33642 Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 

1Section 102 of the Reorganization Plan No. 4 of 

1978, 5 U.S.C. App. at 214 (2000 ed.), 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. For purposes of this exemption, references 

to specific provisions of Title I of the Act, unless 

otherwise specified, refer also to the corresponding 

provisions of the Code. 

10. Medical Records and Health 

Information Technicians including 

Medical Billers and Coders; 

11. Pipe fitters and Steamfitters; 

12. Radiological Technologists and 

Technicians; 

13. Solar Thermal Installers and 

Technicians; 

14. Weatherization Installers and 

Technicians; and 

15. Wind Turbine Service 

Technicians. 

Those who submitted a video prior to 

the original deadline of June 18 and 

wish to submit an alternate version may 

do so by August 20, and indicate that 

they wish to substitute it for the original 

version. 

Phase 2 will run from August 23 to 

September 10. During this phase, the 

DOL/ETA will screen, review, and 

identify the top three career videos in 

each occupational category and post 

these selected videos online at http:// 

www.dolvideochallenge.ideascale.com 

for public review. 

Phase 3 will run from September 13 

to October 8. During this phase, the 

public will recommend the top career 

video in each occupational category. 

They will also have the opportunity to 

comment on videos. 

Phase 4 will run from October 11 to 

October 29. In this final phase, DOL and 

ETA, will communicate the top career 

video in each occupational category to 

the workforce development community, 

educational community, and job seekers 

by: 

1. Posting an announcement of the top 

ranking videos on key Web sites 

including: 

• DOL.gov; 

• DOLETA.gov; 

• White House Office of Science and 

Technology Policy blog; 

• Workforce3One.org; and Other sites; 

2. Highlighting the videos and 

occupations on ETA’s http:// 

www.CareerOneStop.org portal, which 

already houses a variety of occupational 

videos for the workforce system; 

3. Providing additional coverage of 

the videos on the ETA Communities of 

Practice, including: 21st Century 

Apprenticeship, Green Jobs, 

Reemployment Works, Regional 

Innovators, and Disability and 

Employment. 

4. Utilizing other communication 

outlets such as national associations and 

intergovernmental organizations like the 

National Association of State Workforce 

Agencies, the National Association of 

Workforce Boards, the National 

Governor’s Association, the National 

Association of Counties, and the 

Association of Community Colleges. 

FOR FURTHER INFORMATION CONTACT: 

Michael Harding, Room 4510–C 

Employment and Training 

Administration, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

Telephone number: 202–693–2921 (this 

is not a toll-free number). Fax: 202–693– 

3015. E-mail: Harding.Michael@dol.gov 

Signed at Washington, DC this 8th day of 

June 2010. 

Jane Oates, 

Assistant Secretary, Employment and 

Training Administration. 

[FR Doc. 2010–14141 Filed 6–11–10; 8:45 am] 

BILLING CODE 4510–FN–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

[Application Number D–11221] 

ZRIN 1210–ZA09 

Proposed Amendment to Prohibited 

Transaction Exemption (PTE) 96–23 for 

Plan Asset Transactions Determined 

by In-House Asset Managers 

AGENCY: Employee Benefits Security 

Administration. 

ACTION: Notice of Proposed Amendment 

to PTE 96–23. 

SUMMARY: This document contains a 

notice of pendency before the 

Department of Labor (the Department) of 

a proposed amendment to PTE 96–23. 

The exemption permits various 

transactions involving employee benefit 

plans whose assets are managed by inhouse asset managers (INHAMs), 

provided the conditions of the 

exemption are met. The proposed 

amendment would affect participants 

and beneficiaries of employee benefit 

plans, the sponsoring employers of such 

plans, INHAMs, and other persons 

engaging in the described transactions. 

DATES: Written comments must be 

received by the Department on or before 

August 13, 2010. 

ADDRESSES: All written comments and 

requests for a public hearing concerning 

the proposed amendment should be sent 

to the Office of Exemption 

Determinations, Employee Benefits 

Security Administration, Room N–5700, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington 

DC 20210, Attention: PTE 96–23 

Amendment. Interested persons are also 

invited to submit comments and hearing 

requests to EBSA via e-mail to: 

moffitt.betty@dol.gov or by fax to 202– 

219–0204 by the end of the scheduled 

comment period. The comments 

received will be available for public 

inspection in the Public Disclosure 

Room of the Employee Benefits Security 

Administration, U.S. Department of 

Labor, Room N–1513, 200 Constitution 

Avenue, NW., Washington, DC 20210. 

Comments and hearing requests will 

also be available online at http:// 

www.regulations.gov and http:// 

www.dol.gov/ebsa, at no charge. 

Warning: If you submit written 

comments or hearing requests, do not 

include any personally-identifiable or 

confidential business information that 

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

requests are posted on the Internet 

exactly as they are received, and they 

can be retrieved by most Internet search 

engines. The Department will make no 

deletions, modifications or redactions to 

the comments or hearing requests 

received, as they are public records. 

FOR FURTHER INFORMATION CONTACT: 

Chris Motta, Office of Exemption 

Determinations, Employee Benefits 

Security Administration, U.S. 

Department of Labor, Room N–5700, 

200 Constitution Avenue NW., 

Washington DC 20210, (202) 693–8540 

(not a toll-free number). 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given of the pendency before the 

Department of a proposed amendment 

to PTE 96–23 (61 FR 15975, April 10, 

1996). PTE 96–23 provides an 

exemption from certain of the 

restrictions of sections 406 and 407(a) of 

ERISA, and from certain taxes imposed 

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

by reason of section 4975(c)(1) of the 

Code. The Department is proposing this 

amendment to PTE 96–23 on its own 

motion, pursuant to section 408(a) of 

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

Code, and in accordance with the 

procedures set forth in 29 CFR part 

2570, subpart B (55 FR 32836, 32847, 

August 10, 1990).1

Executive Order 12866 Statement 

Under Executive Order 12866 (58 FR 

51735), the Department must determine 

whether a regulatory action is 

‘‘significant’’ and therefore subject to 

review by the Office of Management and 

Budget (OMB). Section 3(f) of the 

Executive Order defines a ‘‘significant 

regulatory action’’ as an action that is 

likely to result in a rule (1) having an 

annual effect on the economy of $100 


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Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 33643 

2 5 CFR 1320.5 and 1320.3(c). 

3 5 CFR 1320.6. 

4EBSA estimates of labor rates include wages, 

other benefits, and overhead based on the National 

Occupational Employment Survey (May 2008, 

Bureau of Labor Statistics) and the Employment 

Cost Index (June 2009, Bureau of Labor Statistics). 

Figures are projected forward to 2010. Financial 

manager wage and benefits estimates of $107.23 are 

based on metropolitan wage estimates for financial 

managers. Clerical wage and benefits estimates of 

$26.14 are based on metropolitan wage rates for 

executive secretaries and administrative assistants. 

Legal professional wage and benefits estimates of 

$119.03 are based on metropolitan wage rates for 

lawyers. 

million or more, or adversely and 

materially affecting a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local or tribal 

governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants; user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

OMB has designated this Notice as a 

significant action under Executive Order 

12866 and has reviewed its contents. 

Paperwork Reduction Act Analysis 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department of Labor 

conducts a preclearance consultation 

program to provide the general public 

and Federal agencies with an 

opportunity to comment on proposed 

and continuing collections of 

information in accordance with the 

Paperwork Reduction Act of 1995 (PRA 

95) (44 U.S.C. 3506(c)(2)(A)). This helps 

to ensure that requested data can be 

provided in the desired format, 

reporting burden (time and financial 

resources) is minimized, collection 

instruments are clearly understood, and 

the impact of collection requirements on 

respondents can be properly assessed. 

Currently, the Department is soliciting 

comments concerning the proposed 

information collection request (ICR) 

included in the Proposed Amendment 

to Prohibited Transaction Exemption 

(PTE) 96–23 for Plan Asset Transactions 

Determined by In-House Asset 

Managers. A copy of the ICR may be 

obtained by contacting the PRA 

addressee shown below or at http:// 

www.RegInfo.gov. PRA Addressee: G. 

Christopher Cosby, Office of Policy and 

Research, U.S. Department of Labor, 

Employee Benefits Security 

Administration, 200 Constitution 

Avenue, NW., Room N–5718, 

Washington, DC 20210. Telephone (202) 

693–8410; Fax: (202) 219–5333. These 

are not toll-free numbers. ICRs 

submitted to OMB are also available at 

reginfo.gov (http://www.reginfo.gov/ 

public/do/PRAMain). 

The Department has submitted a copy 

of the proposed amendment to OMB in 

accordance with 44 U.S.C. 3507(d) for 

review of its information collections. 

The Department and OMB are 

particularly interested in comments 

that: 

• Evaluate whether the collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses. 

Comments should be sent to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 20503; 

Attention: Desk Officer for the 

Employee Benefits Security 

Administration. Comments also may be 

submitted by using the Federal 

eRulemaking portal at http:// 

www.regulations.gov (follow 

instructions for submission of 

comments). OMB requests that 

comments be received within 30 days of 

publication of the proposed amendment 

to ensure their consideration. Please 

note that comments submitted to OMB 

are a matter of the public record. 

The Department notes that a Federal 

agency cannot conduct or sponsor a 

collection of information unless it is 

approved by OMB under the PRA, and 

displays a currently valid OMB control 

number, and the public is not required 

to respond to a collection of information 

unless it displays a currently valid OMB 

control number.2 Also, notwithstanding 

any other provisions of law, no person 

shall be subject to penalty for failing to 

comply with a collection of information 

if the collection of information does not 

display a currently valid OMB control 

number.3

The INHAM exemption permits 

various parties in interest to employee 

benefit plans to engage in transactions 

involving plan assets if, among other 

requirements, the assets are managed by 

an INHAM. The Department included in 

the exemption certain requirements 

intended to preserve plan assets and 

protect plan participant benefits. The 

exemption includes a requirement for 

written guidelines between an INHAM 

and a property manager that an INHAM 

has retained to act on its behalf. Because 

it is a customary business practice for 

agreements related to the investment of 

plan assets or transactions relating to 

the leasing of space to be described in 

writing, no burden was estimated for 

this provision. The information 

collection requirements included in this 

paperwork burden estimate consist of 

the requirements that the INHAM 

develop written policies and procedures 

designed to assure compliance with the 

conditions of the exemption, and have 

an independent auditor conduct an 

annual INHAM exemption audit and 

issue a written audit report. 

The Department has made certain 

specific basic assumptions in order to 

establish a reasonable estimate of the 

paperwork burden of this information 

collection. 

First, the Department assumes that 

INHAMs, which are large, sophisticated 

financial institutions, will use existing 

in-house resources to prepare the 

policies and procedures, rather than 

hiring outside service providers to do 

this work. This assumption does not 

apply to the audit requirements. 

Second, given the nature of the 

information collection requirements, the 

Department assumes a combination of 

personnel will perform the information 

collection. Using data from the Bureau 

of Labor Statistics, the Department 

assumes an hourly wage rate of $107 for 

2010, including both wages and 

benefits, for a financial manager and an 

hourly wage rate of $26, similarly 

including wages and benefits, for 

clerical personnel.4 Legal professional 

time is similarly assumed to be $119 per 

hour. 

Third, the Department assumes that 

maintenance of records of the policies 

and procedures and the audits is 

generally a usual and customary 

business practice that would be 

undertaken regardless of the exemption. 

The proposed amendment does not 

contain any additional recordkeeping 

requirements; no additional burden has 

been assumed for recordkeeping costs. 


emcdonald on DSK2BSOYB1PROD with NOTICES
33644 Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 

5CIEBA is a trade association whose membership 

includes corporate financial officers who serve as 

fiduciaries of employee benefit plans subject to 

ERISA and the Code. CIEBA’s approximately 115 

member companies collectively oversee about $1.4 

trillion of defined benefit and defined contribution 

plan assets for about 16 million plan participants 

and beneficiaries. For defined benefit plans in 2008, 

the member companies oversaw more than $652 

billion in plan assets for more than 10.2 million 

plan participants. CIEBA 2008 Membership Profile 

Executive Summary. This figure represents 

approximately 35 percent of the defined benefit 

plan assets in the United States. This calculation is 

based on a projection computed by applying 

percentage changes in pension assets derived from 

the Federal Reserve Board’s Flow of Funds 

Accounts to the 2006 Form 5500 filings with the 

U.S. Department of Labor. 

6 20 INHAMs x 15 hours = 300 hours. 

7 300 hours x $119 per hour = $35,700. 

8 $20,000 × 20 INHAMs = $400,000. 

9 (10 hours + 25 hours + 12 hours) × 20 INHAMs 

= 940 hours. 

10 (10 hours × $119 per hour + 25 hours × $107 

per hour + 12 hours × $26 per hour) × 20 INHAMs 

= $83,700. 

11 300 hours + 940 hours = 1,240 hours. 

12 $35,700 + $83,700 = $119,400. 

13See Amendment to Prohibited Transaction 

Exemption (PTE) 84–14 for Plan Asset Transactions 

Determined by Independent Qualified Professional 

Asset Managers, 70 FR 49305 (August 23, 2005). See 

also Proposed Amendment to Prohibited 

Transaction Exemption (PTE) 84–14 for Plan Asset 

Transactions Determined by Independent Qualified 

Professional Asset Managers, 70 FR 49312 (August 

23, 2005). 

Further, given the sophisticated nature 

of the parties involved, the Department 

assumes that communications between 

the parties will occur electronically via 

means already in existence. Therefore, 

the costs arising from electronic 

communications will be negligible. 

The Department estimates that there 

will be approximately 20 INHAMs that 

will utilize the amended prohibited 

transaction exemption. Information 

provided by CIEBA, an industry trade 

group, indicates that approximately 24 

of CIEBA’s members manage plan assets 

in-house and approximately 14–16 of 

those currently maintain INHAMs and 

utilize the exemptive relief provided in 

PTE 96–23.5 CIEBA’s membership is 

estimated to include about 80 percent of 

all the large firms that manage plan 

assets in-house. That leads to an 

estimate of approximately 18 INHAMs. 

In addition, the Department expects 

approximately two more INHAMs to be 

established due to proposed changes to 

the definition of an INHAM. The 

number of INHAMs is assumed to be 

constant over time. 

Written Policies and Procedures 

The Department assumes that 

INHAMs will use existing in-house 

resources to prepare the written policies 

and procedures. The Department 

estimates that each INHAM will use 15 

hours of a legal professional’s time to 

develop policies and procedures. This 

leads to an hour burden in the first year 

of 300 hours.6 At $119 per hour, the 

equivalent cost will be $35,700 for the 

first year.7

For subsequent years, the Department 

assumes that INHAMs will change their 

policies and procedures very 

infrequently. Therefore, the hour burden 

for subsequent years is estimated to be 

negligible. The Department invites 

comments from interested persons on 

the appropriateness of this assumption. 

Audit Requirements 

INHAMs are assumed to use either a 

law firm or an accounting firm to 

conduct the annual audit required by 

the proposed amendment. The 

Department has received information 

from industry representatives that the 

cost of the annual audit required by PTE 

96–23 may range from approximately 

$10,000 to $25,000, depending on asset 

size and how many years the INHAM 

has used the auditing firm. The 

Department has used a conservative 

estimate for the cost of the outside 

auditing firm for each audit of $20,000. 

This leads to a cost estimate for the 

annual audits of $400,000.8

For purposes of the hour burden, the 

Department estimates that each INHAM 

will use in-house legal professional, 

financial manager, and clerical time to 

provide documents and respond to 

questions from the auditor. Each annual 

audit will require about ten hours of a 

legal professional’s time, 25 hours of a 

financial manager’s time, and twelve 

hours of clerical time. This leads to an 

hour burden of 940 hours.9 The 

equivalent cost of this hour burden for 

the annual audits is approximately 

$83,700.10

Summary 

For the first year, the Department 

estimates that the total hour burden 

imposed by the information collection is 

about 1,240 hours.11 The total 

equivalent cost of this hour burden is 

approximately $119,400.12 The total 

cost burden is $400,000. 

For subsequent years, the total annual 

hour burden is approximately 940 

hours. The total equivalent annual cost 

of this hour burden is about $83,700. 

The total annual outside cost is 

$400,000. 

The paperwork burden estimates are 

summarized as follows: 

Type of Collection: New collection 

(Request for new OMB Control 

Number). 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Title: Proposed Amendment to PTE 

96–23 for Plan Asset Transactions 

Determined by In-House Asset 

Managers. 

OMB Control Number: New. 

Affected Public: Business or other forprofit; not-for-profit institutions. 

Estimated Number of Respondents: 

20. 

Estimated Number of Annual 

Responses: 40 in the first year, 20 in 

each subsequent year. 

Frequency of Response: Annually; 

occasionally. 

Estimated Total Annual Burden 

Hours: 1,240 in the first year, 940 in 

each subsequent year. 

Estimated Total Annual Burden Cost: 

$400,000. 

Background 

On March 13, 1984, the Department 

granted Prohibited Transaction 

Exemption (PTE) 84–14 for Plan Asset 

Transactions Determined by 

Independent Qualified Professional 

Asset Managers (49 FR 9494), a class 

exemption that permits various parties 

who are related to employee benefit 

plans to engage in transactions 

involving plan assets if, among other 

conditions, the assets are managed by a 

‘‘qualified professional asset manager’’ 

(QPAM). The Department recently 

amended the QPAM exemption.13

The QPAM exemption granted in 

1984 did not provide relief for 

transactions involving the assets of 

plans managed by in-house asset 

managers. The Committee on 

Investment of Employee Benefit Assets 

(CIEBA) subsequently requested such 

relief. CIEBA represented that in-house 

managers encountered technical 

problems under the prohibited 

transaction rules of ERISA in the course 

of considering arm’s-length transactions 

that would be in the interests of their 

plans. 

CIEBA stated, in its original 

exemption application, that in-house 

managers have become an established 

part of many large companies that 

manage some or all of their plan assets 

in-house. According to CIEBA, many of 

the large corporations that made up its 

membership maintained one or more 

employee benefit plans holding, in the 

aggregate, assets in excess of $250 

million. These large corporations 

determined that they could reduce costs 

and maintain high quality management 

by developing an in-house asset 

management capability rather than 

relying exclusively on outside managers 

or consultants. CIEBA represented that, 

in addition to providing reduced costs 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 33645 

14The Department is expressing no opinion as to 

whether the above described transaction would 

come within the scope of relief provided by PTE 

84–14, as amended. 

15 61 FR 15975 (April 10, 1996). 

for comparable or better quality 

management, in-house managers were 

attractive to employers because they 

devoted their time solely to the plan’s 

asset management activities, while 

outside managers had other clients and 

responsibilities. The applicant also 

asserted that the named plan fiduciaries 

benefited from having access to inhouse expertise and advice to assist 

them in carrying out their fiduciary 

responsibilities. 

CIEBA represented that, unless the 

Department provided broad exemptive 

relief for in-house asset managers, inhouse plans would be disadvantaged 

because of the restrictions on the types 

of transactions an in-house manager 

could engage in on behalf of such a 

plan. The applicant explained that very 

large plans may have thousands of 

parties in interest, making the task of 

determining whether a particular 

transaction was prohibited a 

considerable burden for the plan 

fiduciaries. According to the applicant, 

if the in-house manager wished to enter 

into a transaction he or she believed 

would be beneficial to the plan but 

which also involved a party in interest, 

that manager would be required to 

either: (1) Seek an individual prohibited 

transaction exemption; (2) retain a 

QPAM for the transaction; or (3) forgo 

the transaction. The applicant argued 

that seeking an individual exemption 

involved time and legal expenses. In 

addition, the use of a QPAM entailed 

additional expenses for the plan despite 

the fact that the in-house manager had 

already done most of the work required 

for the transaction, including 

performing the necessary due diligence 

as to, for example, the creditworthiness 

of the other parties to the transaction.14

Finally, the applicant argued that 

forgoing the transaction might cause the 

plan to miss out on a beneficial 

opportunity. CIEBA argued that a class 

exemption for in-house asset managers 

was necessary because these limitations 

on a plan’s investment choices could 

raise a plan’s investment costs in the 

short run by limiting the parties with 

whom it may deal, and could adversely 

affect investment performance in the 

long run. Based on the record 

developed, the Department determined 

that relief would be appropriate and 

granted the Class Exemption for Plan 

Asset Transactions Determined by InHouse Asset Managers (INHAMs).15

Description of Existing Relief 

The INHAM exemption consists of 

four separate parts. Part I sets forth the 

general exemption and enumerates 

certain conditions applicable to the 

transactions described therein. The 

general exemption allows that portion of 

a plan which is managed by an INHAM 

to engage in all transactions described 

in section 406(a)(1)(A) through (D) of 

ERISA with virtually all party in interest 

service providers except the INHAM or 

a person related to the INHAM. The 

general exemption does not extend to 

transactions that would give rise to 

violations of section 406(b) of ERISA. 

Part II of the exemption provides 

limited relief under both sections 406(a) 

and (b), and 407(a), of ERISA for certain 

transactions involving employers and 

their affiliates who cannot qualify for 

the general exemption provided by Part 

I. Section II(a) provides limited relief for 

the leasing of office or commercial space 

by a plan to an employer if the plan 

acquired the property subject to an 

outstanding lease with an employer or 

affiliate as a result of foreclosure on a 

mortgage or deed of trust. Section II(b) 

permits a plan to lease residential space 

to an employee of an employer any of 

whose employees are covered by such 

plan, or to any employee of a 50% or 

more parent or subsidiary of the 

employer. 

Part III of the exemption provides 

relief from sections 406(a)(1)(A) through 

(D), 406(b)(1) and (b)(2) of ERISA for the 

furnishing of services, facilities and any 

goods incidental thereto by a place of 

accommodation owned by a plan 

managed by an INHAM to a party in 

interest with respect to the plan, if the 

services, facilities or incidental goods 

are furnished on a comparable basis to 

the general public. 

Part IV contains definitions of certain 

terms used in the exemption. 

Description of the Proposed 

Amendments 

Definition of INHAM 

The Department is proposing to 

amend several provisions of the INHAM 

exemption, including the definition of 

INHAM in section IV(a). Section IV(a) 

currently provides that: 

The term ‘‘in-house asset manager’’ or 

‘‘INHAM’’ means an organization which is— 

(1) Either (A) a direct or indirect whollyowned subsidiary of an employer, or a direct 

or indirect wholly-owned subsidiary of a 

parent organization of such employer, or (B) 

a membership nonprofit corporation a 

majority of whose members are officers or 

directors of such an employer or parent 

organization; and 

(2) an investment adviser registered under 

the Investment Advisers Act of 1940 that, as 

of the last day of its most recent fiscal year, 

has under its management and control total 

assets attributable to plans maintained by 

affiliates of the INHAM (as defined in section 

IV(b)) in excess of $50 million; provided that 

if it has no prior fiscal year as a separate legal 

entity as a result of it constituting a division 

or group within the employer’s 

organizational structure, then this 

requirement will be deemed met as of the 

date during its initial fiscal year as a separate 

legal entity that responsibility for the 

management of such assets in excess of $50 

million was transferred to it from the 

employer. 

In addition, plans maintained by affiliates 

of the INHAM and/or the INHAM, must have, 

as of the last day of each plan’s reporting 

year, aggregate assets of at least $250 million. 

The Department has been informed by 

interested persons that the requirement 

that an INHAM be a wholly owned 

subsidiary of an employer or its parent 

organization unduly limited some 

entities from serving as INHAMs. 

Interested parties requested, in 

comments submitted in connection with 

the proposed amendment to the QPAM 

class exemption [68 FR 52419, 

September 3, 2003], that the Department 

consider broadening the definition of 

INHAM to permit a greater number of 

entities to take advantage of the relief 

provided by the exemption. 

In response to such comments, the 

Department proposes to expand the 

definition of INHAM to include a 

subsidiary that is 80% or more owned 

by the employer or parent company. 

Additionally, the plan assets under 

management requirement would be 

increased from $50 million to $85 

million, effective as of the last day of the 

first fiscal year beginning on or after the 

date of publication in the Federal 

Register of the final amendment to this 

exemption. The increase reflects the 

change in the Consumer Price Index. 

Requested Clarifications 

The Department has also been asked 

informally to clarify several issues 

regarding the definition of an INHAM 

and the scope of the exemption. First, 

the Department has been asked whether 

an INHAM can act on behalf of its own 

plans. The exemption provides relief for 

transactions involving a ‘‘plan’’ as 

defined in section IV(h). As noted by the 

Department in the preamble to the 

original exemption, the definition of 

plan adopted by the Department 

includes a plan maintained by the 

INHAM or an affiliate of the INHAM. 

Accordingly, the exemption currently 

provides relief for an INHAM to act on 

behalf of its own plans. 

Additionally, interested persons have 

asked the Department to clarify certain 

aspects of transactions involving both 

INHAMs and QPAMs. The Department 


emcdonald on DSK2BSOYB1PROD with NOTICES
33646 Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 

16 49 FR 9497. 

17See 68 FR 52422, September 3, 2003. 

was asked whether a QPAM could be 

employed to negotiate the specific terms 

of a deal after an employer or its 

INHAM have agreed on general terms 

with the counterparty. The Department 

stated in the preamble to the original 

QPAM class exemption that, while a 

QPAM may adhere to investment 

guidelines established by persons with 

the power to appoint it, the retention of 

a veto or approval power by the plan 

sponsor or its designee would be 

inconsistent with the underlying 

concept of the QPAM exemption, that 

is, the transfer of plan assets to an 

independent, discretionary, manager.16

In the Department’s view, an INHAM 

directing a QPAM to negotiate specific 

terms of a deal that has already been 

generally agreed upon by the INHAM or 

the employer represents a more 

significant limitation on the QPAM’s 

discretion than the imposition of 

investment guidelines. Similar to a veto 

or approval power, this amount of 

involvement would be inconsistent with 

the basic premise of the QPAM 

exemption. 

Interested persons also asked the 

Department to clarify that a transaction 

that is entered into by an INHAM, but 

subsequently overseen by a QPAM, or 

vice versa, may satisfy the terms of the 

INHAM and the QPAM exemption, as 

applicable. The Department believes 

that, unlike the situation described in 

the previous paragraph, the INHAM and 

the QPAM may each operate 

independently of one another and have 

discretionary authority for different 

aspects of the same plan investment. 

Thus, for example, the INHAM may 

exercise its discretionary authority to 

purchase an office building on behalf of 

the plan. Pursuant to an investment 

management agreement with the plan, 

the QPAM may have independent 

discretionary authority to operate the 

building on a day to day basis, 

including negotiating all lease 

agreements. Under those circumstances, 

the Department agrees that the QPAM 

and the INHAM exemptions would be 

available for the transactions 

independently negotiated by the 

INHAM and QPAM, respectively, 

provided that the conditions of the 

relevant exemption are satisfied. 

Interested persons also requested that 

the Department clarify section I(b) of 

PTE 96–23 in a manner similar to the 

clarification made by the Department in 

the proposed amendment to the QPAM 

class exemption.17 Section I(b) of PTE 

96–23 excludes from exemptive relief 

those transactions described in PTEs 

81–6 (relating to securities lending 

arrangements), 83–1 (relating to 

acquisitions by plans of interests in 

mortgage pools) and 88–59 (relating to 

certain mortgage financing 

arrangements). The Department 

understands that there is uncertainty 

regarding the application of the INHAM 

class exemption to certain types of 

transactions that, although similar to the 

transactions that are the subject of the 

three specialized exemptions, are 

beyond the scope of relief provided by 

those exemptions. It is the view of the 

Department that the INHAM class 

exemption would provide relief for such 

transactions if the conditions of the 

exemption are otherwise satisfied. The 

Department cautions, however, that the 

INHAM class exemption would not be 

available for any transaction specifically 

described in PTEs 81–6, 83–1 or 88–59, 

if a person determines not to satisfy one 

or more of the conditions of the 

specialized exemptions solely in order 

to take advantage of the relief provided 

by the INHAM class exemption. 

The Department notes that on October 

31, 2006, it amended and replaced PTEs 

81–6 and 82–63, relating to securities 

lending arrangements (PTE 2006–16, 71 

FR 63786). That amendment extended 

the relief provided under PTEs 81–6 and 

82–63 to additional parties and 

additional forms of collateral, subject to 

modified conditions. Recognizing that 

class exemptions are often amended 

over time to reflect changes in the 

marketplace, the Department intends 

that section I(b)(1) of the INHAM class 

exemption will continue to exclude 

from relief transactions described in 

PTE 2006–16 as it is amended or 

superseded. Accordingly, the 

Department proposes to amend the 

reference to PTE 2006–16 in section I(b), 

as well as the references in that section 

to the other class exemptions, to include 

the phrase ‘‘as amended or superseded.’’ 

Permitted Counterparties 

The Department also received 

requests from interested persons to 

amend section I(e) of the exemption, 

which as currently drafted provides that 

the party in interest dealing with the 

plan: (1) Is a party in interest with 

respect to the plan (including a 

fiduciary) solely by reason of providing 

services to the plan, or solely by reason 

of a relationship to a service provider 

described in section 3(14)(F), (G), (H), or 

(I) of ERISA; and (2) does not have 

discretionary authority or control with 

respect to the investment of the plan 

assets involved in the transaction and 

does not render investment advice 

(within the meaning of 29 CFR 2510.3– 

21(c)) with respect to those assets. 

On occasion, since the issuance of 

PTE 96–23, the Department has at times 

been asked to remove all limits on the 

types of parties in interest that could 

engage in transactions with the plan 

pursuant to the exemption. The 

Department also received a more limited 

request to permit the plan to engage in 

transactions with ‘‘co-joint venturers.’’ 

Such entities own at least 10% of a joint 

venture in which an employer (or its 

parent) has at least a 50% interest and 

are parties in interest pursuant to 

section 3(14)(I) of ERISA. The interested 

person represented that it is 

administratively burdensome for 

INHAMs to monitor every joint venture 

in which employers may participate. 

The Department has determined not 

to remove all restrictions on the types of 

parties in interest that may engage in 

transactions with plans pursuant to the 

exemption. In this regard, the 

Department notes that a commenter on 

the original INHAM exemption 

requested that the restrictions on parties 

in interest be removed, and at that time 

the Department stated that there had not 

been a sufficient showing that the 

safeguards contained in the proposed 

exemption would adequately discourage 

the exercise of undue influence upon 

the INHAM if the exemption were 

expanded in such manner. For that 

reason, the Department is not persuaded 

at this time that such an amendment is 

warranted. 

However, the Department has 

determined to propose the more limited 

relief requested for entities that are 

parties in interest because they are ‘‘cojoint venturers.’’ Section I(e) would 

provide as follows: 

(e) The party in interest dealing with the 

plan: (1) Is a party in interest with respect to 

the plan (including a fiduciary) either (i) 

solely by reason of providing services to the 

plan, or solely by reason of a relationship to 

a service provider described in section 

3(14)(F), (G), (H) or (I) of ERISA, or (ii) solely 

by reason of being a 10 percent or more 

shareholder, partner or joint venturer, in a 

person, which is 50 percent or more owned 

by an employer of employees covered by the 

plan (directly or indirectly in capital or 

profits), or the parent company of such an 

employer, provided that such person is not 

controlled by, controlling, or under common 

control with such employer, or (iii) by reason 

of both (i) and (ii) only, and (2) does not have 

discretionary authority or control with 

respect to the investment of the plan assets 

involved in the transaction and does not 

render investment advice (within the 

meaning of 29 CFR 2510.3–21(c)) with 

respect to those assets. 

The Department cautions that, under 

section I(e), a co-joint venturer may 

engage in a transaction with a plan only 

if the joint venture relationship is the 


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entity’s sole relationship to the 

employer, or if the entity is both a joint 

venturer and a service provider or an 

entity with a relationship to a service 

provider as described above. If a person 

has any other relationship with the 

employer described in section 3(14) of 

the Act, the person would not fall 

within the scope of section I(e), and, 

therefore, could not take advantage of 

the relief provided by the exemption. In 

addition, the co-joint venturer may not 

be controlled by, controlling, or under 

common control with such employer. 

Finally, section I(e) clarifies that the cojoint venturer may not have 

discretionary authority or control with 

respect to the investment of the plan 

assets involved in the transaction and 

may not render investment advice 

(within the meaning of 29 CFR 2510.3– 

21(c)) with respect to those assets. 

Parties Related to the INHAM 

The Department proposes to amend 

the definition of ‘‘related’’ to in section 

IV(d) of the exemption. Under section 

I(f), the party in interest dealing with 

the plan may not be the INHAM nor a 

person related to the INHAM. Section 

IV(d) currently provides that an INHAM 

is related to a party in interest. 

If the party in interest (or a person 

controlling, or controlled by, the party in 

interest) owns a five percent or more interest 

in the INHAM or if the INHAM (or a person 

controlling, or controlled by, the INHAM) 

owns a five percent or more interest in the 

party in interest. 

The Department understands that 

compliance with the ‘‘related’’ to 

requirement may create administrative 

burdens for a number of INHAMs. In 

order to ease such burdens, the 

Department determined to increase the 

five percent threshold in section IV(d) to 

ten percent. 

The Department notes that, under the 

proposed amendment, the requirements 

in section I(f) may overlap with the 

limitations contained in section I(e) 

under certain circumstances. Thus, for 

example, if the party in interest owns a 

10 percent interest in the INHAM, the 

party in interest would fail section I(e) 

because, as a 10% shareholder of the 

INHAM, it would no longer be a party 

in interest solely by reason of being a 

service provider to the plan. In addition, 

it would fail section I(f) as it would be 

considered ‘‘related’’ to the INHAM 

because of its ownership interest. 

Conversely, under the proposed 

amendment, relief would be available to 

a service provider that is 9% owned by 

the parent corporation of the INHAM. 

In addition, the Department is 

proposing to make several other 

amendments to section IV(d) to ease 

compliance burdens. As amended, that 

section would require ownership 

interests to be calculated only as of the 

last day of the entity’s most recent 

calendar quarter. Finally, ownership 

interests held in a fiduciary capacity 

would not have to be considered in 

applying the percentage limitation in 

section IV(d) of the exemption. 

Continuing Transactions 

The Department has received several 

inquiries about section IV(e) of PTE 

96–23, which defines ‘‘the time as of 

which any transaction occurs.’’ The 

Department understands that there is 

uncertainty regarding the role of an 

INHAM in a continuing transaction. 

Section IV(e) states the following with 

respect to a continuing transaction: 

[I]n the case of a transaction that is 

continuing, the transaction shall be deemed 

to occur until it is terminated. If any 

transaction is entered into on or after April 

10, 1996, or any renewal that requires the 

consent of the INHAM occurs on or after 

April 10, 1996, and the requirements of this 

exemption are satisfied at the time the 

transaction is entered into or renewed, 

respectively, the requirements will continue 

to be satisfied thereafter with respect to the 

transaction. Nothing in this paragraph shall 

be construed as exempting a transaction 

entered into by a plan which becomes a 

transaction described in section 406 of the 

Act or section 4975 of the Code while the 

transaction is continuing, unless the 

conditions of the exemption were met either 

at the time the transaction was entered into 

or at the time the transaction would have 

become prohibited but for this exemption. In 

determining compliance with the conditions 

of the exemption at the time that the 

transaction was entered into for purposes of 

the preceding sentence, section I(e) will be 

deemed satisfied if the transaction was 

entered into between a plan and a person 

who was not then a party in interest. 

In the Department’s view, the 

exemption would be available for a 

continuing transaction (e.g., a loan or 

lease), provided that all the conditions 

of the exemption are satisfied on the 

date on which the transaction is entered 

into (or on the date of a renewal that 

requires the consent of the INHAM), 

notwithstanding the subsequent failure 

to satisfy one or more of the conditions 

of the exemption. Nonetheless, the 

Department cautions that, although Part 

I may continue to be available for the 

entire term of a continuing transaction 

which subsequently fails to satisfy one 

or more of the conditions of that Part, 

no relief would be provided for an act 

of self-dealing described in section 

406(b)(1) of ERISA if the INHAM has an 

interest in the person which may affect 

the exercise of its best judgment as a 

fiduciary. Although Part I provides an 

exemption from section 406(a)(1)(A) 

through (D) of ERISA, it does not 

provide relief from acts described in 

section 406(b) of ERISA. The 

Department urges fiduciaries to take 

appropriate steps to avoid engaging in 

406(b) violations should circumstances 

change during the course of a 

continuing transaction. 

Exemption Audit 

It has come to the Department’s 

attention that practitioner uncertainty 

exists regarding certain aspects of the 

exemption audit, as required by section 

I(h), and defined in section IV(f), of PTE 

96–23. The Department is therefore 

proposing to amend the class 

exemption, and is offering the following 

views, to provide clarity to those 

sections. 

Section IV(f) of PTE 96–23 currently 

requires, in part, an auditor to test a 

representative sample of a plan’s 

transactions covered by the exemption 

in order to make findings regarding 

whether the INHAM is in compliance 

with the INHAM’s policies and 

procedures, and with the objective 

requirements of the exemption. The 

Department notes, however, that in 

certain instances, an auditor may need 

to construct and test more than one 

sample of transactions. For example, an 

auditor may initially believe that the 

most appropriate way to make the 

required findings is to construct a 

sample that represents a subset of the 

total universe of relevant transactions 

engaged in by the INHAM under the 

exemption. In testing the sample, 

however, the auditor should look for, 

and may find, patterns of compliance 

failures that indicate that certain types 

of transactions are more prone to 

compliance failures than others. If such 

patterns appear, the auditor may need to 

test additional transactions to more 

accurately assess the extent and causes 

of non-compliant transactions. 

Ultimately, an auditor must construct 

and test a sampling of transactions that 

is sufficient in size (i.e., number of 

transactions) and nature (i.e., type of 

transactions) to afford the auditor a 

reasonable basis to make its required 

determinations under the class 

exemption. Since, as noted in the 

preamble to PTE 96–23, the sole 

purpose of the audit is to assure 

compliance with the exemption, the 

sample should also be sufficient in size 

and nature for the auditor to render an 

overall opinion regarding whether the 

INHAM’s program complied with the 

objective requirements of the 

exemption, and with the INHAM’s own 

policies and procedures. 

Accordingly, the Department is 

proposing to amend section IV(f)(2) of 


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33648 Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 

the exemption in a manner that is 

consistent with the views expressed 

above. 

Section I(h) of the exemption requires 

that an independent auditor conduct an 

exemption audit on an annual basis, and 

issue a written report to the plan 

presenting its specific findings 

regarding the level of compliance with 

the policies and procedures adopted by 

the INHAM. However, the exemption 

does not currently specify the date by 

which each audit must be completed. 

To avoid any uncertainty on this issue, 

the Department is proposing to amend 

section I(h) of the exemption to 

expressly provide that the audit must be 

completed within six months following 

the end of the year to which it relates. 

The Department is further proposing to 

amend section I(h) to clarify that the 

written report must contain both 

specific findings required under section 

IV(f)(2), and an overall opinion 

regarding the level of compliance of the 

INHAM’s program with the objective 

requirements of the exemption. 

The preamble to the original INHAM 

class exemption points out that relief is 

not available under the exemption for 

those transactions that did not satisfy its 

conditions. As a result, the Department 

anticipates that an auditor’s report will 

clearly identify each transaction 

examined by the auditor that does not 

comply with the INHAM’s policies and 

procedures or the exemption. In this 

regard, the report should identify the 

specific policies, procedures or 

exemption conditions that were not 

satisfied. The Department expects 

further that each written report will 

include a description of the steps, if 

any, taken by the INHAM to remedy 

transactions that did not comply with 

the objective requirements of the 

exemption. The report should also 

contain a description of the steps taken 

by the auditor to construct the sample(s) 

and an explanation as to why the 

auditor believes that the sample on 

which the required findings are based is 

an adequate representation of the total 

universe of transactions engaged in by 

the INHAM. 

The INHAM retains responsibility for 

reviewing the written report and taking 

any appropriate actions deemed 

necessary for assuring compliance with 

the exemption. The Department 

cautions that the failure of the INHAM 

to take appropriate steps to address any 

adverse findings or prohibited 

transactions in an audit would raise 

issues under the fiduciary responsibility 

provisions of section 404 of ERISA. 

Section II Transactions 

Finally, the Department was asked by 

CIEBA, the original applicant, to amend 

section II(a) of the exemption, which 

provides relief for the leasing of office 

or commercial space owned by a plan 

managed by an INHAM to an employer 

with respect to the plan or an affiliate 

of such employer. As originally granted, 

the relief provided in section II(a) was 

limited to situations in which the plan 

acquired the space subject to an existing 

lease as a result of a foreclosure on a 

mortgage or deed of trust. CIEBA noted 

that situations other than a foreclosure 

can give rise to a lease relationship 

between a plan and an employer or its 

affiliate. For example, CIEBA noted that 

the plan may purchase a building 

subject to a pre-existing lease. 

Alternatively, the employer could 

acquire a company with an existing 

lease in a building owned by the plan. 

CIEBA asserted that in both situations, 

the terms of the existing lease were 

negotiated by a third party at arm’s 

length. CIEBA additionally requested 

that section II(a) of the exemption be 

expanded to cover all situations in 

which the plan’s lease to the employer 

or an affiliate arises as a result of a 

corporate transaction outside the 

INHAM’s control. 

The Department concurs with CIEBA 

that it is appropriate to expand the relief 

provided by section II(a) to include 

additional situations involving existing 

leases with an employer or an affiliate 

beyond foreclosure situations, provided 

that the decision to acquire the office or 

commercial space subject to the lease is 

made by the INHAM. The Department 

has proposed to amend section II(a) 

accordingly. In the case of a transaction 

involving the employer’s acquisition of 

a company with an existing lease in a 

building purchased by the plan, the 

Department notes that the last sentence 

of section IV(e) provides that: 

[i]n determining compliance with the 

conditions of the exemption at the time that 

the transaction was entered into for purposes 

of the preceding sentence, section I(e) will be 

deemed satisfied if the transaction was 

entered into between a plan and a person 

who was not then a party in interest. 

Accordingly, it is the view of the 

Department that section II(a) would be 

available for the entire lease term, 

notwithstanding the employer’s 

subsequent acquisition of the lessee, 

provided that the conditions of the 

exemption were met at the time the 

transaction first was entered into. 

Finally, in light of the fact that the 

INHAM is affiliated with the employer 

maintaining the plan, the Department is 

not convinced that it is appropriate to 

provide broad relief for all situations in 

which the plan’s lease to the employer 

or an affiliate arises as a result of a 

corporate transaction outside of the 

INHAM’s control. 

General Information 

The attention of interested persons is 

directed to the following: 

(1) The fact that a transaction is the 

subject of an exemption under section 

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

of the Code does not relieve a fiduciary 

or other party in interest or disqualified 

person with respect to a plan from 

certain other provisions of ERISA and 

the Code, including any prohibited 

transaction provisions to which the 

exemption does not apply and the 

general fiduciary responsibility 

provisions of section 404 of ERISA 

which require, among other things, that 

a fiduciary discharge his or her duties 

respecting plan solely in the interests of 

the participants and beneficiaries of the 

plan. Additionally, the fact that a 

transaction is the subject of an 

exemption does not affect the 

requirement of section 401(a) of the 

Code that the plan must operate for the 

exclusive benefit of the employees of 

the employer maintaining the plan and 

their beneficiaries; 

(2) Before an exemption may be 

granted under section 408(a) of ERISA 

and 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) If granted, the proposed 

amendment is applicable to a particular 

transaction only if the transaction 

satisfies the conditions specified in the 

exemption; and 

(4) The proposed amendment, if 

granted, will be supplemental to, and 

not in derogation of, any other 

provisions of ERISA and the Code, 

including statutory or administrative 

exemptions and transitional rules. 

Furthermore, the fact that a transaction 

is subject to an administrative or 

statutory exemption is not dispositive of 

whether the transaction is in fact a 

prohibited transaction. 

Written Comments and Hearing 

Requests 

The Department invites all interested 

persons to submit written comments or 

requests for a public hearing on the 

proposed amendment to the address and 

within the time period set forth above. 

All comments received will be made a 

part of the record. Comments and 

requests for a public hearing should 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 33649 

state the reasons for the writer’s interest 

in the proposed amendment. Comments 

received will be available for public 

inspection at the above address. 

Proposed Amendment 

Under section 408(a) of the Act and 

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

accordance with the procedures set 

forth in 29 CFR part 2570, subpart B (55 

FR 32836, 32847, August 10, 1990), the 

Department proposes to amend PTE 96– 

23, effective as of the date of publication 

of the final class exemption in the 

Federal Register, as set forth below: 

Part I—Basic Exemption 

Effective as of the date of publication 

of the final class exemption in the 

Federal Register, the restrictions of 

section 406(a)(1)(A) through (D) of the 

Act and the taxes imposed by section 

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

of section 4975(c)(1)(A) through (D) of 

the Code, shall not apply to a 

transaction between a party in interest 

with respect to a plan (as defined in 

section IV(h)) and such plan, provided 

that an in-house asset manager (INHAM) 

(as defined in section IV(a)) has 

discretionary authority or control with 

respect to the plan assets involved in 

the transaction and the following 

conditions are satisfied: 

(a) The terms of the transaction are 

negotiated on behalf of the plan by, or 

under the authority and general 

direction of, the INHAM, and either the 

INHAM, or (so long as the INHAM 

retains full fiduciary responsibility with 

respect to the transaction) a property 

manager acting in accordance with 

written guidelines established and 

administered by the INHAM, makes the 

decision on behalf of the plan to enter 

into the transaction. Notwithstanding 

the foregoing, a transaction involving an 

amount of $5,000,000 or more, which 

has been negotiated on behalf of the 

plan by the INHAM will not fail to meet 

the requirements of this section I(a) 

solely because the plan sponsor or its 

designee retains the right to veto or 

approve such transaction; 

(b) The transaction is not described 

in– 

(1) Prohibited Transaction Exemption 

2006–16 (71 FR 63786, October 31, 

2006) (relating to securities lending 

arrangements) (as amended or 

superseded); 

(2) Prohibited Transaction Exemption 

83–1 (48 FR 895, January 7, 1983) 

(relating to acquisitions by plans of 

interests in mortgage pools)(as amended 

or superseded); or 

(3) Prohibited Transaction Exemption 

88–59 (53 FR 24811, June 30, 1988) 

(relating to certain mortgage financing 

arrangements) (as amended or 

superseded); 

(c) The transaction is not part of an 

agreement, arrangement or 

understanding designed to benefit a 

party in interest; 

(d) At the time the transaction is 

entered into, and at the time of any 

subsequent renewal or modification 

thereof that requires the consent of the 

INHAM, the terms of the transaction are 

at least as favorable to the plan as the 

terms generally available in arm’s length 

transactions between unrelated parties; 

(e) The party in interest dealing with 

the plan: (1) Is a party in interest with 

respect to the plan (including a 

fiduciary) either (i) solely by reason of 

providing services to the plan, or solely 

by reason of a relationship to a service 

provider described in section 3(14)(F), 

(G), (H) or (I) of ERISA, or (ii) solely by 

reason of being a 10 percent or more 

shareholder, partner or joint venturer, in 

a person, which is 50 percent or more 

owned by an employer of employees 

covered by the plan (directly or 

indirectly in capital or profits), or the 

parent company of such an employer, 

provided that such person is not 

controlled by, controlling, or under 

common control with such employer, or 

(iii) by reason of both (i) and (ii) only, 

and (2) does not have discretionary 

authority or control with respect to the 

investment of the plan assets involved 

in the transaction and does not render 

investment advice (within the meaning 

of 29 CFR 2510.3–21(c)) with respect to 

those assets. 

(f) The party in interest dealing with 

the plan is neither the INHAM nor a 

person related to the INHAM (within 

the meaning of section IV(d)); 

(g) The INHAM adopts written 

policies and procedures that are 

designed to assure compliance with the 

conditions of the exemption; and 

(h) An independent auditor, who has 

appropriate technical training or 

experience and proficiency with 

ERISA’s fiduciary responsibility 

provisions and so represents in writing, 

conducts an exemption audit (as 

defined in section IV(f)) on an annual 

basis. Following completion of the 

exemption audit, the auditor shall issue 

a written report to the plan presenting 

its specific findings regarding the level 

of compliance: (1) With the policies and 

procedures adopted by the INHAM in 

accordance with section I(g); and (2) 

with the objective requirements of the 

exemption. The written report shall also 

contain the auditor’s overall opinion 

regarding whether the INHAM’s 

program complied: (1) With the policies 

and procedures adopted by the IHNAM; 

and (2) with the objective requirements 

of the exemption. The exemption audit 

and the written report must be 

completed within six months following 

the end of the year to which the audit 

relates. 

Part II—Specific Exemptions 

Effective as of the date of publication 

of the final class exemption in the 

Federal Register, the restrictions of 

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

407(a) of the Act and the taxes imposed 

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

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

through (E), shall not apply to: 

(a) The leasing of office or commercial 

space owned by a plan managed by an 

INHAM to an employer any of whose 

employees are covered by the plan or an 

affiliate of such employer (as defined in 

section 407(d)(7) of the Act), if — 

(1) The plan acquires the office or 

commercial space subject to an existing 

lease with the employer or its affiliate; 

(2) The lease was negotiated by a 

party unrelated to the employer or its 

affiliate; 

(3) The INHAM makes the decision on 

behalf of the plan to acquire the office 

or commercial space as part of the 

exercise of its discretionary authority; 

(4) The exemption provided for 

transactions engaged in with a plan 

pursuant to section II(a) is effective until 

the later of the expiration of the lease 

term or any renewal thereof which does 

not require the consent of the plan 

lessor; 

(5) The amount of space covered by 

the lease does not exceed fifteen (15) 

percent of the rentable space of the 

office building or the commercial 

center; and 

(6) The requirements of sections I(c), 

I(g) and I(h) are satisfied with respect to 

the transaction. 

(b) The leasing of residential space by 

a plan to a party in interest if — 

(1) The party in interest leasing space 

from the plan is an employee of an 

employer any of whose employees are 

covered by the plan or an employee of 

an affiliate of such employer (as defined 

in section 407(d)(7) of the Act); 

(2) The employee who is leasing space 

does not have any discretionary 

authority or control with respect to the 

investment of the assets involved in the 

lease transaction and does not render 

investment advice (within the meaning 

of 29 CFR 2510.3–21(c)) with respect to 

those assets; 

(3) The employee who is leasing space 

is not an officer, director, or a 10% or 

more shareholder of the employer or an 

affiliate of such employer; 

(4) At the time the transaction is 

entered into, and at the time of any 

subsequent renewal or modification 


emcdonald on DSK2BSOYB1PROD with NOTICES
33650 Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 

thereof that requires the consent of the 

INHAM, the terms of the transaction are 

not less favorable to the plan than the 

terms afforded by the plan to other, 

unrelated lessees in comparable arm’s 

length transactions; 

(5) The amount of space covered by 

the lease does not exceed five percent 

(5%) of the rentable space of the 

apartment building or multi-unit 

residential subdivision [townhouses or 

garden apartments], and the aggregate 

amount of space leased to all employees 

of the employer or an affiliate of such 

employer does not exceed ten percent 

(10%) of such rentable space; and 

(6) The requirements of sections I(a), 

I(c), I(d), I(g) and I(h) are satisfied with 

respect to the transaction. 

Part III—Places of Public 

Accommodation 

Effective as of the date of publication 

of the final class exemption in the 

Federal Register, the restrictions of 

sections 406(a)(1)(A) through (D) and 

406(b)(1) and (2) of ERISA and the taxes 

imposed by Code section 4975(a) and 

(b), by reason of Code section 

4957(c)(1)(A) through (E), shall not 

apply to the furnishing of services and 

facilities (and goods incidental thereto) 

by a place of public accommodation 

owned by a plan and managed by an 

INHAM to a party in interest with 

respect to the plan, if the services and 

facilities (and incidental goods) are 

furnished on a comparable basis to the 

general public. 

Part IV—Definitions 

For purposes of this exemption: 

(a) The term ‘‘in-house asset manager’’ 

or ‘‘INHAM’’ means an organization 

which is— 

(1) either (A) a direct or indirect 80 

percent or more owned subsidiary of an 

employer, or a direct or indirect 80 

percent more owned subsidiary of a 

parent organization of such an 

employer, or (B) a membership 

nonprofit corporation a majority of 

whose members are officers or directors 

of such an employer or parent 

organization; and 

(2) an investment adviser registered 

under the Investment Advisers Act of 

1940 that, as of the last day of its most 

recent fiscal year, has under its 

management and control total assets 

attributable to plans maintained by 

affiliates of the INHAM (as defined in 

section IV(b)) in excess of $50 million; 

provided that if it has no prior fiscal 

year as a separate entity as a result of 

it constituting a division or group 

within the employer’s organizational 

structure, then this requirement will be 

deemed met as of the date during its 

initial fiscal year as a separate legal 

entity that responsibility for the 

management of such assets in excess of 

$50 million was transferred to it from 

the employer. Effective as of the last day 

of the first fiscal year of the investment 

adviser beginning on or after the date of 

publication of this amendment to PTE 

96–23 in the Federal Register, substitute 

‘‘$85 million’’ for ‘‘$50 million’’ in (a)(2) 

of section IV above. 

In addition, plans maintained by 

affiliates of the INHAM and/or the 

INHAM must have, as of the last day of 

each plan’s reporting year, aggregate 

assets of at least $250 million. 

(b) For purposes of sections IV(a) and 

IV(h), an ‘‘affiliate’’ of an INHAM means 

a member of either (1) a controlled 

group of corporations (as defined in 

section 414(b) of the Code) of which the 

INHAM is a member, or (2) a group of 

trades or businesses under common 

control (as defined in section 414(c) of 

the Code) of which the INHAM is a 

member; provided that ‘‘50 percent’’ 

shall be substituted for ‘‘80 percent’’ 

wherever ‘‘80 percent’’ appears in 

section 414(b) or 414(c) or the rules 

thereunder. 

(c) The term ‘‘party in interest’’ means 

a person described in the Act section 

3(14) and includes a ‘‘disqualified 

person’’ as defined in Code section 

4975(e)(2). 

(d) An INHAM is ‘‘related’’ to a party 

in interest for purposes of section I(f) of 

this exemption if, as of the last day of 

its most recent calendar quarter: (i) the 

INHAM (or a person controlling, or 

controlled by, the INHAM) owns a ten 

percent or more interest in the party in 

interest; or (ii) the party in interest (or 

a person controlling, or controlled by, 

the party in interest) owns a ten percent 

or more interest in the INHAM. For 

purposes of this definition: 

(1) The term ‘‘interest’’ means with 

respect to ownership of an entity— 

(A) The combined voting power of all 

classes of stock entitled to vote or the 

total value of the shares of all classes of 

stock of the entity if the entity is a 

corporation, 

(B) The capital interest or the profits 

interest of the entity if the entity is a 

partnership, or 

(C) The beneficial interest of the 

entity if the entity is a trust or 

unincorporated enterprise; and 

(2) A person is considered to own an 

interest if, other than in a fiduciary 

capacity, the person has or shares the 

authority— 

(A) To exercise any voting rights or to 

direct some other person to exercise the 

voting rights relating to such interest, or 

(B) To dispose or to direct the 

disposition of such interest; and 

(3) The term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual. 

(e) For purposes of this exemption, 

the time as of which any transaction 

occurs is the date upon which the 

transaction is entered into. In addition, 

in the case of a transaction that is 

continuing, the transaction shall be 

deemed to occur until it is terminated. 

If any transaction is entered into on or 

after April 10, 1996, or any renewal that 

requires the consent of the INHAM 

occurs on or after April 10, 1996, and 

the requirements of this exemption are 

satisfied at the time the transaction is 

entered into or renewed, respectively, 

the requirements will continue to be 

satisfied with respect to the transaction. 

Nothing in this paragraph shall be 

construed as exempting a transaction 

entered into by a plan which becomes 

a transaction described in section 406 of 

the Act or section 4975 of the Code 

while the transaction is continuing, 

unless the conditions of the exemption 

were met either at the time the 

transaction was entered into or at the 

time the transaction would have become 

prohibited but for this exemption. In 

determining compliance with the 

conditions of the exemption at the time 

that the transaction was entered into for 

purposes of the preceding sentence, 

section I(e) will be deemed satisfied if 

the transaction was entered into 

between a plan and a person who was 

not then a party in interest. 

(f) Exemption Audit. An ‘‘exemption 

audit’’ of a plan must consist of the 

following: 

(1) A review of the written policies 

and procedures adopted by the INHAM 

pursuant to section I(g) for consistency 

with each of the objective requirements 

of this exemption (as described in 

section IV(g)). 

(2) A test of a sample of the INHAM’s 

transactions during the audit period that 

is sufficient in size and nature to afford 

the auditor a reasonable basis: (A) To 

make specific findings regarding 

whether the INHAM is in compliance 

with (i) the written policies and 

procedures adopted by the INHAM 

pursuant to section I(g) of the exemption 

and (ii) the objective requirements of the 

exemption; and (B) to render an overall 

opinion regarding the level of 

compliance of the INHAM’s program 

with section IV(f)(2)(A)(i) and (ii) of the 

exemption. 

(3) A determination as to whether the 

INHAM satisfied the definition of an 

INHAM under the exemption; and 

(4) Issuance of a written report 

describing the steps performed by the 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 113 / Monday, June 14, 2010 / Notices 33651 

auditor during the course of its review 

and the auditor’s findings. 

(g) For purposes of section IV(f), the 

written policies and procedures must 

describe the following objective 

requirements of the exemption and the 

steps adopted by the INHAM to assure 

compliance with each of these 

requirements: 

(1) The definition of an INHAM in 

section IV(a). 

(2) The requirements of Part I and 

section I(a) regarding the discretionary 

authority or control of the INHAM with 

respect to the plan assets involved in 

the transaction, in negotiating the terms 

of the transaction, and with regard to 

the decision on behalf of the plan to 

enter into the transaction. 

(3) That any procedure for approval or 

veto of the transaction meets the 

requirements of section I(a). 

(4) For a transaction described in Part 

I: 

(A) That the transaction is not entered 

into with any person who is excluded 

from relief under section I(e)(1), section 

I(e)(2), to the extent such person has 

discretionary authority or control over 

the plan assets involved in the 

transaction, or section I(f), and 

(B) that the transaction is not 

described in any of the class exemptions 

listed in section I(b). 

(5) For a transaction described in Part 

II: 

(A) If the transaction is described in 

section II(a), 

(i) that the transaction is with a party 

described in section II(a); 

(ii) that the transaction occurs under 

the circumstances described in section 

II(a)(1), (2) and (3); 

(iii) that the transaction does not 

extend beyond the period of time 

described in section II(a)(4); and 

(iv) that the percentage test in section 

II(a)(5) has been satisfied or 

(B) If the transaction is described in 

section II(b), 

(i) that the transaction is with a party 

described in section II(b)(1); 

(ii) that the transaction is not entered 

into with any person excluded from 

relief under section II(b)(2) to the extent 

such person has discretionary authority 

or control over the plan assets involved 

in the lease transaction or section 

II(b)(3); and 

(iii) that the percentage test in section 

II(b)(5) has been satisfied. 

(h) The term ‘‘plan’’ means a plan 

maintained by the INHAM or an affiliate 

of the INHAM. 

Signed at Washington, DC this 9th day of 

June 2010. 

Ivan L. Strasfeld, 

Director of Exemption Determinations, 

Employee Benefits Security Administration, 

U.S. Department of Labor. 

[FR Doc. 2010–14205 Filed 6–11–10; 8:45 am] 

BILLING CODE 4510–29–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

Sunshine Act; Notice of Agency 

Meeting 

TIME AND DATE: 10 a.m., Thursday, June 

17, 2010. 

PLACE: Board Room, 7th Floor, Room 

7047, 1775 Duke Street, Alexandria, VA 

22314–3428. 

STATUS: Open. 

MATTERS TO BE CONSIDERED: 

1. Final Rule—Part 701 of NCUA’s 

Rules and Regulations, Interpretive 

Ruling and Policy Statement (IRPS) 10– 

1, NCUA’s Chartering and Field of 

Membership Policies. 

2. Delegations of Authority— 

Chartering. 

3. Proposed Rule—Part 741 of 

NCUA’s Rules and Regulations, 

Requirements for Insurance, Interest 

Rate Risk Policy and Program. 

4. Insurance Fund Report. 

5. Temporary Corporate Credit Union 

Stabilization Fund Accounting 

Standard. 

6. Temporary Corporate Credit Union 

Stabilization Fund Payment of Insured 

Shares. 

7. Temporary Corporate Credit Union 

Stabilization Fund Assessment. 

RECESS: 11:30 a.m. 

TIME AND DATE: 11:45 a.m., Thursday, 

June 17, 2010. 

PLACE: Board Room, 7th Floor, Room 

7047, 1775 Duke Street, Alexandria, VA 

22314–3428. 

STATUS: Closed. 

MATTERS TO BE CONSIDERED: 

1. Consideration of Supervisory 

Activities (2). Closed pursuant to some 

or all of the following exemptions: (8), 

(9)(A)(ii) and 9(B). 

FOR FURTHER INFORMATION CONTACT: 

Mary Rupp, Secretary of the Board, 

Telephone: 703–518–6304. 

Mary Rupp, 

Board Secretary. 

[FR Doc. 2010–14402 Filed 6–10–10; 4:15 pm] 

BILLING CODE P 

THE NATIONAL FOUNDATION ON THE 

ARTS AND THE HUMANITIES 

Meetings of Humanities Panel 

AGENCY: The National Endowment for 

the Humanities. 

ACTION: Notice of meetings. 

SUMMARY: Pursuant to the provisions of 

the Federal Advisory Committee Act 

(Pub. L. 92–463, as amended), notice is 

hereby given that the following 

meetings of Humanities Panels will be 

held at the Old Post Office, 1100 

Pennsylvania Avenue, NW., 

Washington, DC 20506. 

FOR FURTHER INFORMATION CONTACT: 

Michael P. McDonald, Advisory 

Committee Management Officer, 

National Endowment for the 

Humanities, Washington, DC 20506; 

telephone (202) 606–8322. Hearingimpaired individuals are advised that 

information on this matter may be 

obtained by contacting the 

Endowment’s TDD terminal on 

(202) 606–8282. 

SUPPLEMENTARY INFORMATION: The 

proposed meetings are for the purpose 

of panel review, discussion, evaluation 

and recommendation on applications 

for financial assistance under the 

National Foundation on the Arts and the 

Humanities Act of 1965, as amended, 

including discussion of information 

given in confidence to the agency by the 

grant applicants. Because the proposed 

meetings will consider information that 

is likely to disclose trade secrets and 

commercial or financial information 

obtained from a person and privileged 

or confidential and/or information of a 

personal nature the disclosure of which 

would constitute a clearly unwarranted 

invasion of personal privacy, pursuant 

to authority granted me by the 

Chairman’s Delegation of Authority to 

Close Advisory Committee meetings, 

dated July 19, 1993, I have determined 

that these meetings will be closed to the 

public pursuant to subsections (c)(4), 

and (6) of section 552b of Title 5, United 

States Code. 

1. Date: July 13, 2010. 

Time: 8:30 a.m. to 5 p.m. 

Room: 315. 

Program: This meeting will review 

applications for Musicology in 

Fellowships, submitted to the Division 

of Research Programs at the May 4, 2010 

deadline. 

2. Date: July 13, 2010. 

Time: 9 a.m. to 5 p.m. 

Room: 421. 

Program: This meeting will review 

applications for Colleges and 

Universities I, submitted to the Office of 


emcdonald on DSK2BSOYB1PROD with NOTICES