authorized representative of the 

Committee; and 

(G) Any participant or beneficiary of 

the New Chrysler VEBA Plan, or any 

duly authorized representative of such 

participant or beneficiary. 

Section VI. Definitions 

(a) The term ‘‘affiliate’’ means: (1) 

Any person directly or indirectly, 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with such other 

person; (2) Any officer, director, or 

partner, employee or relative (as defined 

in section 3(15) of ERISA) of such other 

person; or (3) Any corporation, 

partnership or other entity of which 

such other person is an officer, director 

or partner. (For purposes of this 

definition, the term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual.) 

(b) The term ‘‘Class’’ or ‘‘Class 

Members’’ shall mean all persons who 

are: (i) New Chrysler-UAW Represented 

Employees who, as of October 29, 2007, 

were retired from Chrysler LLC with 

eligibility for Retiree Medical Benefits 

under the Chrysler Plan, and their 


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51194 Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 

eligible spouses, surviving spouses and 

dependents; (ii) surviving spouses and 

dependents of any New Chrysler-UAW 

Represented Employees who attained 

seniority and died on or prior to October 

29, 2007 under circumstances where 

such employee’s surviving spouse and/ 

or dependents are eligible to receive 

Retiree Medical Benefits from Chrysler 

and/or the Chrysler Plan; (iii) former 

New Chrysler-UAW Represented 

Employees or UAW-represented 

employees who, as of October 29, 2007, 

were retired from any previously sold, 

closed, divested or spun-off Chrysler 

LLC business unit with eligibility to 

receive Retiree Medical Benefits from 

Chrysler LLC and/or the Chrysler Plan 

by virtue of any agreement(s) between 

Chrysler LLC and the UAW, and their 

eligible spouses, surviving spouses, and 

dependents; and (iv) surviving spouses 

and dependents of any former Chrysler 

LLC–UAW Represented Employee or 

UAW-represented employee of a 

previously sold, closed, divested or 

spun-off Chrysler LLC business unit, 

who attained seniority and died on or 

prior to October 29, 2007 under 

circumstances where such employee’s 

surviving spouse and/or dependents are 

eligible to receive Retiree Medical 

Benefits from Chrysler LLC and/or the 

Chrysler Plan. 

(c) The term ‘‘Committee’’ shall mean 

the eleven individuals consisting of six 

independent members and five UAW 

appointed members who will serve as 

the plan administrator and named 

fiduciary of the New Chrysler VEBA 

Plan. 

(d) The term ‘‘Covered Group’’ shall 

mean: 

(i) All New Chrysler Active 

Employees who had attained seniority 

as of September 14, 2007, and who 

retire after October 29, 2007 under the 

Chrysler LLC–UAW National 

Agreements, or any other agreement(s) 

between Chrysler LLC and the UAW or 

New Chrysler and the UAW, and who 

upon retirement are eligible for Retiree 

Medical Benefits under the Chrysler 

Plan or the New Chrysler VEBA Plan, as 

applicable, and their eligible spouses, 

surviving spouses and dependents; (ii) 

all former New Chrysler-UAW 

Represented Employees and all UAWrepresented employees who, as of 

October 29, 2007, remained employed 

in a previously sold, closed, divested, or 

spun-off Chrysler LLC business unit, 

and upon retirement are eligible for 

Retiree Medical Benefits from Chrysler 

LLC and/or the Chrysler Plan or the 

New Chrysler VEBA Plan by virtue of 

any other agreement(s) between 

Chrysler LLC and the UAW or New 

Chrysler and the UAW, and their 

eligible spouses, surviving spouses and 

dependents; and (iii) all eligible 

surviving spouses and dependents of 

New Chrysler Active Employees, or of 

former New Chrysler-UAW Represented 

Employees or UAW-represented 

employees identified in (ii) above, who 

attained seniority on or prior to 

September 14, 2007 and die after 

October 29, 2007 but prior to retirement 

under circumstances where such 

employee’s surviving spouse and/or 

dependents are eligible for Retiree 

Medical Benefits from Chrysler LLC 

and/or the Chrysler Plan or the New 

Chrysler VEBA Plan, as applicable. 

(e) The term ‘‘Alternative Dispute 

Resolution Procedure’’ shall mean, 

notwithstanding anything in Section 23 

of the Modified Settlement Agreement 

to the contrary, the following process for 

the resolution of any dispute or 

controversy arising under Section 5 of 

the Modified Settlement Agreement for 

the reimbursement of benefit claims or 

in Section 9 of the Modified Settlement 

Agreement for the mistaken deposits. 

Such disputes shall be resolved in the 

following manner: 

(i) While the parties agree that each of 

the disputes with respect to mistaken 

deposits and reimbursement of benefit 

claims referred to in the Settlement 

Agreement may be submitted to 

arbitration, they first shall endeavor to 

resolve the dispute through the 

following procedures: 

(1) The aggrieved party shall provide 

the other party with written notice of 

such dispute; 

(2) The written notice shall include a 

description of the alleged violation and 

identify the Section(s) of the Settlement 

Agreement allegedly violated; 

(3) The party receiving the notice 

shall respond in writing within 21 

calendar days of receipt of notice; and 

(4) Within 21 calendar days of that 

response the parties shall meet in an 

effort to resolve the dispute. 

All the time periods in this definition 

may be extended by agreement of the 

parties to the particular dispute. 

(ii) Should the parties be unable to 

resolve the dispute within 30 calendar 

days from the date of the meeting set 

forth in this definition, either party may 

send written demand to the other party 

that the issue be resolved by arbitration. 

The failure to demand arbitration within 

60 calendar days from the date of the 

meeting as set forth in this definition 

shall waive any right to such arbitration 

over the issue, absent mutual written 

agreement to the contrary by the parties. 

If a party fails to make a timely demand 

for arbitration pursuant to this 

definition, such party may not pursue 

the dispute in court, and the dispute 

will be resolved on the basis of the 

position taken by the opposing or 

answering party. 

(iii) In the event that New Chrysler, 

the UAW, or the Committee proceed to 

arbitration in accordance with this 

definition, that dispute shall be 

submitted to an arbitrator (the 

‘‘Arbitrator’’) who will not have the 

authority to modify or amend the 

Modified Settlement Agreement, but 

only to apply the Modified Settlement 

Agreement, as written, to particular 

factual situations based on a 

preponderance of the evidence. The 

Arbitrator shall not have the authority to 

award punitive or exemplary damages. 

Interest shall be paid on any delayed 

payments as a result of the arbitration 

process. The interest will be calculated 

daily at a rate equal to the OPEB 

Discount Rate for each day that amounts 

remain outstanding. Such arbitration 

shall take place in Auburn Hills, 

Michigan unless otherwise agreed upon 

in writing by the parties. Any award 

shall be in writing and issued within 30 

days from the close of the hearing, 

unless the parties otherwise agree. The 

award shall be final, conclusive and 

binding on New Chrysler, the UAW, and 

the Committee. The award may be 

reduced to judgment in any appropriate 

court having jurisdiction in accordance 

with the provisions of the applicable 

law. 

(iv) In the event that a dispute arising 

under this definition is taken to 

arbitration, the Arbitrator shall be the 

arbitrator/umpire used by New Chrysler 

and the UAW for disputes arising under 

the then applicable New Chrysler-UAW 

National Agreement; provided that, if 

within 15 days of receipt of the written 

arbitration demand referred to in (ii) 

above, the parties agree in writing that 

the dispute requires an arbitrator with 

actuarial expertise, then the Arbitrator 

shall be a person with actuarial 

expertise upon whom the parties 

mutually agree in writing, but failing 

such mutual agreement with 30 days of 

receipt of the written arbitration 

demand referred to in (ii) above, the 

arbitrator/umpire used by New Chrysler 

and the UAW for disputes arising under 

then applicable New Chrysler-UAW 

National Agreement shall select a 

person with actuarial expertise to serve 

as the Arbitrator. 

(v) New Chrysler, the UAW, and the 

Committee shall cooperate in setting a 

hearing date for the arbitration as soon 

as possible following selection of the 

Arbitrator. 

(f) The term ‘‘Existing Internal VEBA’’ 

shall mean the Chrysler VEBA Trust 

between Chrysler and State Street Bank 

and Trust Company, which will be 


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Federal Register / Vol. 74, No. 191 / Monday, October 5, 2009 / Notices 51195 

maintained by New Chrysler from June 

10, 2009. 

(g) The term ‘‘Independent Fiduciary’’ 

means a fiduciary that is (i) independent 

of and unrelated to Chrysler LLC, New 

Chrysler, the UAW, the Committee, and 

their affiliates, and (ii) appointed to act 

on behalf of the New Chrysler VEBA 

Plan with respect to the holding, 

management and disposition of the 

Shares and the Note. In this regard, the 

fiduciary will not be deemed to be 

independent of and unrelated to 

Chrysler LLC, New Chrysler, the UAW, 

the Committee, and their affiliates if (1) 

such fiduciary directly or indirectly 

controls, is controlled by, or is under 

common control with Chrysler LLC, 

New Chrysler, the UAW, the Committee 

or their affiliates, (2) such fiduciary 

directly or indirectly receives any 

compensation or other consideration 

from Chrysler LLC, New Chrysler, the 

UAW or any Committee member in his 

or her individual capacity in connection 

with any transaction contemplated in 

this exemption (except that an 

independent fiduciary may receive 

compensation from the Committee or 

the New Chrysler VEBA Plan for 

services provided to the New Chrysler 

VEBA Plan in connection with the 

transactions discussed 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 

the fiduciary, in any fiscal year, from 

Chrysler LLC, New Chrysler, the UAW 

or a member of the Committee in his or 

her individual capacity, exceeds 3% of 

the fiduciary’s annual gross revenue 

from all sources (for federal income tax 

purposes) for its prior tax year. 

(h) The term ‘‘Implementation Date’’ 

shall mean the later of January 1, 2010 

or (ii) the ‘‘Final Effective Date,’’ as 

defined in the Modified Settlement 

Agreement. 

(i) The term ‘‘New Chrysler’’ shall 

mean a Delaware Limited Liability 

Company formed by Fiat North America 

LLC, a subsidiary of Fiat S.p.A., a 

manufacturer of automobiles and 

automotive parts in Turin, Italy. New 

Chrysler is the company that acquired 

certain assets and liabilities from 

Chrysler LLC pursuant to the Section 

363 Sale. 

(j) The term ‘‘Note’’ shall mean a note 

issued by New Chrysler with a principal 

amount of $4,587 billion and an implicit 

interest rate of nine (9%) payable in 

fixed annual installments pursuant to 

the Indenture Agreement. Payments, 

consisting of accrued and unpaid 

interest and amortized principal shall be 

due on July 15 of each year, 

commencing July 15, 2010 and ending 

on July 15, 2023. 

(k) The term ‘‘Shares’’ means the 

membership interests issued by New 

Chrysler. 

(l) The term ‘‘New Chrysler VEBA 

Plan’’ refers to the newly created retiree 

medical employee welfare benefit plan. 

The plan is an employee welfare benefit 

plan established and maintained by the 

Committee, and shall provide retiree 

medical benefits to the Class and the 

Covered Group established pursuant to 

the Modified Settlement Agreement. 

(m) The term ‘‘Registration Rights 

Agreement’’ means the Equity 

Registration Rights Agreement by and 

among New Chrysler, the U.S. Treasury, 

Canada, the VEBA Trust and Chrysler 

LLC, entered into on June 10, 2009. 

(n) The term ‘‘Section 363 Sale’’ 

means a sale under section 363 of Title 

11 of the U.S. Code, by which on June 

10, 2009, New Chrysler succeeded to 

certain assets and liabilities of Chrysler 

LLC. 

(o) The term ‘‘Modified Settlement 

Agreement’’ means the UAW Retiree 

Settlement Agreement between New 

Chrysler and the UAW dated June 10, 

2009. 

(p) The term ‘‘Treasury Department’’ 

shall mean the United States 

Department of the Treasury. 

(q) The term ‘‘VEBA’’ means the UAW 

Chrysler Retiree Medical Benefits Plan 

(the New Chrysler VEBA Plan) and its 

associated UAW Retiree Medical 

Benefits Trust (the VEBA Trust). 

(r) The term ‘‘UAW’’ means the 

International Union, United 

Automobile, Aerospace and Agricultural 

Implement Workers of America. 

(s) The term ‘‘Verification Time 

Period’’ means: (i) With respect to all 

Shares, the period beginning on the date 

of publication of the final exemption in 

the Federal Register and ending 60 

calendar days thereafter; (ii) with 

respect to each payment pursuant to the 

Note, the period beginning on the date 

of the payment and ending 90 calendar 

days thereafter; and (iii) with respect to 

the UAW-Related Account of the 

Existing Internal VEBA, the period 

beginning on the date of publication of 

the final exemption in the Federal 

Register (or, if later, the date of the 

transfer of the UAW-Related Account to 

the New Chrysler VEBA Plan) and 

ending 180 calendar days thereafter. 

Signed at Washington, DC, this 29th day of 

September 2009. 

Ivan Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. E9–23849 Filed 10–2–09; 8:45 am] 

BILLING CODE 4510–29–P 

DEPARTMENT OF LABOR 

Employment and Training 

Administration 

[TA–W–60,808] 

Invista, S.A.R.L., Nylon Apparel 

Filament Fibers Group, a Subsidiary of 

Koch Industries, Inc., Chattanooga, 

TN; Notice of Revised Determination 

on Remand 

On June 18, 2009, the U.S. Court of 

International Trade (USCIT) remanded 

to the Department of Labor’s motion for 

further investigation into the matter of 

Former Employees of Invista, S.A.R.L. v. 

U.S Secretary of Labor, Court No. 07– 

00160. 

On December 15, 2006, an official of 

Invista, S.A.R.L, Nylon Apparel 

Filament Fibers Group, A Subsidiary of 

Koch Industries, Inc., Chattanooga, 

Tennessee (Invista) filed a petition for 

Trade Adjustment Assistance (TAA) and 

Alternative Trade Adjustment 

Assistance (ATAA) on behalf of workers 

and former workers at Invista engaged 

in activity related to the production of 

nylon fiber. AR 1. The petition stated 

that the separations were due to a shift 

in production to Mexico that was the 

basis for a certification that expired on 

August 20, 2006 (TA–W–55,055). AR 2. 

The company official stated that, as of 

February 1, 2007, all workers of Invista 

would be terminated from employment. 

AR 7. 

On February 7, 2007, the Department 

of Labor (Department) issued a negative 

determination regarding workers’ 

eligibility to apply for TAA/ATAA. AR 

30–32. On February 21, 2007, the 

Department’s Notice of determination 

was published in the Federal Register 

(72 FR 7909). AR 43. 

In support of a request for 

administrative reconsideration (dated 

February 18, 2007), a worker stated that 

the workers’ separations are ‘‘a direct 

result of the textile industry going to 

developing countries.’’ AR 38. 

In a letter dated March 15, 2007, the 

Department stated that the request for 

reconsideration was being dismissed 

because insufficient evidence was 

furnished to warrant reconsideration 

pursuant to 29 CFR 90.18(c) and that the 

shift in production that was the basis for 

the certification of TA–W–55,055 

occurred outside the relevant period. 

AR 45. The Dismissal of Application for 

Reconsideration was issued on March 

21, 2007. AR 47. The Department’s 

Notice of dismissal was published in the 

Federal Register on March 30, 2007 (72 

FR 15169). AR 48. 

On May 11, 2007, Plaintiffs sought 

review by the USCIT. The Plaintiffs 


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