Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices 5855

1Section 102 of Reorganization Plan No. 4 of

1978 (43 FR 47713, October 17, 1978) generally

transferred the authority of the Secretary of the

Treasury to issue administrative exemptions under

section 4975(c)(2) of the Code to the Secretary of

Labor.

the charge, if any, shall be no more than

$7.41 per day, unless the RA has

approved a higher charge pursuant to 20

CFR 655.111 or 655.211(b); for 20 CFR

655.111 and 655.211, the RA may

permit an employer to charge workers

up to $9.25 per day for providing them

with three meals per day, if the

employer justifies the charge and

submits to the RA the documentation

required to support the higher charge.

C. Maximum Travel Subsistence

Expense

The regulations at 20 CFR

655.102(b)(5) establish that the

minimum daily subsistence expense

related to travel expenses, for which a

worker is entitled to reimbursement, is

the employer’s daily charge for three

meals or, if the employer makes no

charge, the amount permitted under 20

CFR 655.104(b)(4). The regulation is

silent about the maximum amount to

which a qualifying worker is entitled.

The Department, in Field

Memorandum 42–94, established that

the maximum is the meals component

of the standard CONUS (continental

United States) per diem rate established

by the General Services Administration

(GSA) and published at 41 CFR Ch. 301.

The CONUS meal component is now

$28.00 per day.

Workers who qualify for travel

reimbursement are entitled to

reimbursement up to the CONUS meal

rate for related subsistence when they

provide receipts. In determining the

appropriate amount of subsistence

reimbursement, the employer may use

the GSA system under which a traveler

qualifies for meal expense

reimbursement per quarter of a day.

Thus, a worker whose travel occurred

during two quarters of a day is entitled,

with receipts, to a maximum

reimbursement of $14.00. If a worker

has no receipts, the employer is not

obligated to reimburse above the

minimum stated at 20 CFR 655.102(b)(4)

as specified above.

Signed at Washington, D.C., this 31st day

of January 1997.

John R. Beverly

Director, U.S. Employment Service.

[FR Doc. 97–3095 Filed 2–6–97; 8:45 am]

BILLING CODE 4510–30–M

Pension and Welfare Benefits

Administration

[Prohibited Transaction Exemption 97–11;

Application D–09707]

Class Exemption for the Receipt of

Certain Investment Services by

Individuals for Whose Benefit

Individual Retirement Accounts or

Retirement Plans for Self-Employed

Individuals Have Been Established or

Maintained

AGENCY: Pension and Welfare Benefits

Administration, U.S. Department of

Labor.

ACTION: Grant of class exemption.

SUMMARY: This document contains a

final class exemption from the

prohibited transaction restrictions of the

Employee Retirement Income Security

Act of 1974 (ERISA) and the Internal

Revenue Code of 1986 (the Code). The

class exemption permits the receipt of

services at reduced or no cost by an

individual for whose benefit an

individual retirement account (IRA) or,

it self-employed, a Keogh Plan is

established or maintained, or by

members of his or her family, from a

broker-dealer, provided that the

conditions of the exemption are met.

The exemption affects individuals with

beneficial interests in such plans who

receive such services as well as the

broker-dealers who provide such

services.

EFFECTIVE DATE: February 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Allison Padams, Office of Exemption

Determinations, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, (202) 219–8971,

(This is not a toll-free number); or Paul

D. Mannina, Plan Benefits Security

Division, Office of Solicitor, U.S.

Department of Labor (202) 219–9141,

(This is not a toll-free number).

SUPPLEMENTARY INFORMATION: On July

31, 1996, the Department of Labor (the

Department) published a notice in the

Federal Register (61 FR 39996) of the

pendency of a proposed class exemption

from the restrictions of sections

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

the sanctions resulting from the

application of sections 4975 (a) and (b),

4975(c)(3) and 408(e)(2) of the Code by

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

(F) of the Code. This exemption was

requested in an exemption application

filed on behalf of the Securities Industry

Association (the SIA or the Applicant).

The application was filed pursuant to

section 408(a) of ERISA and section

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

accordance with the procedures set

forth in 29 CFR part 2570, subpart B, (55

FR 32836, August 10, 1990.) 1

The notice of pendency gave

interested persons an opportunity to

comment or request a public hearing on

the proposal. No requests for a public

hearing were received by the

Department. Two public comments

were received by the Department. Upon

consideration of the record as a whole,

the Department has determined to grant

the proposed exemption subject to

certain modifications. These

modifications and the comments are

discussed below.

Discussion of the Comments Received

One commenter sought clarification of

the language in the preamble to the

notice of proposed exemption which

addressed the Investment Company

Institute’s inquiry as to whether the

exemption would provide relief for a

relationship brokerage program whereby

a broker-dealer offers reduced sales

charges with respect to the purchase of

investment company shares as the size

of the purchase increases. In this regard,

a broker-dealer would aggregate total

purchases of all of a customer’s

accounts, including IRAs and Keogh

Plans. Thus, a broker-dealer would set

a schedule of commissions or rates that

vary according to the size of the

transaction. Specifically, the commenter

requests that the Department clarify that

the exemption covers ‘‘rights of

accumulation’’ programs as described in

the National Association of Securities

Dealers’ Rules of Fair Practice in which

a broker dealer takes into account both

a customer’s present purchases of shares

and the aggregate quantity of securities

previously purchased by the customer.

The Department notes that such

programs would be covered by the

exemption provided that all the

conditions of the exemption are

satisfied.

In addition, the commenter requests

that the Department reconsider its views

stated in footnote 8 of the Preamble

relating to ‘‘letter of intent programs’’ in

which broker-dealers reduce sales

commissions based on the aggregate of

a customer’s actual purchases and

anticipated purchases over a specified

period of time, as agreed to by the

customer (the Target Amount). The

commenter states that the letter of intent

is not a binding obligation on the

customer to purchase the Target

Amount. Rather, if the customer holds
5856 Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices

less than the Target Amount in his

accounts at the end of the specified

period, the sales charge is adjusted

upward for the shares purchased during

such period, and the customer is

required to pay the same sales charge he

would have paid if he had not

participated in the letter of intent

program. For example, an individual

purchases shares of a mutual fund

under a letter of intent program which

requires the individual to purchase a

total of $100,000 of mutual fund shares

within 13 months of the initial

purchase. The individual makes an

initial purchase of $2,000 for his or her

IRA account. In addition, the individual

makes a $3,000 purchase for a non-IRA/

Keogh account and pays a reduced sales

charge associated with both purchases.

An escrow arrangement is established

with regard to the $5,000 in purchases

to secure payment of the higher sales

charge in the event the investor fails to

purchase the intended number of shares

during the specified period. During the

13-month period, the individual only

purchases another $5,000 amount for

his non-IRA/Keogh account. In

accordance with the program, an

unreduced sales charge must be

reinstated. the broker-dealer would

assess each account its prorata share of

the reinstated sales charge. Thus, the

IRA would only pay 20% of the total

amount of money owed for the

reinstated sales charge (the IRA

purchased $2,000 of the total $10,000

purchased or 20%). The commenter

represents that under letter of intent

programs, IRA and Keogh Plans would

be treated as favorably as any other type

of account that a broker-dealer includes

in the letter of intent program. Based

upon the commenter’s assertion that the

IRA and Keogh Plans only will be

assessed that portion of the reinstated

sales charges related to the IRA and

Keogh Plan purchases, the Department

is of the view that letter of intent

programs would be covered by the class

exemption.

Another commenter urged the

Department to modify the definition of

an individual retirement account to

include simple retirement accounts as

described in section 408(p) of the Code.

The Small Business Job Protection Act

of 1996 (Pub. L. 104–188), effective for

taxable years beginning after December

31, 1996, amended section 408 of the

Code to permit simple retirement

accounts. In this regard, the commenter

states that section 408(p)(7) provides

that participants of simple employee

pensions have the unrestricted authority

to transfer their account balances

without cost or penalty to simple

retirement accounts sponsored by

different financial institutions. The

Department finds merit in this comment

and has modified section III(b) of the

exemption to include simple retirement

accounts. The same commenter urges

the Department to clarify the definition

of account value to include insured

investment accounts or insured savings

accounts. According to the commenter,

such accounts are established in a

separate bank and are insured by a

federal deposit agency. Broker-dealers

establish insured savings accounts

whereby the uninvested cash in a

clients account is swept into a separate

bank account for a client rather than

into a money market fund. Clients may

select such an account as a sweep

vehicle because the assets in the bank

account are insured by federal deposit

insurance up to the maximum permitted

by law. In this regard, the commenter

represents that a separate program may

be maintained for the broker-dealer’s

retirement account clients. In response

to the comment, the Department has

clarified section III(d) to include

accounts that are insured by a federal

deposit insurance agency and that

constitute deposits as that term is

defined in section 29 CFR 2550.408(b)–

4(c)(3).

General Information

The attention of interested persons is

directed to the following:

(1) In accordance with section 408(a)

of ERISA and section 4975(c)(2) of the

Code, and based upon the entire record,

the Department finds that the exemption

is administratively feasible, in the

interests of the IRAs and Keogh Plans

and their participants and beneficiaries

and protective of the rights of

participants and beneficiaries of such

plans.

(2) The exemption is supplemental to,

and not in derogation of, any other

provisions of ERISA and the Code

including statutory or administrative

exemptions and transitional rules.

Furthermore, the fact that a transaction

is subject to an administrative

exemption is not dispositive of whether

the transaction is in fact a prohibited

transaction.

(3) The exemption is applicable to a

transaction only if the conditions

specified in the class exemption are

met.

Exemption

Accordingly, the following exemption

is granted under the authority of section

408(a) of ERISA and section 4975(c)(2)

of the Code and in accordance with the

procedures set forth in 29 CFR part

2570, subpart B. [55 FR 32836, August

10, 1990].

Section I: Covered Transactions

Effective February 7, 1997, the

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

406(b) of ERISA and the sanctions

resulting from the application of section

4975 of the Code, including the loss of

exemption of an IRA pursuant to section

408(e)(2)(A) of the Code, by reason of

section 4975(c)(1)(D), (E) and (F) of the

Code, shall not apply to the receipt of

services at reduced or no cost by an

individual for whose benefit an IRA or,

if self-employed, a Keogh Plan, is

established or maintained, or by

members of his or her family, from a

broker-dealer registered under the

Securities Exchange Act of 1934

pursuant to an arrangement in which

the account value of, or the fees

incurred for services provided to, the

IRA or Keogh Plan is taken into account

for purposes of determining eligibility to

receive such services, provided that

each condition of Section II of this

exemption is satisfied.

Section II: Conditions

(a) The IRA or Keogh Plan whose

account value or whose fees are taken

into account for purposes of

determining eligibility to receive

services under the arrangement is

established and maintained for the

exclusive benefit of the participant

covered under the IRA or Keogh Plan,

his or her spouse or their beneficiaries.

(b) The services offered under the

relationship brokerage arrangement

must be of the type that the brokerdealer itself could offer consistent with

all applicable federal and state laws

regulating broker-dealers.

(c) The services offered under the

arrangement are provided by the brokerdealer (or an affiliate of the brokerdealer in the ordinary course of the

broker-dealer’s business to customers

who qualify for reduced or no cost

services, but do not maintain IRAs or

Keogh Plans with the broker-dealer.

(d) For purposes of determining

eligibility to receive services, the

arrangement satisfies one of the

following:

(i) Eligibility requirements based on

the account value of the IRA or Keogh

Plan are as favorable as any such

requirements based on the value of any

other type of account which the brokerdealer includes to determine eligibility;

and

(ii) Eligibility requirements based on

the amount of fees incurred by the IRA

or Keogh Plan are as favorable as any

requirements based on the amount of

fees incurred by any other type of
Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices 5857

account which the broker-dealer

includes to determine eligibility.

(e) The combined total of all fees for

the provision of services to the IRA or

Keogh Plan is not in excess of

reasonable compensation within the

meaning of section 4975(d)(2) of the

Code.

(f) The investment performance of the

IRA or Keogh Plan investment is no less

favorable than the investment

performance of an identical

investment(s) that could have been

made at the same time by a customer of

the broker-dealer who is not eligible for

(or who does not receive) reduced or no

cost services.

(g) The services offered under the

arrangement to the IRA or Keogh Plan

customer must be the same as are

offered to non-IRA or non-Keogh Plan

customers with account values of the

same amount or the same amount of fees

generated.

Section III: Definitions

The following definitions apply to

this exemption:

(a) The term ‘‘broker-dealer’’ means a

broker-dealer registered under the

Securities Exchange Act of 1934.

(b) The term ‘‘IRA’’ means an

individual retirement account described

in Code section 408(a). For purposes of

this exemption, the term IRA shall not

include an IRA which is an employee

benefit plan covered by Title I of ERISA,

except for a Simplified Employee

Pension (SEP) described in section

408(k) of the Code or a Simple

Retirement Account described in

section 408(p) of the Code which

provides participants with the

unrestricted authority to transfer their

balances to IRAs or Simple Retirement

Accounts sponsored by different

financial institutions.

(c) The term ‘‘Keogh Plan’’ means a

pension, profit-sharing, or stock bonus

plan qualified under Code section

401(a) and exempt from taxation under

Code section 501(a) under which some

or all of the participants are employees

described in section 401(c) of the Code.

For purposes of this exemption, the

term Keogh Plan shall not include a

Keogh Plan which is an employee

benefit plan covered by Title I of ERISA.

(d) The term ‘‘account value’’ means

investments in cash or securities held in

the account for which market quotations

are readily available. For purposes of

this exemption, the term cash shall

include savings accounts that are

insured by a federal deposit insurance

agency that constitute deposits as that

term is defined in section 29 CFR

2550.408b–4(c)(3). The term account

value shall not include investments in

securities that are offered by the brokerdealer [or its affiliate] exclusively to

IRAs and Keogh Plans.

(e) An affiliate of a broker-dealer

includes any person directly or

indirectly controlling, controlled by, or

under common control with the brokerdealer. The term control means the

power to exercise a controlling

influence over the management or

policies of a person other than an

individual.

(f) The term ‘‘members of his or her

family’’ refers to beneficiaries of the

individual for whose benefit the IRA or

Keogh Plan is established or

maintained, who would be members of

the family as that term is defined in

Code section 4975(e)(6), or a brother, a

sister, or spouse of a brother or sister.

(g) The term ‘‘service’’ includes

incidental products of a de minimis

value which are directly related to the

provision of services covered by the

exemption.

(h) The term ‘‘fees’’ means

commissions and other fees received by

the broker-dealer from the IRA or Keogh

Plan for the provision of services,

including, but not limited to, brokerage

commissions, investment management

fees, custodial fees, and administrative

fees.

Signed at Washington, DC, this 31st day of

January 1997.

Alan D. Lebowitz,

Deputy Assistant Secretary for Program

Operations, Pension and Welfare Benefits

Administration, U.S. Department of Labor.

[FR Doc. 97–3030 Filed 2–6–97; 8:45 am]

BILLING CODE 4510–29–M

Advisory Council on Employee Welfare

and Pension Benefit Plans; Notice of

Meeting

Pursuant to the authority contained in

Section 512 of the Employee Retirement

Income Security Act of 1974 (ERISA), 29

U.S.C. 1142, a public meeting of the

Advisory Council on Employee Welfare

and Pension Benefit Plans will be held

March 6, 1997, in Room S2508, U.S.

Department of Labor Building, Third

and Constitution Avenue, N.W.,

Washington, DC 20210.

The purpose of the meeting, which

will begin at 1:00 p.m. and end at

approximately 3:30 p.m., is to consider

the items listed below and to invite

public comment on any aspect of the

administration of ERISA.

I. Welcome and Introduction of New

Council Members

II. Assistant Secretary’s Report

A. PWBA Priorities for 1997

B. Announcement of Council Chair

and Vice Chair

III. Introduction of PWBA Senior Staff

and Swearing In of New Members

IV. Report of Advisory Council Working

Groups (1996 Term)

V. Determination of Council Working

Groups for 1997

VI. Statements from the General Public

VII. Adjourn

Members of the public are encouraged

to file a written statement pertaining to

any topic concerning ERISA by

submitting 20 copies on or before

February 27, 1997 to Sharon Morrissey,

Acting Executive Secretary, ERISA

Advisory Council, U.S. Department of

Labor, Suite N–5677, 200 Constitution

Avenue, N.W., Washington, DC 20210.

Individuals or representatives of

organizations wishing to address the

Advisory Council should forward their

request to the Acting Executive

Secretary or telephone (202) 219–8753.

Oral presentations will be limited to ten

minutes, but extended statements may

be submitted for the record. Individuals

with disabilities, who need special

accommodations, should contact Sharon

Morrissey by February 27, at the address

indicated.

Organizations or individuals may also

submit statements for the record

without testifying. Twenty (20) copies of

such statements should be sent to the

Acting Executive Secretary of the

Advisory Council at the above address.

Papers will be accepted and included in

the record of the meeting if received on

or before February 27, 1997.

Signed at Washington, DC, this 3rd day of

February, 1997.

Olena Berg,

Assistant Secretary, Pension and Welfare

Benefits Administration.

[FR Doc. 97–3094 Filed 2–6–97; 8:45 am]

BILLING CODE 4510–29–M

NUCLEAR REGULATORY

COMMISSION

[Docket Nos. 50–282 and 50–306]

Northern States Power Company;

Notice of Consideration of Issuance of

Amendments to Facility Operating

Licenses, Proposed No Significant

Hazards Consideration Determination,

and Opportunity for a Hearing

The U.S. Nuclear Regulatory

Commission (the Commission) is

considering issuance of amendments to

Facility Operating License Nos. DPR–42

and DPR–60 issued to Northern States

Power Company (the licensee), for

operation of the Prairie Island Nuclear

Generating Plant, Units 1 and 2, located

in Goodhue County, Minnesota.