14722 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2570 

RIN 1210–ACO5 

Procedures Governing the Filing and 

Processing of Prohibited Transaction 

Exemption Applications 

AGENCY: Employee Benefits Security 

Administration, U.S. Department of 

Labor. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document gives notice of 

a proposed rule that, if adopted, would 

supersede the Department of Labor’s 

(the Department) existing procedure 

governing the filing and processing of 

applications for administrative 

exemptions from the prohibited 

transaction provisions of the Employee 

Retirement Income Security Act of 1974 

(ERISA), the Internal Revenue Code of 

1986 (the Code), and the Federal 

Employees’ Retirement System Act of 

1986 (FERSA). The Secretary of Labor 

(the Secretary) is authorized to grant 

exemptions from the prohibited 

transaction provisions of ERISA, the 

Code, and FERSA and to establish an 

exemption procedure to provide for 

such relief. The proposed rule would 

update the Department’s prohibited 

transaction exemption procedures. 

DATES: Written comments and requests 

for a public hearing on the proposed 

rule must be submitted to the 

Department within April 14, 2022. 

ADDRESSES: All written comments and 

requests for a hearing concerning the 

proposed rule should be sent to the 

Office of Exemption Determinations 

through the Federal eRulemaking Portal 

and identified by RIN 1210–ACO5. 

Federal eRulemaking Portal: 

www.regulations.gov at Docket ID 

number: EBSA–2022–0003. Follow the 

instructions for submitting comments. 

See SUPPLEMENTARY INFORMATION

below for additional information 

regarding comments. 

FOR FURTHER INFORMATION CONTACT: 

Brian Shiker, telephone: (202) 693– 

8552, email: shiker.brian@dol.gov, 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration, U.S. Department of 

Labor (this is not a toll-free number). 

Customer Service Information: 

Individuals interested in obtaining 

information from the Department 

concerning ERISA and employee benefit 

plans may call the Employee Benefits 

Security Administration’s Toll-Free 

Hotline, at 1–866–444–EBSA (3272) or 

visit the Department’s website 

(www.dol.gov/ebsa). 

SUPPLEMENTARY INFORMATION: 

Comment Instructions 

All comments and requests for a 

hearing must be received by the end of 

the comment period. Requests for a 

hearing must state the issues to be 

addressed and include a general 

description of the evidence to be 

presented at the hearing. In light of the 

current circumstances surrounding the 

COVID–19 pandemic caused by the 

novel coronavirus which may result in 

disruption to the receipt of comments 

by U.S. Mail or hand delivery/courier, 

persons are encouraged to submit all 

comments electronically and not to 

follow with paper copies. The 

comments and hearing requests 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; 

however, the Public Disclosure Room 

may be closed for all or a portion of the 

comment period due to circumstances 

surrounding the COVID–19 pandemic 

caused by the novel coronavirus. 

Comments and hearing requests will 

also be available online at 

www.regulations.gov, at Docket ID 

number: EBSA–2022–0003 and 

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

Warning: All comments received will 

be included in the public record 

without change and will be made 

available online at www.regulations.gov, 

including any personal information 

provided, unless the comment includes 

information claimed to be confidential 

or other information whose disclosure is 

restricted by statute. If you submit a 

comment, the Employee Benefits 

Security Administration (EBSA) 

recommends that you include your 

name and other contact information, but 

DO NOT submit information that you 

consider to be confidential, or otherwise 

protected (such as Social Security 

number or an unlisted phone number), 

or confidential business information 

that you do not want publicly disclosed. 

However, if EBSA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EBSA might not be able to consider your 

comment. Additionally, the 

www.regulations.gov website is an 

‘‘anonymous access’’ system, which 

means EBSA will not know your 

identity or contact information unless 

you provide it. If you send an email 

directly to EBSA without going through 

www.regulations.gov, your email 

address will be automatically captured 

and included as part of the comment 

that is placed in the public record and 

made available on the internet. 

Background 

Part 4 of Title I of ERISA establishes 

an extensive framework of standards 

and rules that govern the conduct of 

ERISA plan fiduciaries; collectively, 

these rules are designed to safeguard the 

integrity of employee benefit plans. As 

part of this structure, ERISA section 

406(a) generally prohibits a plan 

fiduciary from causing the plan to 

engage in a variety of transactions with 

certain related parties, unless a statutory 

or administrative exemption applies to 

the transaction. These related parties 

(which include plan fiduciaries, 

sponsoring employers, unions, service 

providers, and other persons who may 

be in a position to exercise improper 

influence over a plan) are defined as 

‘‘parties in interest’’ in ERISA section 

3(14). ERISA section 406(b) generally 

prohibits a plan fiduciary from (1) 

dealing with the assets of a plan in his 

or her own interest or for his or her 

account, (2) acting in any transaction 

involving the plan on behalf of a party 

whose interests are adverse to those of 

the plan or its participants and 

beneficiaries, or (3) receiving any 

consideration for his or her own 

personal account from a party dealing 

with the plan in connection with a 

transaction involving plan assets, unless 

an exemption specifically applies to 

such conduct. To supplement these 

provisions, ERISA sections 406(a)(1)(E) 

and 407(a) impose restrictions on the 

nature and extent of plan investments in 

assets such as ‘‘employer securities’’ (as 

defined in ERISA section 407(d)(1)) and 

‘‘employer real property’’ (as defined in 

ERISA section 407(d)(2)). The 

transactions prohibited under ERISA 

sections 406 and 407 are referred to as 

‘‘prohibited transactions.’’ 

Most of the transactions prohibited by 

ERISA section 406 are likewise 

prohibited by Code section 4975, which 

imposes an excise tax on those 

transactions to be paid by each 

‘‘disqualified person’’ (defined in Code 

section 4975(e)(2) in virtually the same 

manner as the term ‘‘party in interest’’ 

is defined in ERISA section 3(14)) who 

engages in the prohibited transactions. 

Prohibited Transaction Exemptions 

Both ERISA and the Code contain 

various statutory exemptions from the 

prohibited transaction rules. These 

statutory exemptions were enacted by 

Congress to prevent the disruption of a 

number of customary business practices 


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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 14723 

1See Secretary of Labor’s Order 6–2009, 74 FR 

21524 (May 7, 2009). 

2 5 U.S.C. 8477(c)(3). 

3See Secretary of Labor’s Order 6–2009, 74 FR 

21524 (May 7, 2009). 

involving employee benefit plans, 

parties in interest, and fiduciaries. The 

statutory exemptions afford relief for 

transactions such as loans to 

participants and stock ownership plans, 

the provision of services necessary for 

the operation of a plan, certain 

investment advice transactions 

involving individual account plan 

participants and beneficiaries, and the 

investment of plan assets into deposits 

in certain financial institutions 

regulated by state or Federal agencies. 

In addition to the statutory 

exemptions, ERISA section 408(a) 

authorizes the Secretary to grant 

administrative exemptions from the 

restrictions of ERISA sections 406 and 

407(a) in instances where the Secretary 

makes a finding on the record that relief 

is (1) administratively feasible, (2) in the 

interests of the plan and its participants 

and beneficiaries, and (3) protective of 

the rights of participants and 

beneficiaries of such plan. Similarly, 

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

authorizes the Secretary of the Treasury 

or his delegate to grant administrative 

exemptions from the prohibitions of 

Code section 4975(c)(1) upon making 

the same findings. Before an exemption 

is granted, notice of its pendency must 

be published in the Federal Register 

and interested persons must be given 

the opportunity to comment on the 

proposed exemption. If the exemption 

transaction involves potential fiduciary 

self-dealing or conflicts of interest, an 

opportunity for a public hearing must be 

provided. 

ERISA section 408(a) authorizes the 

Secretary to grant administrative 

exemptions on either an individual or a 

class basis. Class exemptions provide 

general relief from the restrictions of 

ERISA, the Code, and FERSA to those 

parties in interest who engage in the 

categories of transactions described in 

the exemption and who also satisfy the 

conditions stipulated by the exemption. 

Persons who are in conformity with all 

the requirements of a class exemption 

are not ordinarily required to seek an 

individual exemption for the same 

transaction from the Department. 

Individual exemptions, by contrast, 

involve case-by-case determinations as 

to whether the specific facts represented 

by an applicant concerning an 

exemption transaction as well as the 

conditions applicable to such a 

transaction support a finding by the 

Department that the requirements for 

relief from the prohibited transaction 

provisions of ERISA, the Code, and 

FERSA have been satisfied in a 

particular instance. While the vast 

majority of administrative exemptions 

issued by the Department are the 

product of requests for relief from 

individual applicants or the broader 

employee benefits community, ERISA 

section 408(a) also authorizes the 

Department to initiate exemptions on its 

own motion. 

In considering individual exemption 

requests from applicants, the 

Department exercises its authority 

under ERISA section 408(a) by carefully 

examining the decision-making process 

utilized by a plan’s fiduciaries with 

respect to an exemption transaction. In 

general, the Department does not make 

determinations concerning the 

appropriateness or prudence of the 

investment proposals submitted by 

exemption applicants. However, the 

Department ordinarily will not give 

favorable consideration to an exemption 

request if the Department believes that 

the proposed transactions are 

inconsistent with the fiduciary 

responsibility provisions of ERISA 

sections 403 and 404. To protect plans 

and their participants, the Department 

requires that an exemption transaction 

be designed to minimize the potential 

for conflicts of interest or self-dealing. 

Moreover, the structure of the 

transaction under consideration should 

preclude unilateral action by the 

applicant that could disadvantage the 

plan. 

Prohibited Transaction Exemption 

Procedure 

ERISA section 408(a) and Code 

section 4975(c)(2) direct the Secretary 

and the Secretary of the Treasury (the 

Secretaries), respectively, to establish 

procedures for granting administrative 

exemptions. In connection with this 

directive, ERISA section 3003(b) directs 

the Secretaries to consult and 

coordinate with each other with respect 

to the establishment of rules applicable 

to the granting of exemptions from the 

prohibited transaction restrictions of 

ERISA and the Code. Further, under 

ERISA section 3004, the Secretaries are 

authorized to develop rules on a joint 

basis that are appropriate for the 

efficient administration of ERISA. 

Pursuant to these statutory provisions, 

the Secretaries jointly issued an 

exemption procedure on April 28, 1975 

(ERISA Procedure 75–1, 40 FR 18471, 

also issued as Rev. Proc. 75–26, 1975– 

1 C.B. 722). Under this procedure, a 

person seeking an exemption under 

both ERISA section 408(a) and Code 

section 4975 was obliged to file an 

exemption application with both the 

Internal Revenue Service (IRS) and the 

Department. However, requiring 

applicants to seek exemptive relief for 

the same transaction from two separate 

Federal departments soon proved 

administratively cumbersome. 

To resolve this problem, section 102 

of Presidential Reorganization Plan No. 

4 of 1978 (3 CFR, 1978 Comp., p. 332), 

reprinted in 5 U.S.C. app. at 672 (2006), 

and in 92 Stat. 3790 (1978)), effective on 

December 31, 1978, transferred the 

authority of the Secretary of the 

Treasury to issue exemptions under 

Code section 4975, to the Secretary with 

certain enumerated exceptions. As a 

result, the Secretary possesses authority 

under Code section 4975(c)(2) and 

ERISA section 408(a) to issue individual 

and class administrative exemptions 

from the prohibited transaction 

restrictions of ERISA and the Code. The 

Secretary has delegated this authority, 

along with most of the Secretary’s other 

responsibilities under ERISA, to the 

Assistant Secretary of Labor for the 

Employee Benefits Security 

Administration.1

FERSA also contains prohibited 

transaction rules similar to those found 

in ERISA and the Code that are 

applicable to parties in interest with 

respect to the Federal Thrift Savings 

Fund established by FERSA. The 

Secretary is directed under FERSA to 

prescribe, by regulation, a procedure for 

granting administrative exemptions 

from certain of those prohibited 

transactions.2 The Secretary also 

delegated this rulemaking authority 

under FERSA to the Assistant Secretary 

of Labor for the Employee Benefits 

Security Administration.3

Over time, the Department has issued 

additional guidance explaining its 

policies and practices relating to the 

consideration of exemption 

applications. In 1985, the Department 

published a statement of policy 

concerning the issuance of retroactive 

exemptions from the prohibited 

transaction provisions of section 406 of 

ERISA and section 4975 of the Code 

(ERISA Technical Release 85–1, January 

22, 1985). This statement noted that in 

evaluating future applications for 

retroactive exemptions, the Department 

would ordinarily take into account a 

variety of objective factors in 

determining whether a plan fiduciary 

had exhibited good faith conduct in 

connection with the past prohibited 

transaction for which relief is sought 

(such as whether the fiduciary had 

utilized a contemporaneous 

independent appraisal or reference to an 

objective third-party source, e.g., a stock 


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14724 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 

4 76 FR 66637 (October 27, 2011). 

exchange, in establishing the fair market 

value of the plan assets acquired or 

disposed of by the plan in connection 

with the transaction at issue). However, 

while noting that the satisfaction of 

such objective criteria might be 

indicative of a fiduciary’s good faith 

conduct, the release cautioned that the 

Department would routinely examine 

the totality of facts and circumstances 

surrounding a past prohibited 

transaction before reaching a final 

determination on whether a retroactive 

exemption is warranted. 

In 1990, the Department published a 

final regulation (29 CFR 2570.30 

through 2570.52 (1991), reprinted in 55 

FR 32847 (August 10, 1990)), setting 

forth a revised exemption procedure 

that superseded ERISA Procedure 75–1 

(the Exemption Procedure Regulation). 

This regulation, which became effective 

on September 10, 1990, reflected the 

jurisdictional changes made by 

Presidential Reorganization Plan No. 4 

and extended the scope of the 

exemption procedure to applications for 

relief from the FERSA prohibited 

transaction rules. In addition, the 

Exemption Procedure Regulation 

codified various informal exemption 

guidelines developed by the Department 

since the adoption of ERISA Procedure 

75–1. 

In 1995, the Department issued a 

publication entitled ‘‘Exemption 

Procedures under Federal Pension Law’’ 

(the 1995 Exemption Publication). In 

addition to providing a brief overview of 

the exemption process, the 1995 

Exemption Publication included 

definitions of technical terms such as 

‘‘qualified independent fiduciary,’’ 

‘‘qualified independent appraiser,’’ and 

‘‘qualified appraisal report.’’ These 

definitions, derived from conditions 

contained in previously granted 

exemptions, provide important 

guidance about the Department’s 

standards concerning the independence, 

knowledge, and competence of thirdparty experts retained by a plan to 

review and oversee an exemption 

transaction, as well as the contents of 

the reports and representations the 

Department ordinarily requires from 

such experts. 

Most recently, the Department 

published an updated Exemption 

Procedure Regulation in 2011 (29 CFR 

2570.30 through 2570.52 (2011)).4 The 

updated Exemption Procedure 

Regulation revised the prohibited 

transaction exemption procedure to 

reflect changes in the Department’s 

exemption practices since the previous 

exemption procedure was issued in 

1990. Among other things, the 

Department consolidated elements of 

the exemption policies and guidance 

previously found in ERISA Technical 

Release 85–1 and the 1995 Exemption 

Publication within a single, 

comprehensive final regulation. The 

updated Exemption Procedure 

Regulation promoted the prompt and 

efficient consideration of all exemption 

applications by (1) clarifying the types 

of information and documentation 

generally required for a complete filing, 

(2) affording expanded opportunities for 

the electronic submission of information 

and comments relating to an exemption, 

and (3) providing plan participants and 

other interested persons with a more 

thorough understanding of the 

exemption under consideration. 

Proposed Changes to the Exemption 

Procedure Regulation 

The current Exemption Procedure 

Regulation consists of 23 individual 

sections (§§ 2570.30 through 2570.52) 

arranged by topic that generally reflect 

the chronological order of the steps the 

Department takes to process an 

exemption application. This proposed 

revision to the Exemption Procedure 

Regulation retains the current sectionby-section topical structure and most of 

the operative language. The Department 

made some proposed changes to the 

Exemption Procedure Regulation to 

improve its readability and other 

substantive amendments that are 

discussed below. The Department 

requests comments on these changes, 

particularly whether the changes 

improve the clarity of the procedure and 

whether additional clarifying edits 

would be useful. As discussed 

throughout this preamble, the 

Department is interested in how its 

process may better allow the 

Department to ensure administrative 

prohibited transaction exemptions 

satisfy the applicable statutory criteria. 

Section 2570.30 

Section 2570.30 sets forth the scope of 

the Exemption Procedure Regulation. It 

addresses filing and processing of 

applications for both individual and 

class exemptions that the Department 

may propose and grant pursuant to 

ERISA section 408(a), Code section 

4975(c)(2), FERSA, and on its own 

motion. Paragraph (b) broadly addresses 

the Department’s power to issue 

exemptions. The proposal revises the 

text that is applicable to retroactive 

exemptions by including a statement 

that the Department will, among many 

other things, review any retroactive 

exemption application to determine 

whether any plan participants or 

beneficiaries were harmed by the 

transaction for which retroactive relief 

is sought. This language reinforces the 

Department’s existing policy that it, 

generally, will not support a request for 

a retroactive exemption involving a 

transaction that negatively impacted 

participants and beneficiaries. Further, 

the Department emphasizes in the 

amended text that it will apply a high 

level of scrutiny to any retroactive 

exemption application using 

longstanding standards that have been 

previously set forth by the Department 

in the Exemption Procedure Regulation. 

As a result, the Department strongly 

suggests that a party that anticipates 

engaging in a transaction that would 

require exemptive relief should contact 

the Department before engaging in the 

transaction. 

Paragraph (e) addresses oral requests 

for exemptions. Generally, the 

Department will not accept oral 

exemption applications or orally grant 

exemptions. The proposal revises the 

regulatory text to clarify that the 

Department will provide feedback to 

oral inquiries but will not be bound by 

that feedback. However, any statements 

made by the party making the inquiry 

will become part of the administrative 

record. 

Finally, the proposal adds a new 

paragraph (g), which provides that the 

Department issues administrative 

exemptions at its sole discretion based 

on the statutory criteria set forth in 

ERISA section 408(a) and Code section 

4975(c)(2). In conjunction with this 

amendment, the proposal states that the 

existence of previously issued 

administrative exemptions is not 

determinative of whether the 

Department will propose future 

exemption applications with the same 

or similar facts, or whether a proposed 

exemption will contain the same 

conditions as a similar previously 

issued administrative exemption. The 

addition of this language reinforces that 

Department’s existing policy that it has 

the sole discretionary authority to issue 

exemptions and is not bound by facts or 

conditions of prior exemptions in 

making determinations with respect to 

an exemption application. This policy 

allows the Department to retain 

sufficient flexibility to grant exemptions 

that are appropriate in an ever-changing 

business, legislative, and regulatory 

policy environment. 

Section 2570.31 

Section 2570.31 sets forth definitions 

that are used throughout the Exemption 

Procedure Regulation. While most of the 

definitions have not been revised other 

than to improve readability, the 


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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 14725 

Department has made substantive 

revisions to several existing definitions 

and added new definitions. The changes 

are proposed to address issues that the 

Department has often experienced in its 

regular review of exemption 

applications. The Department requests 

comments on these revisions, including 

whether these proposed changes are 

clear, appropriately reflect the manner 

in which entities interact with ERISAcovered plans and plan participants and 

beneficiaries, and assist the Department 

in making its statutory finding. 

First, the proposal revises the 

definition of ‘‘affiliate’’ set forth in 

paragraph (a) to include: (1) Any person 

directly or indirectly through one or 

more intermediaries, controlling, 

controlled by, or under common control 

with the person. For purposes of this 

paragraph, the term ‘‘control’’ means the 

power to exercise a controlling 

influence over the management or 

policies of a person other than an 

individual; any officer, director, partner, 

employee, or relative (as defined in 

ERISA section 3(15)) of any such 

person; or (2) any corporation, 

partnership, trust, or unincorporated 

enterprise of which such person is an 

officer, director, partner, or five percent 

or more owner. The revision reflects the 

definition of affiliate the Department 

commonly uses in most recent 

individual and class exemptions. In 

addition to rewording the text for 

clarity, the revised definition includes 

all employees and officers, rather than 

those who are highly compensated (as 

defined in Code section 4975(e)(2)(H) or 

have direct or indirect authority, 

responsibility, or control regarding the 

custody, management, or disposition of 

plan assets involved in the subject 

exemption transaction. This change will 

help the Department more accurately 

identify whether a particular transaction 

involves conflicts of interest. 

The proposal also revises the 

definition of the term ‘‘qualified 

independent appraiser’’ in paragraph (i). 

The amended definition defines a 

qualified independent appraiser as any 

individual or entity with appropriate 

training, experience, and facilities to 

provide a qualified appraisal report on 

behalf of the plan regarding the 

particular asset or property appraised in 

the report that is independent of and 

unrelated to any party involved in the 

exemption transaction (as defined in 

paragraph (l)). The Department 

determines the independence of the 

appraiser based on all relevant facts and 

circumstances. In making this 

determination, the Department will take 

into account the amount of the 

appraiser’s revenues and projected 

revenues for the current Federal income 

tax year (including amounts received for 

preparing the appraisal report) that will 

be derived from parties involved in the 

exemption transaction relative to the 

appraiser’s revenues from all sources for 

the appraiser’s prior Federal income tax 

year and the appraiser’s projected 

revenue for the current Federal income 

tax year as well as the appraiser’s 

related business interests. An appraiser 

will not be treated as independent if the 

revenues it receives, or is projected to 

receive, within the current Federal 

income tax year from parties involved in 

the exemption transaction are more than 

two percent of such appraiser’s annual 

revenues from all sources based upon 

either its prior Federal income tax year 

or the appraiser’s projected revenues for 

the current Federal income tax year, 

unless the Department determines 

otherwise in its sole discretion. 

The proposal also revises the 

qualified independent appraiser 

definition to provide that the appraiser 

must be independent of any potential 

qualified independent fiduciary in 

addition to other parties involved in the 

exemption transaction. The Department 

added this language to ensure that the 

appraiser will not be pressured to 

deliver a valuation reflecting undue 

influence from the fiduciary. 

The Department proposes to revise 

the definition to clearly limit the 

amount of present and projected 

revenue an appraiser may receive from 

parties involved in the exemption 

transaction relative to revenues it 

received from all sources. The 

Department is proposing to set this limit 

at two percent determined using prior 

and projected tax year information; 

provided, that the Department may, in 

its sole discretion, determine otherwise. 

The revision clarifies the method that 

must be used to calculate the limitation 

and ensures that all sources of income 

are included in the analysis. The revised 

definition also emphasizes the 

Department’s default assumption that a 

two percent limitation is essential to 

ensuring the appraiser’s independence. 

These revisions are intended to assist 

the Department in more accurately 

identifying potential conflicts of interest 

that could affect an appraiser’s 

independence. 

Further bolstering the independence 

of the appraiser, the definition of a 

‘‘qualified appraisal report’’ in 

paragraph (h) is revised to require the 

report to be prepared solely on behalf of 

the plan, which ensures that the 

qualified independent appraiser only 

takes into account the interest of the 

plan and its participants and 

beneficiaries when it produces the 

report. 

The proposal revises the definition of 

a ‘‘qualified independent fiduciary’’ in 

paragraph (j). A qualified independent 

fiduciary is defined as any individual or 

entity with appropriate training, 

experience, and facilities to act on 

behalf of the plan regarding the 

exemption transaction in accordance 

with the fiduciary duties and 

responsibilities prescribed by ERISA 

that is independent of and unrelated to: 

Any party involved in the exemption 

transaction (as defined in paragraph (l)) 

and any other party involved in the 

development of the exemption request. 

In general, the Department will 

determine the independence of a 

fiduciary based on of all relevant facts 

and circumstances. Among other things, 

the Department will consider whether 

the fiduciary has an interest in the 

subject transaction or future 

transactions of the same nature or type. 

In making this determination, the 

Department will also take into account, 

among other things, the amount of both 

the fiduciary’s revenues and projected 

revenues for the current Federal income 

tax year (including amounts received for 

preparing fiduciary reports) that will be 

derived from parties involved in the 

exemption transaction relative to the 

fiduciary’s revenues from all sources for 

the prior Federal income tax year or the 

fiduciary’s projected revenues from all 

sources for the current Federal income 

tax year. A fiduciary will not be treated 

as independent if the revenues it 

receives or is projected to receive from 

parties (and their affiliates) involved in 

the exemption transaction within the 

current Federal income tax year are 

more than two percent of either the 

fiduciary’s annual revenues from all 

sources based upon its prior year 

Federal income tax return or the 

fiduciary’s projected revenue for the 

current Federal income tax year, unless, 

in its sole discretion, the Department 

determines otherwise. 

As with the revision to definition of 

a qualified independent appraiser, the 

proposal revises the definition of a 

qualified independent fiduciary to 

ensure that the fiduciary is truly 

independent. Thus, the definition is 

revised to require the fiduciary to be 

independent not only from parties 

involved in the exemption transaction 

but also from any other party involved 

in the development of the exemption 

request. The revised language would 

include persons that are not parties that 

engage in in the exemption transaction 

but are otherwise involved in 

developing the exemption request, such 

as consultants or advisors that assist a 


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14726 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 

plan sponsor in structuring exemption 

transactions and submitting exemption 

applications. 

Consistent with this approach, the 

proposal also revises the independent 

fiduciary definition to state that the 

Department will consider whether a 

fiduciary has an interest in the 

exemption transaction or in future 

transactions of the same nature or type 

in determining whether a fiduciary is 

independent. This language addresses 

the Department’s concern that a 

fiduciary may not be independent if it 

has a business interest in promoting the 

exemption transaction. For example, a 

fiduciary may be affected by a conflict 

of interest if it motivated to use the 

exemption transaction to promote its 

fiduciary services to potential clients 

contemplating similar transactions or if 

its work with respect to the exemption 

transaction is connected to a valued 

relationship with a third party, such as 

an investment advisor or bank. 

Finally, as with the definition of a 

qualified independent appraiser, the 

proposal revises the independent 

fiduciary definition to clearly limit the 

amount of present and projected 

revenue that a fiduciary may receive 

from parties involved in the exemption 

transaction across all of the fiduciary’s 

related business interests. This 

Department is proposing to set this 

limitation at two percent using prior 

and projected tax year information; 

provided, that the Department may, in 

its sole discretion, determine otherwise. 

The revision clarifies how the 

percentage limitation is calculated and 

ensures that all sources of income are 

included in the analysis. The revised 

definition also emphasizes the 

Department’s default assumption that 

the revenue limitation is essential to 

ensuring the fiduciary’s independence. 

These revisions would assist the 

Department in more accurately 

identifying potential conflicts, and, 

thereby, provide important information 

for the Department to assess the 

independence of the fiduciary involved 

in the exemption transaction. 

The proposal also adds a new 

definition of ‘‘pre-submission 

applicant’’ in paragraph (k) that defines 

a pre-submission applicant as a party 

that contacts the Department, either 

orally or in writing, to inquire whether 

a party with a particular fact pattern 

would need to submit an exemption 

application and, if so, what conditions 

and relief would be applicable. This 

definition does not include a party that 

contacts the Department to inquire 

broadly without reference to a specific 

fact pattern. The Department is 

proposing to add this definition to 

clearly distinguish parties making 

inquiries that may potentially lead to an 

exemption application from parties that 

simply seek non-fact specific guidance. 

The distinction impacts how the 

Department addresses the inquiries and 

whether an administrative record is 

created. 

Paragraph (l) adds a new definition of 

‘‘party involved in the exemption 

transaction’’ that includes the following: 

(1) A party in interest (as defined in 

paragraph (f)); (2) any party (or its 

affiliate) that is engaged in the 

exemption transaction; and (3) any party 

(or its affiliates) that provides services 

with respect to the exemption 

transaction to either the plan or a party 

described in (1) or (2). This term 

replaces the more limited term ‘‘party in 

interest’’ in multiple places throughout 

the Exemption Procedure Regulation to 

more accurately describe parties that 

have interests in the exemption 

transaction. The Department believes 

that parties engaged in the transaction 

(and their affiliates) that are not ‘‘parties 

in interest’’ could have interests and 

potential conflicts that should be 

addressed by the Exemption Procedure 

Regulation. Similarly, the Department 

proposes to include service providers in 

the definition to ensure that all parties 

with interests in the transaction are 

included. 

Section 2570.32 

The proposal makes two revisions to 

§ 2570.32. First, paragraph (a) is revised 

to describe ‘‘persons who may apply for 

exemption.’’ The Department is 

proposing to delete the language in 

paragraph (a) stating that ‘‘the 

Department will initiate exemption 

proceedings upon the application of’’ to 

clarify that this paragraph addresses 

only those parties who are permitted to 

apply for an exemption but does not 

address whether the Department is 

required to initiate an exemption 

proceeding. The decision to initiate an 

exemption proceeding remains within 

the Department’s sole discretion. 

The second revision addresses the 

creation of the administrative record, 

because the start of the exemption 

application process, whether through a 

formal application or contact by a presubmission applicant, is tied to the 

creation of the administrative record. To 

reflect the addition of new paragraph 

(d), the Department has added ‘‘and the 

administrative record’’ to the title of 

§ 2570.32. 

The revision addresses questions 

applicants have historically asked the 

Department regarding the creation of the 

administrative record. Specifically, 

paragraph (d)(1) provides that the 

administrative record is open for public 

inspection, pursuant to § 2570.51(a), 

from the date an applicant or presubmission applicant provides any 

information or documentation to the 

Office of Exemption Determinations. In 

the past, some applicants were 

uncertain regarding when the 

administrative record was available for 

public review. The proposal’s language 

sets forth the Department’s longstanding 

position that the administrative record 

is always available for public review, 

because the exemption process is open, 

transparent, and subject to public 

scrutiny at all times. 

Paragraph (d)(2) provides that the 

administrative record includes, but is 

not limited to, the following items: (1) 

Any documents submitted to, and 

accepted by, the Department before the 

initial application, whether provided in 

writing by the applicant or presubmission applicant or notes taken by 

the Department at a pre-submission 

conference; (2) the initial exemption 

application and any modifications or 

supplements thereto; (3) all 

correspondence with the applicant or 

pre-submission applicant, whether 

before or after the applicant’s 

submission of the exemption 

application; and (4) any supporting 

information provided by the applicant 

or pre-submission applicant orally or in 

writing (as well as any comments and 

testimony received by the Department 

in connection with an application). 

Importantly, the language specifically 

includes all information provided by a 

pre-submission applicant, whether in 

writing or orally. The pre-submission 

information is included in the record 

because if a pre-submission applicant 

pursues an application, the information 

provided by the applicant before 

submitting its application will 

ultimately inform the Department’s 

decision making with respect to the 

exemption application. In addition, the 

Department proposes to clarify that the 

administrative record only includes 

information accepted by the 

Department. If, for example, the 

applicant submits trades secrets, the 

Department will reject the information 

and not include it in the administrative 

record as discussed in § 2570.33(c). 

Finally, paragraph (d)(3) updates the 

regulation to reflect modern methods of 

communication. Thus, the paragraph 

provides that if documents are required 

to be provided in writing by either the 

applicant or the Department, the 

documents may be provided either by 

mail or electronically, unless otherwise 

required by the Department at its sole 

discretion. 


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Section 2570.33 

In § 2570.33, the Department proposes 

to revise the regulatory text to clarify 

situations in which it will not consider 

an exemption application. The 

Department requests comments on these 

clarifications, including other situations 

where the Department should or should 

not consider an exemption application. 

First, the Department is proposing to 

amend paragraph (a)(1) to include 

applications that fail to include current 

information to clarify that the 

Department will treat an applicant’s 

failure to include current information in 

the same manner as a failure to include 

information. Absent current 

information, the Department cannot 

develop an accurate understanding of 

the facts underlying an application. 

The Department also is proposing to 

revise paragraph (a)(2), which generally 

excludes from consideration an 

application involving: (1) a transaction 

or transactions that are the subject of an 

investigation for possible violations of 

part 1 or 4 of subtitle B of Title I of 

ERISA or sections 8477 or 8478 of 

FERSA; or (2) a party in interest who is 

the subject of such an investigation or 

who is a defendant in an action by the 

Department or the IRS to enforce those 

provisions of ERISA or FERSA. 

The proposed revision expands the 

existing exclusion to include any ERISA 

investigations (not only Sections 8477 

and 8478), as well as investigations 

under any other Federal or state law. 

The proposal also expands the 

limitation on parties that are the subject 

of an investigation or a defendant in an 

action brought by the Department or the 

IRS to include any other regulatory 

agency enforcing ERISA, the Code, 

FERSA, or any other Federal or state 

laws. The proposed expansion of the 

paragraph addresses the Department’s 

concerns regarding prohibited 

transactions that are engaged in by bad 

actors. Before considering an 

application for a transaction that 

otherwise is prohibited, the Department 

must be completely free from doubt 

regarding the transaction and the 

motivations of the parties involved in 

order to make its findings under ERISA 

section 408(a). 

The proposal deletes the language in 

the current paragraph (c) regarding the 

administrative record, because that 

topic is now addressed in proposed 

revisions to § 2570.32 discussed above. 

The proposal revises the part of 

paragraph (c) addressing the submission 

of confidential information. Currently, 

the rule provides that if an applicant 

designates any information required by 

the rule or requested by the Department 

as confidential, the Department will 

determine whether the information is 

material to the exemption 

determination. If it determines the 

information to be material, the 

Department will not process the 

application unless the applicant 

withdraws the claim of confidentiality. 

The proposal revises this language to 

clarify that the Department will not 

review an application that includes 

confidential information, with an 

exception for confidential designations 

by a Federal, state, or other 

governmental entity. This means that if 

an applicant submits any confidential 

information, even outside of the 

application itself, the Department will 

not review the information nor process 

the exemption application. The 

Department will process that 

application only after the applicant 

withdraws its claim of confidentiality or 

revokes it submission of the confidential 

information. 

The revised language also states that 

by submitting an exemption application, 

an applicant consents to public 

disclosure of the entire administrative 

record pursuant to § 2570.51. This 

revision places the applicant on notice 

that it is consenting to the public 

disclosure of all information in the 

administrative record when it submits 

an exemption application. 

In place of the current paragraph (d), 

the Department is proposing to add a 

new paragraph (d) that governs 

communications with pre-submission 

applicants as newly defined in 

§ 2570.31(k). Paragraph (d) provides that 

the Department will not communicate 

with a pre-submission applicant or its 

representative, whether through written 

correspondence or a conference, if the 

pre-submission applicant does not: (1) 

Identify and fully describe the 

transaction for which exemptive relief is 

sought; (2) identify the applicant, the 

applicable plan(s), and the relevant 

parties to the exemption transaction; 

and (3) set forth the prohibited 

transaction provision(s) that the 

applicant believes are applicable. This 

language is proposed to address a 

recurring problem faced by the 

Department when a pre-submission 

applicant seeks informal guidance from 

the Department while disclosing an 

incomplete set of facts and later bases 

its arguments for an exemption on the 

Department’s informal guidance 

received before the submission. While 

the Department welcomes presubmission requests for guidance, it is 

imperative that parties approaching the 

Department for such guidance regarding 

a specific exemption transaction 

provide the Department with sufficient 

information to allow it to properly 

attribute the guidance to a specific presubmission applicant and determine the 

transaction for which such guidance is 

requested and the relevant prohibited 

transaction provisions that are 

applicable to the transaction. 

Section 2570.34 

Section 2570.34 addresses 

information the Department requires 

applicants to include in class and 

individual exemption applications. The 

proposal revises § 2570.34 to ensure that 

the Department receives sufficient 

information to evaluate an exemption 

application. While the proposal expands 

the amount of information the 

Department would require to be 

included in an application in some 

cases, the Department’s intention in 

expanding the required information is to 

streamline the exemption process by 

ensuring that most of the information 

the Department needs to make an 

exemption determination is available to 

it when the application is submitted, 

which will reduce the need for back and 

forth communication between the 

applicant and the Department after the 

application is submitted. The 

Department requests comments on the 

proposed revisions, including whether 

the Department should consider other 

types of information. 

Specifically, paragraphs (a)(1) and (3) 

are revised to require addresses, phone 

numbers, and email addresses to be 

provided for the applicants, 

representatives, and parties in interest. 

Requiring this information to be 

included in the initial application 

would ensure that the Department can 

efficiently contact the proper parties. In 

addition, the Department is proposing to 

replace the original paragraph (a)(4) 

with new paragraphs (a)(4), (5) and 

(a)(7) to facilitate the Department’s 

understanding of the decision-making 

process the applicant undertook to 

determine that it was necessary to 

submit an exemption application. 

Accordingly, new paragraph (a)(4) 

would require the applicant to include 

in its application a description of: (1) 

The reason(s) for engaging in the 

exemption transaction; (2) any material 

benefit that a party involved in the 

exemption transaction may receive as a 

result of the subject transaction 

(including the avoidance of any 

materially adverse outcome by a party 

as a result of engaging in the exemption 

transaction); and (3) the costs and 

benefits of the exemption transaction to 

the affected plan(s), participants, and 

beneficiaries, including quantification 

of those costs and benefits to the extent 

possible. The Department is proposing 


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this language to facilitate its 

understanding of the underlying 

rationale for the exemption transaction 

including the costs and benefits for both 

the party involved in the transaction 

and the plan and its participants and 

beneficiaries. For example, an applicant 

who is a plan sponsor will need to 

provide not only a rationale for engaging 

in the exemption transaction, but also a 

statement of the costs and benefits to the 

sponsor, as well as the costs and 

benefits to the plan. 

The Department is proposing to add a 

new paragraph (a)(5) that builds on 

paragraph (a)(4) by requiring applicants 

to provide a detailed description of 

possible alternatives to the exemption 

transaction that would not involve a 

prohibited transaction and why the 

applicant did not pursue those 

alternatives. The Department’s intention 

in proposing this language is to require 

the applicant to evaluate whether the 

exemption transaction could be 

structured in a manner that would not 

result in a prohibited transaction. 

Structuring a transaction in a manner 

that is prohibited by ERISA and requires 

an exemption should not be an 

applicant’s default approach. The 

Department believes that an applicant 

must fully evaluate whether an 

exemption transaction could be 

structured in a non-prohibited manner 

before applying for an exemption that 

would attain the same results and 

benefits to the plan and its participants 

and beneficiaries as the prohibited 

transaction. 

The proposal also inserts a new 

paragraph (a)(7) that replaces the prior 

requirement for an applicant to state 

why the transaction is customary to the 

industry with a requirement for the 

applicant to set forth a description of 

each conflict of interest or potential 

instance of self-dealing that would be 

permitted if the exemption is granted. 

The Department is proposing to make 

this change, because the prior 

‘‘customary to the industry’’ language 

did not sufficiently inform the 

Department of the conflicts of interest 

and instances of self-dealing involved in 

an exemption transaction or the costs 

and benefits to a plan and its 

participants and beneficiaries. The new 

language would assist the Department in 

identifying conflicts of interest and 

instances of self-dealing involved in an 

exemption transaction, and thereby 

facilitate the Department’s analysis 

regarding whether the exemption 

transaction is structured to properly 

protect the interest of the plan and its 

participants and beneficiaries. Together, 

the proposal’s new paragraphs (a)(4), 

(5), and (7) would help the Department 

better understand the proposed 

transaction and its implications, so that 

the Department could make the required 

findings under ERISA section 408(a) as 

to whether a requested exemption 

would be (1) administratively feasible, 

(2) in the interests of the plan and of its 

participants and beneficiaries, and (3) 

protective of the rights of participants 

and beneficiaries. 

The final revisions to paragraph (a) 

are intended to provide consistency 

among exemption applications. The 

revised paragraph (a)(8) simply expands 

the disclosure requirement by requiring 

applicants to include in their 

application a statement regarding 

whether the transaction is the subject of 

investigation or enforcement actions by 

any regulatory authority. This change is 

consistent with the amendments 

proposed in § 2570.33 and ensures that 

the Department has the information it 

needs to make an informed decision 

regarding an exemption application. 

The proposal’s new paragraph (a)(10) 

would requires that if any exemption 

application uses a definition of the term 

‘‘affiliate,’’ the applicant include in its 

application a statement that either (1) 

the definition of affiliate set forth in 

§ 2570.31(a) is applicable or (2) explains 

why a different affiliate definition 

should be applied. The Department 

believes this language will encourage 

the use of a single, consistent affiliate 

definition among all exemptions, when 

possible. This consistency will allow 

anyone who reviews an exemption 

application to more easily compare 

provisions of different exemptions and 

prevent the development of unforeseen 

exemption issues that could result from 

variations in the definition. 

Paragraph (b) addresses some of the 

Department’s specific concerns with 

respect to exemption transactions. The 

most substantial change would add 

proposed paragraph (b)(2)(i), which 

requires applicants to include a 

statement that the exemption 

transaction (A) will be in the best 

interest of the plan and its participants 

and beneficiaries; (B) all compensation 

received, directly or indirectly, by a 

party involved in the exemption 

transaction will not exceed reasonable 

compensation within the meaning of 

ERISA section 408(b)(2) and Code 

section 4975(d)(2); and (C) all of the 

statements to the Department, the plan, 

or, if applicable, the qualified 

independent fiduciary or qualified 

independent appraiser about the 

exemption transaction and other 

relevant matters are not materially 

misleading at the time the statements 

are made. Otherwise, the applicant must 

explain why these exemption standards 

should not be applicable to the 

exemption transaction. 

For purposes of paragraph (b), an 

exemption transaction is in the best 

interest of a plan if the plan fiduciary 

causing the plan to enter into the 

transaction determines, with the care, 

skill, prudence, and diligence under the 

circumstances then prevailing, that a 

prudent person acting in a like capacity 

and familiar with such matters would, 

in the conduct of an enterprise of a like 

character and with like aims, enter into 

the exemption transaction based on the 

circumstances and needs of the plan. 

Such fiduciary shall not place the 

financial or other interests of itself, a 

party to the exemption transaction, or 

any affiliate ahead of the interests of the 

plan, or subordinate the plan’s interests 

to any party or affiliate. 

Paragraph (b)(2) generally 

incorporates compliance with 

‘‘impartial conduct standards’’ as 

formalized in Prohibited Transaction 

Exemption 2020–02 as a baseline 

condition for approved exemptions. 

However, the Department recognizes 

that impartial conduct standards may 

not be appropriate or necessary in all 

exemption transactions. Therefore, 

paragraph (b)(2) gives applicants an 

opportunity to affirmatively explain 

why the impartial conduct standards 

should not be applicable to their 

exemption transactions. 

Proposed paragraph (b)(4) (previously 

paragraph (b)(3)) provides that if an 

advisory opinion has been requested by 

any party to the exemption transaction 

from the Department with respect to any 

issue relating to the exemption 

transaction, the exemption application 

must include (1) a copy of the letter 

concluding the Department’s action on 

the advisory opinion request; or (2) if 

the Department has not yet concluded 

its action on the request, a copy of the 

request or the date on which it was 

submitted together with the 

Department’s correspondence control 

number as indicated in the 

acknowledgment letter. The Department 

is revising this provision for readability 

and to require an applicant to include 

with its application any opinion or 

guidance issued by the Department and 

any other opinions or guidance issued 

by Federal, state, or regulatory bodies 

regarding the exemption transaction. 

The proposal expands the prior text to 

ensure that all relevant information 

regarding the exemption transaction, 

including guidance issued in 

connection to the transaction by other 

Federal, state, or regulatory bodies is 

available to the Department when 

making its determination whether to 

grant an exemption. 


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The Department proposes to make 

substantial revisions to the requirements 

set forth in paragraphs (c) through (f) 

regarding statements and documents 

about qualified independent appraisers 

and qualified independent fiduciaries 

that are involved in an exemption 

transaction. The changes relate to the 

revisions made to the definitions of 

qualified independent appraiser and 

qualified independent fiduciary in 

§ 2570.31. Overall, the proposed 

changes further ensure that the 

appraiser and fiduciary are independent 

and that their valuations and oversight 

over the exemption transaction are 

reliable and valid. 

The proposal’s revised paragraph (c) 

addresses statements and documents 

included in the application by the 

qualified independent appraiser. The 

proposal extends the provisions of 

paragraph (c) to auditors and 

accountants. As a result, paragraph (c) 

would apply to all statements submitted 

by appraisers, auditors, and accountants 

to ensure that the Department can rely 

on financial documents submitted by 

third parties. 

More specifically, the proposal would 

revise several provisions that govern the 

information that must be included in 

any statements submitted in an 

application by an appraiser, auditor or 

accountant. First, a new paragraph (c)(1) 

would be added to require the 

statements to include a signed and 

dated declaration under penalty of 

perjury that, to the best of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s knowledge and belief, all 

of the representations made in such 

statement are true and correct. 

Next, the Department is proposing to 

expand paragraph (c)(2) to specifically 

address the contractual obligations of 

the appraiser, auditor, or accountant. 

The revised provision requires a copy of 

the qualified independent appraiser’s, 

auditor’s, or accountant’s engagement 

letter and, if applicable, contract with 

the plan describing the specific duties 

the appraiser, auditor, or accountant 

shall undertake to be included with an 

application. The proposed provision 

provides that the appraiser, auditor, or 

accountant’s letter or contract may not: 

(1) Include any provision that provides 

for the direct or indirect 

indemnification or reimbursement of 

the independent appraiser, auditor, or 

accountant by the plan or another party 

for any failure to adhere to its 

contractual obligations or to Federal and 

state laws applicable to the appraiser’s, 

auditor’s, or accountant’s work; or (2) 

waive any rights, claims or remedies of 

the plan or its participants and 

beneficiaries under ERISA, the Code, or 

other Federal and state laws against the 

independent appraiser, auditor’s, or 

accountant’s with respect to the 

exemption transaction. 

Proposed paragraph (c)(2) would 

prevent appraisers, auditors, and 

accountants from avoiding 

accountability to the plan and its 

participants by relying on 

indemnification or reimbursement 

provisions, whether direct or indirect, to 

avoid financial liability for their failure 

to comply with their contract or state or 

Federal law. When parties agree to 

relieve appraisers, auditors, and 

accountants from accountability through 

releases, waivers, and indemnification 

or reimbursement agreements, they 

undermine the protective conditions of 

the exemption, compromise the 

independence of their services, and cast 

doubt on the reliability of the service 

providers’ work. 

Building on the proposal’s theme of 

independence, paragraph (c)(4) would 

also be revised to state that submitted 

documents must contain a detailed 

description of any relationship that the 

qualified independent appraiser, 

auditor, or accountant has had or may 

have with the plan or any party 

involved in the exemption transaction, 

or with any party or its affiliates 

involved in the development of the 

exemption request that may influence 

the appraiser, auditor, or accountant, 

including a description of any past 

engagements with the appraiser, 

auditor, or accountant. The amendment 

would add a requirement to the current 

regulatory text requiring the appraiser, 

auditor, or accountant to provide 

detailed information regarding 

relationships with any party or its 

affiliates involved in the development of 

the exemption request that may 

influence it. In addition to this 

expansion, the relationship disclosure 

must include past engagements. The 

Department includes this additional 

language in order to address instances 

in which a party has potentially 

conflicting relationships because it is 

dependent on or otherwise regularly 

involved with parties that develop 

transactions that may rely on the receipt 

of exemptions as a part of its business. 

The Department is proposing to delete 

the statement in current paragraph 

(c)(4)(iii) that requires an applicant to 

submit a new appraisal to the 

Department if an appraisal report is one 

year or more old. This deletion would 

make clear to applicants that they must 

submit a current appraisal report with 

their application, and that the 

Department would not move forward 

with its analysis of an exemption 

transaction without receipt of a recent 

appraisal report. 

The proposal also makes changes in 

paragraph (c)(8). The revisions are 

discreet changes that are consistent with 

the revised definition of a qualified 

independent appraiser in § 2570.31(i) 

and describe how the revenue 

limitations thereunder are calculated. 

Specifically with respect to the 

qualified independent appraiser, the 

Department proposes to add a new 

paragraph (d) that would require an 

applicant to include with its application 

the following information regarding an 

appraiser: A statement describing the 

process by which the independent 

appraiser was selected, including the 

due diligence performed, the potential 

independent appraiser candidates 

reviewed, and the references contacted; 

and a statement that the independent 

appraiser has appropriate technical 

training and proficiency with respect to 

the specific details of the exemption 

transaction. The Department is 

proposing to add new paragraph (d) to 

promote a prudent and loyal selection 

process to hire a qualified independent 

appraiser. Without such information, 

the Department has little or no insight 

into the prudence of the hiring process. 

The Department similarly proposes to 

add a new paragraph (e) that would 

require applicants requesting an 

exemption for transactions requiring the 

retention of a qualified independent 

fiduciary to represent the interest of the 

plan, to include a statement that: (1) 

Describes the process by which the 

independent fiduciary was selected, 

including the due diligence performed, 

the potential independent fiduciary 

candidates reviewed, and the references 

contacted; and (2) represents that the 

independent fiduciary has appropriate 

technical training and proficiency with 

respect to ERISA and the Code and the 

specific details of the exemption 

transaction to serve as an independent 

fiduciary. As with paragraph (d), the 

new paragraph is added to promote a 

prudent and loyal selection process for 

a critically important plan service 

provider. 

The Department would revise 

paragraph (f), which specifies the 

information an applicant must include 

in the qualified independent fiduciary’s 

statement required to be submitted with 

its application. As with the changes to 

the qualified independent appraiser’s 

statement, the changes to the qualified 

independent fiduciary’s statement are 

designed to bolster independence and 

reliability. 

Accordingly, paragraph (f)(2) would 

be revised to provide the applicant must 

include a copy of the qualified 


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independent fiduciary’s engagement 

letter and contract, which could not: (1) 

Contain any provisions that violates 

ERISA section 410, which prohibits 

exculpatory provisions; (2) include any 

provision that provides for the direct or 

indirect indemnification or 

reimbursement of the independent 

fiduciary by the plan or other party for 

any failure to adhere to its contractual 

obligations or to state or Federal laws 

applicable to the independent 

fiduciary’s work; or (3) waive any rights, 

claims or remedies of the plan under 

ERISA, state, or Federal law against the 

independent fiduciary with respect to 

the exemption transaction. 

The Department has proposed to 

include new paragraph (f)(2) to ensure 

that the qualified independent fiduciary 

remains financially responsible for its 

own decisions while acting as a 

fiduciary with respect to the exemption 

transaction. This limitation extends to 

any third party retained by the fiduciary 

in connection with the fiduciary’s 

engagement letter or contract. 

In order to ensure that qualified 

independent fiduciaries have sufficient 

resources to compensate plans for any 

losses for which they are liable, the 

Department proposes to require such 

fiduciaries to maintain fiduciary 

liability insurance in an amount that is 

sufficient to indemnify the plan for 

damages resulting from a breach by the 

independent fiduciary of either (1) 

ERISA, the Code, or any other Federal 

or state law or (2) its contract or 

engagement letter under proposed 

paragraph (f)(3). The insurance may not 

contain an exclusion for actions brought 

by the Secretary or any other Federal, 

state, or regulatory body; the plan; or 

plan participants or beneficiaries. 

The Department understands that 

some entities that provide ERISA 

fiduciary services with respect to 

exemption transactions may not be 

either sufficiently liquid or capitalized 

to address liability that might arise in 

connection with an exemption 

transaction, especially in light of the 

proposal’s language limiting 

indemnification, reimbursement, and 

waivers. Without the addition of 

paragraph (f)(3), the Department 

believes that the new provisions in 

paragraph (f)(2) may not provide the 

protections to plans and their 

participant and beneficiaries that the 

Department intends. By requiring 

independent fiduciaries to acquire and 

maintain fiduciary liability insurance, 

the Department believes the fiduciary is 

more likely to act prudently when 

serving as a fiduciary with respect to the 

exemption transaction, and plans, 

participate will receive better protection 

from liability resulting from fiduciary 

breaches. 

The proposal makes additional 

changes to paragraph (f) to further 

bolster the qualified independent 

fiduciary’s independence. First, 

proposed paragraph (f)(6) would expand 

the existing acknowledgement provision 

to require the acknowledgement to state 

that the fiduciary understands its duties 

and responsibilities under ERISA; is 

acting as a fiduciary of the plan with 

respect to the exemption transaction; 

has no material conflicts of interest with 

respect to the exemption transaction; 

and is not acting as an agent or 

representative of the plan sponsor. The 

proposal expands the acknowledgement 

in order to capture more potential 

conflicts. Under the proposed 

amendment, the fiduciary no longer 

could simply acknowledge that it is an 

ERISA fiduciary, but would also have to 

acknowledge that it is acting with 

respect to the transaction solely in the 

interest of the plan, not acting on behalf 

of the plan sponsor, and not subject to 

conflicts of interest. 

The proposal would also revise 

paragraph (f)(7) to provide that the 

qualified independent fiduciary certify 

in writing that the exemption 

transaction complies with the impartial 

conducts standards set forth in 

proposed paragraphs (b)(2)(i)(A) through 

(C). 

Paragraph (f)(9) is revised to reflect 

the changes to the definition of a 

qualified independent fiduciary. The 

changes require additional disclosures 

regarding the fiduciary’s revenue to 

ensure that the fiduciary meets the 

terms of the definition. 

The proposal adds a new paragraph 

(f)(10) that would require the qualified 

independent fiduciary to state that it has 

no conflicts of interest with respect to 

the exemption transaction that could 

affect the exercise of its best judgment 

as a fiduciary. The requirement would 

put the fiduciary on the record that it 

has no conflicts that could impact its 

judgment and, thereby, promote 

compliance with the exemption’s terms. 

The final proposed revisions to 

paragraph (f) would require the 

exemption application to address 

whether the qualified independent 

fiduciary is under investigation or 

examination or engaged in any litigation 

or continuing controversy. Specifically, 

the fiduciary would be required to state 

that either, within the last five years, the 

independent fiduciary has not been 

under investigation or examination by, 

and has not engaged in litigation, or a 

continuing controversy with, the 

Department, the Internal Revenue 

Service, the Justice Department, the 

Pension Benefit Guaranty Corporation, 

the Federal Retirement Thrift 

Investment Board, or any other Federal 

or state entity involving compliance 

with provisions of ERISA, the Code, 

FERSA, or other Federal or state law; or 

include a statement describing the 

applicable investigation, examination, 

litigation or controversy. The addition 

of this paragraph ensures that the 

Department would have full knowledge 

of any potential issues or conflicts that 

involve the fiduciary. Without a full 

disclosure by the fiduciary with respect 

to all of items delineated in the 

paragraph, the Department may not be 

able to fully evaluate the qualifications 

and independence of the qualified 

independent fiduciary and whether the 

selection of the fiduciary was prudent. 

Lastly, a proposed new paragraph 

(f)(12) would connect with proposed 

paragraph (f)(11) by requiring the 

exemption application to include the 

qualified independent fiduciary’s 

statement either that it has not been 

either convicted or released from 

imprisonment, whichever is later, 

within the last 13 years as a result of: 

(1) Any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime described in 

ERISA section 411 or (2) convicted by 

a foreign court of competent jurisdiction 

or released from imprisonment, 

whichever is later, as a result of any 

crime, however denominated by the 

laws of the relevant foreign government, 

that is substantially equivalent to an 

offense described in (1) and a 

description of the circumstances of any 

such conviction; or a statement 

describing a conviction or release from 

imprisonment described in (1) or (2). As 

with proposed paragraph (f)(11), the 

required statement would ensure that 

the Department has important 

information relevant to the 

qualifications and independence of the 

fiduciary and to the prudence and 

loyalty of the applicant’s selection of the 

independent fiduciary. 


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Section 2570.35 

Section 2570.35 addresses 

information that solely needs to be 

included in an individual exemption 

application. As with changes elsewhere 

in this proposal, multiple changes are 

made to current § 2570.35 for readability 

and consistency with changes made in 

other sections of the Exemption 

Procedure Regulation. In addition, some 

minor changes are included in the 

proposal that would require the mail 

and email addresses of the plan and 

parties in interest to which the 

exemption application applies and a 

reminder that applicants should not 

submit social security numbers. The 

Department requests comments on these 

changes, including the clarified 

requirements related to information 

about previously consummated 

exemption transactions and criminal 

convictions. 

Beyond those changes, the proposal 

revises paragraph (a)(6) to more clearly 

address foreign convictions. While the 

Department believes the current 

language includes foreign convictions, 

the proposal now clearly would require 

applicants to disclose in their 

application whether, within the last 

thirteen years, they or any party 

involved in the exemption had been 

convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime, however 

denominated by the laws of the relevant 

foreign government, that is substantially 

equivalent to an offense described in 

paragraph (a)(6)(i) and a description of 

the circumstances of any such 

conviction. For purposes of this section, 

a person shall be deemed to have been 

‘‘convicted’’ from the date of the trial 

court’s judgment, regardless of whether 

that judgment remains under appeal and 

the foreign jurisdiction considers a trial 

court judgment final while under 

appeal. Clarifying the treatment of 

foreign convictions serves to remove 

uncertainty from the exemption 

application process and ensures that the 

Department receives all relevant 

information. 

The proposal also revises current 

paragraph (a)(12), which requires the 

applicant to state the percentage of plan 

assets affected by the exemption 

transaction to provide that if the 

exemption transaction includes the 

acquisition of an asset by the plan, the 

fair market value of the asset to be 

acquired must be included in both the 

numerator and denominator of the 

applicable fraction. The new language 

simply clarifies the Department’s 

understanding of how to calculate the 

fair market value percentage in an 

acquisition so that the percentage 

accurately reflects the impact of the 

exemption transaction on overall plan 

assets. 

Paragraph (a)(18) requires applicants 

to provide information on which parties 

will bear the cost of the exemption 

application and notifying interested 

persons. The proposal revises and 

expands the paragraph to require that 

the applicant disclose the person(s) or 

entity who will bear the costs of: (1) The 

exemption application; (2) any 

commissions, fees, or costs associated 

with the exemption transaction, and any 

related transaction; and (3) notifying 

interested persons; provided, in each 

case, that the plan may not bear the 

costs of the exemption application, 

commissions, fees, and costs incurred to 

notify interested persons unless the 

Department determines, at its sole 

discretion, that a compelling 

circumstance exists that necessitates the 

payment of these expenses by the plan. 

The expanded language clarifies that the 

disclosure is intended to capture all of 

the costs and fees associated with the 

exemption transaction, not just those 

immediately derived from the 

submission of the exemption 

application. In this way, the Department 

can better understand the true cost of a 

particular exemption transaction. 

Further, the new language emphasizes 

the Department’s view that the costs of 

the application, exemption transaction, 

and notice should not be borne by the 

plan and its participants and 

beneficiaries. Unless truly compelling 

circumstance exist, exemption 

transaction expenses should be the 

responsibility of parties other than the 

plan. 

Finally, the proposal adds a new 

paragraph (a)(20). The new paragraph 

requires the applicant to state in its 

application whether any prior 

transactions have occurred between (1) 

the plan or plan sponsor and (2) a party 

involved in the exemption transaction. 

Requiring this information would allow 

the Department to determine where the 

exemption transaction fits in the 

relationship between the plan and the 

parties involved in the exemption 

transaction and to evaluate whether the 

exemption transaction is part of a larger 

set of transactions or a pattern of 

practice. 

The proposal makes a minor change 

to paragraph (b)(4). Currently, the 

paragraph requires the application to 

contain a disclosure of a net worth 

statement with respect to any party in 

interest providing a personal guarantee 

with respect to the exemption 

transaction. The proposal expands this 

language to cover not just parties in 

interest, but any party providing such a 

guarantee. The expansion of the 

language would allow the Department to 

more accurately determine the value of 

any guarantee associated with the 

exemption transaction. 

In accordance with its discussion of 

§ 2570.30 above as it pertains to 

retroactive exemption requests, the 

Department would also make specific 

revisions to the requirements for 

retroactive exemptions in paragraph (d). 

The Department proposes to amend 

current paragraph (d)(1) to state that the 

Department will consider exemption 

requests for retroactive relief only when 

(1) the safeguards necessary for the grant 

of a prospective exemption were in 

place at the time at which the parties 

entered into the transaction, and (2) the 

plan and its participants and 

beneficiaries have not been harmed by 

the transaction. An applicant for a 

retroactive exemption must demonstrate 

that the responsible plan fiduciaries 

acted in good faith by taking all 

appropriate steps necessary to protect 

the plan from abuse, loss, and risk at the 

time of the transaction. An applicant 

should further explain and describe 

whether the transaction could have been 

performed without engaging in a 

prohibited transaction. The proposal 

revises prior language to emphasize the 

applicant must demonstrate that the 

plan and its participants and 

beneficiaries were not harmed by the 

exemption transaction. The Department 

cannot readily make the findings 

required by Section 408(a) of ERISA that 

the transaction is in the interests of the 

plan and its participants and 

beneficiaries, and protective of their 

rights, if, in fact, the transaction was 

harmful to plan participants and 

beneficiaries. Further, the applicant 

must demonstrate that the plan 

fiduciaries took all appropriate steps 

necessary to prevent abuse, loss, and 

risk when the transaction took place. 

Including such information in the 

exemption application demonstrates to 

the Department that the fiduciaries were 

acting prudently to protect the plan and 

its participants and beneficiaries when 

the transaction took place. Consistent 

with this requirement, the proposed 

amendment includes language requiring 

the applicant to show that it evaluated 

other possibilities to the exemption 

transaction and made a determination 

that the exemption transaction was the 

appropriate option in light of the other 

possible solutions that were available, if 

any. 

In order to assist applicants in 

demonstrating that they acted in good 

faith when entering into a previously 


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consummated exemption transaction, 

proposed paragraph (d)(2) provides 

factors the Department will take into 

account when reviewing a retroactive 

exemption application. Paragraph 

(d)(2)(i) is revised to state that one of the 

factors the Department will consider is 

the involvement of an independent 

fiduciary before a transaction occurs 

who acts on behalf of the plan and is 

qualified to negotiate, approve, and 

monitor the transaction; provided, 

however, the Department may consider, 

at its sole discretion, an independent 

fiduciary’s appointment and 

retrospective review after completion of 

the exemption transaction due to 

exigent circumstances. The proposal 

revises the prior language in order to 

provide that, in certain exigent 

circumstances, the Department may 

consider, at its sole discretion, the 

approval of an independent fiduciary 

after the fact. The Department 

recognizes that under certain rare and 

extreme circumstance an independent 

fiduciary’s approval of the transaction 

after the fact may serve to assist the 

Department in determining whether an 

applicant acted in good faith. 

The proposal also revises paragraph 

(d)(2)(v) to assist with the good faith 

determination. Under the amendment, 

the applicant would be required to 

submit evidence that the plan fiduciary 

did not engage in an act or transaction 

that the fiduciary should have known 

was prohibited under ERISA section 406 

and/or Code section 4975 consistent 

with its ERISA fiduciary duties and 

responsibilities. The revised language 

applies the more appropriate ERISA 

standard that a fiduciary is responsible 

not only for what it knows, but what it 

should have known. Setting forth this 

standard ensures that the plan fiduciary 

actively engaged and evaluated the 

exemption transaction. 

Finally, the proposal revises the last 

paragraph on retroactive exemptions. 

Paragraph (d)(3) addresses the 

Department’s position that it will not 

consider retroactive exemption requests 

if the exemption transaction resulted in 

a loss for the plan. The proposal 

modifies the existing language to make 

absolutely clear that the Department’s 

starting presumption is that it will 

simply not consider such requests. 

However, the Department also clarifies 

that the determination as to loss is only 

applied at the time of the exemption 

application. Thus, if the facts later show 

that the exemption transaction did 

result in a loss months or years after the 

completion of the exemption 

application, that information is not 

relevant to the exemption 

determination, which is made based on 

the facts available at the time. 

Section 2570.36 

Section 2570.36 addresses where to 

file an exemption application. The 

proposal modernizes the submission 

process by no longer requiring a paper 

submission, and instead directs 

applicants to e-oed@dol.gov for 

submission. Applicants would retain 

the right to submit a paper application, 

and the proposal provides current 

information on the correct delivery 

addresses while noting that that the 

address published in the Exemption 

Procedure Regulation may change over 

time. The Department will always 

provide the current submission address 

on its website. 

Section 2570.37 

Section 2570.37 addresses an 

applicant’s duty to supplement the 

exemption application. The proposal 

revises paragraph (a) to state that 

applicants have a duty to promptly 

notify the Department of any material 

changes to facts or representations 

either during the Department’s 

consideration of the application or 

following the Department’s grant of an 

exemption. This duty only extends to 

the information that was provided at the 

time of the grant of the exemption. The 

proposal also expands the duty to 

disclose to the Department whether a 

party participating in the exemption 

transaction is the subject of an 

investigation or enforcement act in 

paragraph (b) by proposing to include 

investigative and enforcement actions 

by any Federal or state governmental 

entity, not just the Department, the 

Internal Revenue Service, the Justice 

Department, the Pension Benefit 

Guaranty Corporation, and the Federal 

Retirement Thrift Investment Board. 

Section 2570.38 

Section 2570.38 addresses the 

issuance of tentative denial letters 

before the Department issues a final 

denial letter. Tentative denial letters, 

often referred to as TD letters, inform 

the applicant of issues that it needs to 

resolve with the Department before the 

Department is able to grant an 

exemption. The proposal revises the text 

to clarify that the Department may 

extend the twenty-day period during 

which an applicant normally would be 

required to request a hearing or notify 

the Department of its intent to submit 

additional information following the 

issuance of a tentative denial letter at its 

sole discretion. The Department is 

proposing this change to inform 

applicants that the 20-day period 

provides a hard deadline for the 

applicant to reply unless the 

Department chooses to extend the 

period at its sole discretion based on the 

facts and circumstances. 

Section 2570.39 

Section 2570.39 addresses the 

applicant’s ability to submit additional 

information. Consistent with other 

revisions to the Exemption Procedure 

Regulation, the proposal revises the text 

to update the manner by which the 

applicant may communicate with the 

Department. Beyond those updates, the 

proposal revises paragraph (b), and then 

makes conforming changes throughout 

the section, to provide that while the 

applicant is required to submit the 

additional information within forty days 

of the date the tentative denial letter 

was issued by the Department, the 

Department may, at its sole discretion 

extend the time period. As with 

§ 2570.38, this change is made to inform 

the applicant that the time period is a 

hard deadline, unless the Department 

chooses to extend the period pursuant 

to its own discretion based on the facts 

and circumstances. 

The proposal also deletes paragraph 

(d). The paragraph provided that if an 

applicant could not submit all of the 

supplementary information within the 

forty-day time period (unless extended 

by the Department), it could withdraw 

the application and reinstate it at a later 

time. The proposal deletes this 

provision to be consistent with 

proposed changes to § 2570.44, which 

covers withdrawn applications. As 

described below, the Department 

proposes to amend its approach 

regarding withdrawals and 

reapplications in that section. 

Section 2570.40 

Section 2570.40 addresses 

conferences between the applicant, or 

its representative, and the Department. 

The Department requests comments 

related to the revisions, particularly 

whether additional information or 

clarity might be useful. 

Paragraph (b) provides that, generally, 

an applicant is entitled to only one 

conference under the Exemption 

Procedure Regulation. The proposal 

retains this text, but adds additional 

language providing that the Department 

may request the applicant to participate 

in additional conferences at its sole 

discretion. The Department would make 

such a request if it determines the 

conferences are appropriate based on 

the facts and circumstances of the 

exemption application. 

The Department also proposes to 

revise paragraphs (d) through (h), which 


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govern the timing of conferences and 

the submission of information. As with 

changes to §§ 2570.39 and 2570.40(b), 

the proposed amendment revises the 

sections to provide that the Department 

may, at its sole discretion extend time 

periods. These changes are made to 

similarly inform the applicant that the 

time periods outlined in the section 

provide a hard deadline for the 

applicant, unless the Department, based 

on the facts and circumstances, chooses 

to extend the period pursuant to its own 

discretion. 

The proposal also adds a new 

paragraph (i) providing that the 

Department, at its sole discretion, may 

hold a conference with any party, 

including the qualified independent 

fiduciary or the qualified independent 

appraiser, regarding any matter related 

to an exemption request without the 

presence of the applicant or other 

parties to the exemption transaction or 

their representatives. Any such 

conferences may occur in addition to 

the conference with the applicant 

described in § 2570.40(b). The proposal 

adds this language to clarify that the 

Department is not limited with respect 

to whom it holds conferences. The 

Department proposes to reserve this 

right, because it may determine that 

under certain circumstances the 

Department may need to meet with a 

third party in order accurately assess the 

exemption application. For example, the 

Department may determine that a 

discussion with a qualified independent 

fiduciary without the presence of the 

applicant or its representative, may 

provide additional insight into the 

qualified independent fiduciary’s work 

if the applicant is not present to 

influence the explanation of the 

fiduciary’s work product or limit the 

topics which are discussed. 

Section 2570.41 

Section 2570.41 addresses final denial 

letters, which are the final action taken 

by the Department with respect to an 

application if the Department has 

determined that an exemption will not 

be granted for an exemption transaction. 

The proposal adds a new paragraph (a), 

which provides that the Department 

will issue a final denial letter without 

issuing a tentative denial letter under 

§ 2570.38 or conducting a hearing on 

the exemption under either § 2570.46 or 

§ 2570.47, if the Department determines, 

at its sole discretion, that: (1) The 

applicant has failed to submit 

information requested by the 

Department in a timely manner; (2) the 

information provided by the applicant 

does not meet the requirements of 

§§ 2570.34 and 2570.35; or (3) if a 

conference has been held between the 

Department and the applicant before the 

issuance of a tentative denial letter 

during which the Department and the 

applicant addressed the reasons for 

denial that otherwise would have been 

set forth in a tentative denial letter 

pursuant to § 2570.38. While the 

language of §§ 2570.38, 2570.46, and 

2570.47 does not require a tentative 

denial letter to be sent or a hearing 

occur under all circumstances, the 

current language does not clearly state 

that the Department may issue a final 

denial letter without taking those steps. 

To clear up this uncertainty, the 

proposal adds the new text to make 

clear that the Department, based on the 

reasons outlined herein, may issue final 

denial letters without tentative denial 

letters or hearings. The Department 

requests comments on the proposed 

revisions, including whether there are 

any circumstances in which plan 

participants and beneficiaries may be 

adversely impacted by the issuance of a 

final denial letter where the Department 

has not first issued a tentative denial 

letter. 

The proposal also adds a new 

paragraph (e) which states the 

Department will issue a final denial 

letter where the applicant either (1) asks 

to withdraw the exemption application 

or (2) communicates to the Department 

that it is not interested in continuing the 

application process. This revision is 

consistent with the changes being made 

in § 2570.44. The proposal adds this text 

in order to provide that if the applicant 

decides it no longer is interested in an 

exemption, whether communicated 

through either a withdrawal or a 

statement of disinterest, the Department 

will formally memorializes the ultimate 

disposition of the application by issuing 

a final denial letter. The proposed 

amendment will help the Department 

more clearly track and manage 

exemption applications. 

Section 2570.42 

When the Department comes to the 

initial decision that the issuance of an 

exemption is warranted, § 2570.42 

provides that the Department must 

provide for notice and comment through 

the publication of a proposed exemption 

in the Federal Register. The proposal 

revises a portion of paragraph (d). 

Previously, the paragraph provided that 

when the proposed exemption includes 

relief from ERISA section 406(b), Code 

section 4975(c)(1)(E), or FERSA section 

8477(c)(2), the proposal must inform 

interested persons who would be 

adversely affected by the transaction of 

their right to request a hearing under 

§ 2570.46. The proposal deletes the 

reference to interested persons who 

would be adversely affected by the 

exemption transaction, thus, making the 

text applicable to all interested persons. 

This revision was made to both reflect 

the difficulty in determining which 

parties are adversely affected and to 

ensure all parties that might have 

relevant information to the 

Department’s final determination are 

provided with an opportunity to 

communicate that information. 

Section 2570.43 

Upon publication of a proposed 

exemption in the Federal Register, 

§ 2570.43 provides that the applicant 

must provide notice to interested 

persons of the pendency of the 

exemption. The section outlines the 

process by which the notice is drafted 

and provided. The proposal revises 

paragraph (a) to delete ‘‘adversely’’ and 

replace it with ‘‘materially’’ when 

applying the term to the interested 

parties’ right to a hearing to remain 

consistent with the proposal’s revision 

to § 2570.42 discussed above. The 

proposal also makes minor changes 

regarding how a commenter may submit 

their comment and adds language to 

existing text advising commenters not to 

disclose personal data that also advises 

commenters not to submit confidential 

or otherwise protected information. 

Section 2570.44 

Section 2570.44 addresses the 

withdrawal of an exemption 

application. The existing provision 

allows an applicant to withdraw their 

application without the Department’s 

issuance of a formal final denial letter. 

The proposal revises paragraph (b) to 

provide explicitly that that Department 

will terminate all proceedings regarding 

the application upon receiving an 

applicant’s withdrawal request and 

issue a final denial letter. The issuance 

of the final denial letter will formally 

close the application and allow the 

Department to better manage its 

inventory of exemption applications. 

The proposal revises paragraph (d) to 

provide that if an applicant chooses to 

reapply after withdrawing its 

application, the applicant must update 

all previously furnished information 

with respect to the prior application and 

the exemption transaction. Applicants 

currently can reapply without providing 

additional information after 

withdrawing their applications, unless 

the request occurs more than two years 

after withdrawal; however, the 

Department believes that applicants 

should be required to completely update 

all information when they reapply for 

an exemption. Therefore, the proposal 


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treats the withdrawal as a formal denial, 

which shifts the burden to the applicant 

to present an updated application to the 

Department for its review. 

Finally, the proposal adds a new 

paragraph (f) stating that following the 

withdrawal of an exemption 

application, the administrative record 

will remain subject to public inspection 

pursuant to § 2570.51. The Department 

is proposing this revision to clearly set 

forth the Department’s policy that the 

administrative record for an exemption 

will always be available for public 

inspection after it is created. 

Section 2570.45 

Section 2570.45 addresses formal 

requests for reconsideration following a 

denial. The proposal adds a new 

paragraph (g), which provides that a 

request for reinstatement of an 

exemption application following a 

withdrawal pursuant to § 2570.44(d) is 

not a request for reconsideration 

governed by § 2570.45. The Department 

is adding this text to draw a clear 

distinction between §§ 2570.44 and 

2570.45. 

Section 2570.46 

Current § 2570.46 covers the right to 

a hearing with respect to a proposed 

exemption that provides relief from 

ERISA section 406(b), Code section 

4975(c)(1)(E) or (F), or FERSA section 

8477(c)(2) for any interested person who 

may be adversely affected by the 

exemption. The Department is 

proposing to expand the right to a 

hearing to any person who may be 

materially affected by an exemption that 

provides the relief described in this 

section. The determination of whether a 

person is materially affected would be at 

the sole discretion of the Department. 

The proposal deletes the reference to 

interested persons to allow any party 

materially affected by the exemption to 

provide material information. The 

Department requests comments on this 

provision, including information about 

the benefits or drawbacks of holding a 

hearing before deciding whether to grant 

a proposed exemption. 

Similarly, the Department is changing 

the word ‘‘adversely’’ to ‘‘materially’’ in 

order to capture all relevant information 

with respect to the exemption 

transaction. Combined, these revisions 

assist the Department in its review of 

the exemption transaction by ensuring 

that potentially helpful information is 

not excluded. 

The proposal also makes a minor 

revision to paragraph (b). The 

Department is inserting language to 

explicitly state that the Department will 

hold a hearing when it is necessary to 

explore material factual information 

with respect to the proposed exemption. 

Factual information is limited to the 

proposed exemption in order to ensure 

that the hearing is relevant to the 

Department’s exemption determination. 

Section 2570.47 

The proposal does not make any 

revisions to § 2570.47. 

Section 2570.48 

Section 2570.48 restates the 

Department’s ERISA section 408 

statutory finding requirements. The 

proposal’s only material change was to 

clarify that the Department must make 

a finding that the exemption is 

administratively feasible ‘‘for the 

Department.’’ The language was revised 

to add ‘‘for the Department’’ in order to 

clarify that the finding concerns 

whether the Department can feasibly 

administer the exemption, not the 

applicant. 

Section 2570.49 

Section 2570.49 addresses the various 

effects of and limits on the grant of an 

exemption. The proposal revises 

paragraph (e) to clarify that the 

determination as to whether a particular 

statement contained in (or omitted from) 

an exemption application constitutes a 

material fact or representation based on 

the totality of the facts and 

circumstances is made by the 

Department in its sole discretion. The 

addition of the ‘‘sole discretion’’ 

language reinforce the language of the 

existing paragraph and clarifies that the 

Department retains sole discretion with 

respect to the determination. 

Section 2570.50 

Section 2570.50 addresses the 

revocation and modification of existing 

exemptions. The Department requests 

comments on the revisions, including 

information about what steps might be 

taken to mitigate any harm to plan 

participants and beneficiaries in the 

event an exemption is revoked or 

modified. 

The proposal substantially revises 

paragraph (a) to provide that, if material 

changes in facts, circumstances, or 

representations occur after an 

exemption take effect, including 

whether a qualified independent 

fiduciary resigns, is terminated, or is 

convicted of a crime, the Department, at 

its sole discretion, may take steps to 

revoke or modify the exemption. In the 

event that the qualified independent 

fiduciary resigns, is terminated, or is 

convicted of a crime, the proposal 

requires the applicant to notify the 

Department within thirty 30 days of the 

resignation, termination, or conviction, 

and the Department reserves the right to 

request the applicant to provide the 

Department with any of the information 

required pursuant to § 2570.34(e) and (f) 

at a time determined by the Department 

at its sole discretion. 

The proposal revises paragraph (a) to 

ensure that granted exemptions remain 

protective of plans and their 

participants and beneficiaries. The 

Department reserves the right at its sole 

discretion to determine if material 

changes impact the grounds upon which 

the exemption was issued, thereby 

necessitating a change. The paragraph 

provides a tool by which the 

Department can evaluate ongoing 

exemptions and ensure the exemptions 

continue to meet the ERISA statutory 

requirements. 

The proposal’s revision of paragraph 

(a) also expands beyond the core 

material facts to address the qualified 

independent fiduciary. In many 

exemptions that employ qualified 

independent fiduciaries, the fiduciaries 

represent one of the exemption’s core 

protective conditions. It is imperative 

that an applicant inform the Department 

if the independent fiduciary ceases to 

serve in that role because it resigns, is 

terminated, or is convicted of a crime. 

The proposed language would ensure 

that the Department will be informed of 

the changed circumstances and require 

the applicant to take necessary actions 

to ensure the exemption continues to be 

protective of the plan and its 

participants and beneficiaries. 

In connection with the qualified 

independent fiduciary issue, the 

proposal reserves the Department’s right 

to request that the applicant provide any 

of the information required pursuant to 

§ 2570.34(e) and (f) at a time 

determined by the Department at its sole 

discretion. The Department’s ability to 

take action with respect to the fiduciary 

is bolstered by this ability. The 

proposal’s provision for access to 

information assists the Department’s 

ultimate disposition of the issue and 

serves to ensure the exemption remains 

protective. 

Lastly, the proposal would revise 

paragraph (c), which currently permits 

the Department to revoke or modify an 

exemption under certain circumstances 

and to give the modifications retroactive 

effect. The proposal would delete the 

reservation of the Department’s right to 

make retroactive changes, and instead 

provide that changes would be 

prospective only. The amendment 

reflects the Department’s concern that 

the ability to make retroactive changes 

undermines the legitimate reliance 

interests of applicants, plans, 


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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 14735 

participants and beneficiaries in 

exemptions that have been granted 

pursuant to specific conditions. 

Section 2750.51 

Section 2570.51 addresses public 

inspection and the provision of copies 

of the administrative record. The 

proposal revises the current language in 

coordination with § 2570.32(d), which 

addresses the administrative record and 

the information included in the 

administrative record. The proposal 

clarifies that from the date the 

administrative record is established, as 

determined by § 2570.32(d), the 

administrative record is open to the 

public and available to copy. In 

addition, the proposal updates 

paragraph (b) to allow copies of the 

administrative record to be furnished 

electronically at the staff’s discretion. 

Effective Date 

The Department proposes to make 

this regulation effective 90 days after the 

date of publication of the final 

rulemaking in the Federal Register. 

Regulatory Impact Analysis 

Executive Order 12866 

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 

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. 

Pursuant to the terms of Executive 

Order 12866, it has been determined 

that this action is not ‘‘significant’’ 

within the meaning of section 3(f) of the 

Executive order and therefore is not 

subject to review by OMB. 

Paperwork Reduction Act 

As part of its continuing effort to 

reduce paperwork and respondent 

burden, the Department 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 program helps to ensure that the 

public understands the Department’s 

collection instructions, respondents can 

provide the requested data in the 

desired format, the reporting burden 

(time and financial resources) is 

minimized, and the Department can 

properly assess the impact of collection 

requirements on respondents. 

Currently, the Department is soliciting 

comments concerning the information 

collection request (ICR) included in the 

proposed amendment of the Exemption 

Procedure Regulation. A copy of the ICR 

may be obtained by contacting the 

person listed in the PRA Addressee 

section below. The Department has 

submitted a copy of the proposed rule 

to OMB in accordance with 44 U.S.C. 

3507(d) for review of its information 

collections. The Department is 

particularly interested in comments 

that: 

(A) 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; 

(B) 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; 

(C) Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

(D) Help 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., by 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; 

and marked ‘‘Attention: Desk Officer for 

the Employee Benefits Security 

Administration.’’ Comments can also be 

submitted by Fax: 202–395–5806 (this is 

not a toll-free number), or by email: 

OIRA_submission@omb.eop.gov. OMB 

requests that comments be received by 

April 14, 2022, which is 30 days from 

publication of the proposed amendment 

to ensure their consideration. 

PRA Addressee: Address requests for 

copies of the ICR to James Butikofer, 

Office of Research and Analysis, U.S. 

Department of Labor, Employee Benefits 

Security Administration, 200 

Constitution Avenue NW, Room N– 

5718, Washington, DC 20210 or by 

email at: ebsa.opr@dol.gov. These are 

not toll-free numbers. A copy of the ICR 

also may be obtained at https://

www.RegInfo.gov. 

Background 

Both ERISA and the Code contain 

various statutory exemptions from the 

prohibited transaction rules. In 

addition, ERISA section 408(a) 

authorizes the Secretary to grant 

administrative exemptions from the 

restrictions of ERISA sections 406 and 

407(a), while Code section 4975(c)(2) 

authorizes the Secretary of the Treasury 

or his delegate to grant exemptions from 

the prohibitions of Code section 

4975(c)(1). ERISA section 408(a) and 

Code section 4975(c)(2) also direct the 

Secretary and the Secretary of the 

Treasury, respectively, to establish 

procedures to carry out the purposes of 

these sections. 

Under ERISA section 3003(b), the 

Secretary and the Secretary of the 

Treasury are directed to consult and 

coordinate with each other with respect 

to the establishment of rules applicable 

to the granting of exemptions from the 

prohibited transaction restrictions of 

ERISA and the Code. Under ERISA 

section 3004, moreover, the Secretary 

and the Secretary of the Treasury are 

authorized to develop jointly rules 

appropriate for the efficient 

administration of ERISA. 

Under section 102 of Reorganization 

Plan No. 4 of 1978, the foregoing 

authority of the Secretary of the 

Treasury to issue exemptions under 

Code section 4975 was transferred, with 

certain enumerated exceptions not 

discussed herein, to the Secretary. 

Accordingly, the Secretary now 

possesses the authority under Code 

section 4975(c)(2), as well as under 

ERISA section 408(a), to issue 

individual and class exemptions from 

the prohibited transaction rules of 

ERISA and the Code. 

On April 28, 1975, the Department 

published ERISA Procedure 75–1 in the 

Federal Register (40 FR 18471). This 

procedure provided necessary 

information to the affected public 

regarding the procedure to follow when 

requesting an exemption. On August 10, 

1990, the Department issued its current 

exemption procedure regulation, which 


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5The Department estimates of labor costs by 

occupation reflect estimates of total compensation 

and overhead costs. Estimates for total 

replaced ERISA Procedure 75–1, for 

applications for prohibited transaction 

exemptions filed on or after September 

10, 1990. (29 CFR 2570.30 through 

2570.52, 55 FR 32836, Aug. 10, 1990) 

Most recently, the Department 

published an updated Exemption 

Procedure Regulation in 2011 (29 CFR 

2570.30 through 2570.52 (2011)). The 

updated Exemption Procedure 

Regulation revised the prohibited 

transaction exemption procedure to 

reflect changes in the Department’s 

exemption practices since the previous 

exemption procedure was issued in 

1990. 

Under the current Exemption 

Procedure Regulation, the Department 

requires information to be provided in 

a written application pursuant to the 

requirements set forth in the Exemption 

Procedure Regulation. The written 

application is an ICR for purposes of the 

PRA. Sections 2570.34 and 2570.35 of 

the current Exemption Procedure 

Regulation describe the information that 

must be supplied by the applicant, such 

as, but not limited to: Identifying 

information (name, type of plan, EIN 

number, etc.); an estimate of the number 

of plan participants; a detailed 

description of the exemption transaction 

and the parties for which an exemption 

is requested; a statement regarding 

which section of ERISA is thought to be 

violated and whether transaction(s) 

involved have already been entered 

into; a statement of whether the 

transaction is customary in the industry; 

a statement of the hardship or economic 

loss, if any, which would result if the 

exemption were denied; and a statement 

explaining why the proposed exemption 

would be administratively feasible, in 

the interests of the plan and protective 

of the rights of plan participants and 

beneficiaries. In addition, the applicant 

must certify that the information 

supplied is accurate and complete. 

The proposed amendment to the 

Exemption Procedure Regulation would 

expand the ICR contained in §§ 2570.34 

and 2570.35 in several respects. First, 

the proposal seeks to expand the 

information sought about the proposed 

exemption transaction, such as 

requiring a more detailed description of 

the exemption transaction, including 

the benefits derived by the parties and 

the costs and benefits to the plan; 

alternative transactions considered; and 

descriptions of all conflicts of interest 

and self-dealing. Second, the proposal 

requires the inclusion of additional 

information in exemption applications 

such as a statement regarding whether 

the exemption transaction is in the best 

interest of the plan and its participant 

and beneficiaries and expanded 

disclosures with respect to any 

Advisory Opinions that the applicant 

requests with respect to any issue 

relating to the exemption transaction 

and investigations by any Federal, state, 

or regulatory body. 

The proposal also would revise the 

ICR to expand the number of specialized 

parties from whom statements and 

documents must be included in 

exemption applications. The specialized 

parties covered by the existing 

requirements would be expanded to 

include not just independent appraisers 

and fiduciaries, but also auditors and 

accountants acting on the behalf of the 

plan, and the documents required to be 

disclosed with respect to those parties 

would expand to cover any documents 

submitted by those parties in support of 

the application. Specialized parties 

would be required to disclose, among 

other things, additional information 

regarding their contracts, including, but 

not limited to, information on 

indemnification provisions, waivers, 

and relationships with other parties 

involved in the exemption transaction. 

In addition, the qualified independent 

fiduciary would be required to provide 

more information, such as, but not 

limited to: Information regarding 

conflicts of interest and fiduciary 

liability insurance and whether the 

fiduciary has been under investigation 

or convicted of certain crimes. 

In addition to the requirements 

created by the application described in 

§§ 2570.34 and 2570.35, additional 

requirements are added by amending 

§ 2570.34(d) with respect to a presubmission applicant. Specifically, if an 

applicant desires to engage in a presubmission conference or 

correspondence, the applicant or its 

representative must (1) identify and 

fully describe the exemption 

transaction; (2) identify the applicant, 

the applicable plan(s), and the relevant 

parties to the exemption transaction; 

and (3) set forth the prohibited 

transactions that the applicant believes 

are applicable. 

Finally, the Department proposes to 

amend § 2570.36 to provide that the 

application and supporting documents 

may be submitted electronically. The 

Department expects that no longer 

requiring paper copies should reduce 

the burden associated with this ICR. 

In order to assess the hour and cost 

burden of the revision to the current ICR 

associated with the Exemption 

Procedure Regulation, the Department 

updated its estimate of the number of 

exemption requests it expects to receive 

and the hour and cost burden associated 

with providing information required to 

be submitted by applicants, including 

the new information required under this 

proposal. The Department also adjusted 

its estimate of the labor rates for 

professional and clerical help and the 

size of plans filing exemption requests 

with the Department. In the revised 

estimate, the costs of hiring outside 

service providers (such as, law firms 

specializing in ERISA, outside 

appraisers, and financial experts) are 

accounted for as a cost burden. 

Requirements related to these services 

are more explicitly specified in the 

proposed rule than they were in the 

previous procedure, and any paperwork 

costs associated with these requirements 

are built into the estimated fees for 

outside services. 

Annual Hour Burden 

Between 2019 and 2021, the 

Department received an average of 22 

requests annually for prohibited 

transaction exemptions. For purposes of 

this analysis, the Department assumes 

that the Department will receive 

approximately the same number of 

applications annually over the next 

three years. The paperwork burden 

consists of the time outside attorneys 

will spend to prepare and submit an 

exemption application, and the time 

required to prepare and distribute the 

notice of a proposed exemption to 

interested parties. Because notices are 

only distributed once a proposed 

application for an exemption has been 

published in the Federal Register, the 

Department estimates that four 

applications annually will proceed to 

the notice stage based on the number of 

notices published between 2019 and 

2021. 

An exemption application may be 

made either directly by plans or by 

parties-in-interest to plans. The 

preparation of an application, however, 

is generally conducted by, or under the 

direction of, attorneys with specialized 

knowledge of employee benefit plans. 

The Department assumes that these 

same attorneys will also prepare and 

distribute the notice of the application 

to interested parties. 

The Department estimates that, on 

average, 12 hours of in-house legal 

professional and 13 hours of in-house 

clerical time will be spent preparing the 

documentation for the application that 

will be used by the outside counsel. The 

Department estimates that total labor 

costs (wages plus benefits plus 

overhead) for legal staff would average 

$140.96 per hour and $55.23 per hour 

for clerical staff.5 Therefore, the 


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compensation are based on mean hourly wages by 

occupation from the 2020 Occupational 

Employment Statistics and estimates of wages and 

salaries as a percentage of total compensation by 

occupation from the 2020 National Compensation 

Survey’s Employee Cost for Employee 

Compensation. Estimates for overhead costs for 

services are imputed from the 2017 Service Annual 

Survey. To estimate overhead cost on an 

occupational basis, the Office of Research and 

Analysis allocates total industry overhead cost to 

unique occupations using a matrix of detailed 

occupational employment for each NAICS industry. 

All values are presented in 2020 dollars. 

6The 286 in-house clerical hours are estimated to 

cost $15,796 and the 264 in-house legal professional 

hours are estimated to cost $37,213. This totals to 

$53,009. 

7Any discrepancies in the calculations are a 

result of rounding. 

8The outside legal staff labor rate is a composite 

weighted average of the Laffey Matrix for Wage 

Rates. (($381 × 0.4) + ($468 × 0.35) + ($676 × 0.15) 

+ ($764 × 0.1) = $494). http://

www.laffeymatrix.com/see.html. 

9The wage rate for the outside fiduciary and 

outside appraiser, which was estimated as $250 in 

2014, was adjusted for inflation. The CPI in October 

2014 was 237.433 (https://www.bls.gov/ 

news.release/archives/cpi_11202014.pdf) and the 

CPI in October 2021 was 276.589 (https://

www.bls.gov/news.release/pdf/cpi.pdf). Thus, the 

percent change in the CPI from October 2014 to 

October 2021 is estimated to be approximately 

1.165 and therefore, the adjusted wage rate is $291 

($250 × 1.165). 

10The 308 outside appraiser/expert hours are 

estimated to cost $89,699 and the 748 outside 

fiduciary hours are estimated to cost $217,840. This 

totals to $307,539. 11 (5 * $140.96) = $705. 

Department estimates that preparing the 

documentation for the application 

would require 264 in-house legal 

professional hours (22 applications 

times 12 hours) and 286 clerical hours 

(22 applications times 13 hours) 

resulting in 550 total hours at an 

equivalent cost of approximately 

$53,009.6 7

An exemption application may be 

made either directly by plans or by 

parties-in-interest to plans. The 

preparation of an exemption 

application, however, generally is 

conducted by or under the direction of 

attorneys with specialized knowledge of 

ERISA. The Department assumes that 

these same attorneys will also prepare 

and distribute the notice of the 

application to interested parties. As 

discussed above, the Department 

proposes to revise the requirements for 

specialized statements and documents. 

The specialized parties would be 

required to disclose, among other 

things, additional information regarding 

their contracts, including, but not 

limited to, information on 

indemnification provisions, waivers, 

and relationships with other parties 

involved in the exemption transaction. 

Because of the large amount of 

paperwork that is submitted 

(applications average approximately 100 

pages with varying numbers of 

supporting documents), and complexity 

of the issues, the Department estimates 

that, on average, 52 hours of outside 

legal professional work will be spent 

preparing the documentation for the 

application. The Department requests 

comment on the accuracy of this 

assumption and notes that there could 

be a large dispersion in the number of 

hours required, based on the complexity 

of the application. Total labor costs 

(wages plus benefits plus overhead) for 

outside legal staff was estimated to 

average $494.00 per hour.8 Therefore, 

the Department estimates that preparing 

the applications will require 1,144 inhouse legal professional hours (22 

applications times 52 hours) with an 

equivalent cost of $565,136. This 

estimate includes potential meetings 

with Department personnel as well as 

preparation of supplementary 

documents that are requested following 

some of these meetings. For some of the 

more complex cases, the Department 

will request a Summary of Proposed 

Exemption (SPE), which will involve a 

one page summary of the rationale for 

the transaction. 

As discussed above, the Department 

proposes to make substantial revisions 

to the requirements set forth in 

paragraphs (c) through (f) regarding 

statements and documents about 

qualified independent appraisers and 

qualified independent fiduciaries that 

are involved in an exemption 

transaction. The changes relate to the 

revisions made to the definitions of 

qualified independent appraiser and 

qualified independent fiduciary in 

§ 2570.31. The Department assumes that 

an outside qualified independent 

fiduciary and an outside appraiser/ 

expert will help prepare documentation 

for the application. Total labor costs for 

outside fiduciary and outside appraiser 

were estimated to average $291.23 per 

hour.9 Therefore, the Department 

estimates that preparing the 

applications will require 748 hours of 

work by outside fiduciaries (22 

applications times 34 hours) and 308 

hours of work by outside appraisers/ 

experts (22 times 14 hours) totaling 

approximately $307,539. The new 

requirements contained in the proposal 

are incorporated into these estimates.10

For applications that reach the stage 

of publication in the Federal Register as 

pending approval, a notice must be 

prepared and distributed to interested 

parties. The Department estimates that 

four applications will be published 

annually and that approximately 3,480 

notices to interested parties will be 

distributed. The distribution of the 

notices is estimated to require about 5 

minutes of in-house clerical time per 

interested party. Therefore, distribution 

of notices will require approximately 

290 hours at an equivalent cost of 

approximately $16,017 (5 minutes/60 

minutes) times 3,480 notices times 

$55.23 hourly clerical rate). 

Proposed amendments to § 2730.31(k) 

define a pre-submission applicant and 

§ 2570.34(d) imposes requirements on 

the pre-submission applicant. If an 

applicant desires to engage in a presubmission conference or 

correspondence, the applicant or its 

representative must (1) identify and 

fully describe the exemption 

transaction; (2) identify the applicant, 

the applicable plan(s), and the relevant 

parties to the exemption transaction; 

and (3) set forth the prohibited 

transactions that the applicant believes 

are applicable. While the number of 

entities that would satisfy the definition 

of pre-submission applicant is not 

tracked, most applicants do contact the 

Department. Other entities that satisfy 

the definition of a pre-submission 

applicant, but that do not end up 

submitting an application also contact 

the Department. To account for these 

additional entities, an estimate of 25 

pre-submission applicants is used. The 

required information is required on the 

application, so for those submitting an 

application, the requirement does not 

create a new burden, but rather only 

changes the timing of providing the 

information. For those five entities that 

do not submit an application, an hour 

of an in-house legal professional’s time 

could be required. This creates an 

additional five hours of burden with an 

equivalent cost of $705.11

The overall hour burden for this ICR 

is approximately 3,045 hours at an 

equivalent cost of approximately 

$942,406. 

Annual Cost Burden 

The Department estimates that 3,480 

notices to interested persons will be 

sent, and that 2,784 of the notices (80 

percent) will distributed via first class 

mail with a material cost of $0.05 per 

page and distribution costs of $0.58 per 

notice. This generates an estimated cost 

of approximately $1,754. The 

Department further estimates that 

approximately 522 (15 percent of the 

total number of notices) will be 

distributed electronically and 174 (5 

percent) will be distributed by 

alternative means approved by the 

Department, for example in highly 

visible area within a factory, at no cost. 

The Department notes that it determines 

whether it is appropriate to distribute 


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12The basis for this definition is found in ERISA 

section 104(a)(2), which permits the Secretary to 

prescribe simplified annual reports for pension 

plans that cover fewer than 100 participants. 

Pursuant to the authority of ERISA section 

104(a)(3), the Department has previously issued at 

29 CFR 2520.104–20, 2520.104–21, 2520.104–41, 

2520.104–46 and 2520.104b–10 certain simplified 

reporting provisions and limited exemptions from 

reporting and disclosure requirements for small 

plans, including unfunded or insured welfare plans 

covering fewer than 100 participants and satisfying 

certain other requirements. 

notices by means other than mailing on 

a case-by-case basis and only will allow 

a method to be used that ensures actual 

receipt based on the demographics of 

the class of interested persons. 

The Departments estimates that SPEs 

will be requested with respect to 

approximately three submissions (15 

percent of the 22 submissions) per year, 

and that the SPEs with be sent with the 

notices. Based on an average plan size 

of 696 participants per plan, this results 

in the distribution of approximately 

2,297 SPEs, of which approximately 

1,837 (80 percent) will be mailed. The 

material cost associated with mailing 

the 1,837 SPEs at $.05 per page is 

approximately $92. Therefore, the total 

cost burden for distribution of the 

notices and SPEs is estimated to be 

approximately $1,846 ($1,754 for the 

notices + $92 for the cost of including 

the SPEs). 

Overall, the cost burden associated 

with this ICR is approximately $1,846. 

The paperwork burden estimates are 

summarized as follows: 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Title: Employee Retirement Income 

Security Act of 1974 Section 408(a) 

Prohibited Transaction Provisions 

Exemption Application Procedure. 

OMB Control Number: 1210–0060. 

Affected Public: Businesses or other 

for-profits. 

Type of Review: Revision. 

Estimated Number of Respondents: 

22. 

Estimated Number of Annual 

Responses: 5,799. 

Frequency of Response: Annual or as 

needed. 

Estimated Total Annual Burden 

Hours: 3,045 hours. 

Estimated Total Annual Burden Cost: 

$1,846. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless the 

head of an agency certifies that a 

proposed rule is not likely to have a 

significant economic impact on a 

substantial number of small entities, 

section 603 of the RFA requires that the 

agency present an initial regulatory 

flexibility analysis at the time of the 

publication of the notice of proposed 

rulemaking describing the impact of the 

rule on small entities and seeking public 

comment on such impact. 

For purposes of the RFA, the 

Department continues to consider a 

small entity to be an employee benefit 

plan with fewer than 100 participants.12

Further, while some large employers 

may have small plans, in general small 

employers maintain most small plans. 

Thus, the Department believes that 

assessing the impact of this proposed 

rule on small plans is an appropriate 

substitute for evaluating the effect on 

small entities. The definition of small 

entity considered appropriate for this 

purpose differs, however, from a 

definition of small business that is 

based on size standards promulgated by 

the Small Business Administration 

(SBA) (13 CFR 121.201) pursuant to the 

Small Business Act (15 U.S.C. 631 et 

seq.). The Department therefore requests 

comments on the appropriateness of the 

size standard used in evaluating the 

impact of this proposed rule on small 

entities. 

By this standard, the Department 

estimates that nearly half the requests 

for exemptions would be from small 

plans. Thus, of the approximately 

639,751 ERISA-covered small plans, the 

Department estimates that 20 small 

plans (.0031% of small plans) file 

prohibited transaction exemption 

applications each year. The Department 

does not consider this to be a substantial 

number of small entities. Therefore, 

based on the foregoing, pursuant to 

section 605(b) of RFA, the Assistant 

Secretary of the Employee Benefits 

Security Administration hereby certifies 

that the proposed rule, if promulgated, 

will not have a significant economic 

impact on a substantial number of small 

entities. The Department invites 

comments on this certification and the 

potential impact of the rule on small 

entities. 

Congressional Review Act 

The proposed rule being issued here 

will, when finalized, be subject to the 

provisions of the Congressional Review 

Act provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and will be 

transmitted to Congress and the 

Comptroller General for review. 

Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), the proposed rule does not 

include any Federal mandate that may 

result in expenditures by State, local, or 

tribal governments, or impose an annual 

burden exceeding $100 million or more, 

adjusted for inflation, on the private 

sector. 

Federalism Statement 

Executive Order 13132 (August 4, 

1999) outlines fundamental principles 

of federalism and requires Federal 

agencies to adhere to specific criteria in 

the process of their formulation and 

implementation of policies that have 

substantial direct effects on the States, 

or the relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. This proposed 

rule does not have federalism 

implications, because it has no 

substantial direct effect on the States, on 

the relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. ERISA section 514 

provides, with certain exceptions 

specifically enumerated, that the 

provisions of Titles I and IV of ERISA 

supersede any and all laws of the States 

as they relate to any employee benefit 

plan covered under ERISA. The 

requirements implemented in the rule 

do not alter the fundamental provisions 

of the statute with respect to employee 

benefit plans, and as such would have 

no implications for the States or the 

relationship or distribution of power 

between the National Government and 

the States. 

List of Subjects in 29 CFR Part 2570 

Administrative practice and 

procedure, Employee benefit plans, 

Employee Retirement Income Security 

Act, Federal Employees’ Retirement 

System Act, Exemptions, Fiduciaries, 

Party in interest, Pensions, Prohibited 

transactions, Trusts and trustees. 

For the reasons set forth in the 

preamble, the Department proposes to 

amend subchapter G, part 2570 of 

chapter XXV of title 29 of the Code of 

Federal Regulations as follows: 


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PART 2570—PROCEDURAL 

REGULATIONS UNDER THE 

EMPLOYEE RETIREMENT INCOME 

SECURITY ACT 

■ 1. The authority citation for part 2570 

continues to read as follows: 

Authority: 5 U.S.C. 8477; 29 U.S.C. 

1002(40), 1021, 1108, 1132, and 1135; sec. 

102, Reorganization Plan No. 4 of 1978, 5 

U.S.C. App at 672 (2006); Secretary of Labor’s 

Order 3–2010, 75 FR 55354 (September 10, 

2010). 

Subpart I is also issued under 29 U.S.C. 

1132(c)(8). 

■ 2. Revise subpart B to read as follows: 

Subpart B—Procedures Governing the 

Filing and Processing of Prohibited 

Transaction Exemption Applications 

Sec. 

2570.30 Scope of this subpart. 

2570.31 Definitions. 

2570.32 Persons who may apply for 

exemptions and the administrative 

record. 

2570.33 Applications the Department will 

not ordinarily consider. 

2570.34 Information to be included in every 

exemption application. 

2570.35 Information to be included in 

applications for individual exemptions 

only. 

2570.36 Where to file an application. 

2570.37 Duty to amend and supplement 

exemption applications. 

2570.38 Tentative denial letters. 

2570.39 Opportunities to submit additional 

information. 

2570.40 Conferences. 

2570.41 Final denial letters. 

2570.42 Notice of proposed exemption. 

2570.43 Notification of interested persons 

by applicant. 

2570.44 Withdrawal of exemption 

applications. 

2570.45 Requests for reconsideration. 

2570.46 Hearings in opposition to 

exemptions from restrictions on 

fiduciary self-dealing and conflicts of 

interest. 

2570.47 Other hearings. 

2570.48 Decision to grant exemptions. 

2570.49 Limits on the effect of exemptions. 

2570.50 Revocation or modification of 

exemptions. 

2570.51 Public inspection and copies. 

2570.52 Effective date. 

Subpart B—Procedures Governing the 

Filing and Processing of Prohibited 

Transaction Exemption Applications 

§ 2570.30 Scope of this subpart. 

(a) The rules of procedure set forth in 

this subpart apply to applications for 

prohibited transaction exemptions 

issued by the Department under the 

authority of: 

(1) Section 408(a) of the Employee 

Retirement Income Security Act of 1974 

(ERISA); 

(2) Section 4975(c)(2) of the Internal 

Revenue Code of 1986 (the Code); or 

Note 1 to paragraph (a)(2). See H.R. Rep. 

No. 1280, 93d Cong., 2d Sess. 310 (1974), and 

also section 102 of Presidential 

Reorganization Plan No. 4 of 1978 (3 CFR, 

1978 Comp., p. 332, reprinted in 5 U.S.C. 

app. at 672 (2006), and in 92 Stat. 3790 

(1978)), effective December 31, 1978, which 

generally transferred the authority of the 

Secretary of the Treasury to issue 

administrative exemptions under section 

4975(c)(2) of the Code to the Department. 

(3) The Federal Employees’ 

Retirement System Act of 1986 (FERSA) 

(5 U.S.C. 8477(c)(3)). 

(b) Under the rules of procedure in 

this subpart, the Department may 

conditionally or unconditionally 

exempt any fiduciary or transaction, or 

class of fiduciaries or transactions, from 

all or part of the restrictions imposed by 

ERISA section 406 and the 

corresponding restrictions of the Code 

and FERSA. While administrative 

exemptions granted under the rules in 

this subpart are ordinarily prospective 

in nature, it is possible that an applicant 

may obtain retroactive relief for past 

prohibited transactions if, among other 

things, the Department determines that 

appropriate safeguards were in place at 

the time the transaction was 

consummated, and no plan participants 

or beneficiaries were harmed by the 

transaction. 

(c) The rules in this subpart govern 

the filing and processing of applications 

for both individual and class 

exemptions that the Department may 

propose and grant pursuant to the 

authorities cited in paragraph (a) of this 

section. The Department may also 

propose and grant exemptions on its 

own motion, in which case the 

procedures relating to publication of 

notices, hearings, evaluation, and public 

inspection of the administrative record, 

and modification or revocation of 

previously granted exemptions will 

apply. 

(d) The issuance of an administrative 

exemption by the Department under the 

procedural rules in this subpart does not 

relieve a fiduciary or other party in 

interest or disqualified person with 

respect to a plan from the obligation to 

comply with certain other provisions of 

ERISA, the Code, or FERSA, including 

any prohibited transaction provisions to 

which the exemption does not apply, 

and the general fiduciary responsibility 

provisions of ERISA, if applicable, 

which require, among other things, that 

a fiduciary discharge his or her duties 

respecting the plan solely in the 

interests of the participants and 

beneficiaries of the plan and in a 

prudent fashion; nor does it affect the 

requirement of Code section 401(a) that 

the plan must operate for the exclusive 

benefit of the employees of the 

employer maintaining the plan and their 

beneficiaries. 

(e) The Department will not propose 

or issue exemptions upon oral request 

alone, nor will the Department grant 

exemptions orally. An applicant for an 

administrative exemption may request 

and receive oral feedback from 

Department employees in preparing an 

exemption application, which will not 

be binding on the Department in its 

processing of an exemption application 

or in its examination or audit of a plan. 

Such feedback will become part of the 

administrative record as set forth in 

§ 2570.32(c). 

(f) The Department will generally treat 

any exemption application that is filed 

solely under ERISA section 408(a) or 

solely under Code section 4975(c)(2) as 

an exemption request filed under both 

ERISA section 408(a) and Code section 

4975(c)(2) if it relates to a plan that is 

subject to both ERISA and the Code and 

the transaction would be prohibited 

both by ERISA and the corresponding 

provisions of the Code. 

(g) The Department’s issuance of an 

administrative exemption is at its sole 

discretion based on the statutory criteria 

set forth in ERISA section 408(a) and 

Code section 4975(c)(2). The existence 

of previously issued administrative 

exemptions is not determinative of 

whether future exemption applications 

with the same or similar facts will be 

proposed, or whether a proposed 

exemption will contain the same 

conditions as a previously issued 

administrative exemption. 

§ 2570.31 Definitions. 

For purposes of the procedures in this 

subpart, the following definitions apply: 

(a) An affiliate of a person means— 

(1) Any person directly or indirectly 

through one or more intermediaries, 

controlling, controlled by, or under 

common control with the person. For 

purposes of this paragraph (a)(1), the 

term ‘‘control’’ means the power to 

exercise a controlling influence over the 

management or policies of a person 

other than an individual; 

(2) Any officer, director, partner, 

employee, or relative (as defined in 

ERISA section 3(15)) of any such 

person; or 

(3) Any corporation, partnership, 

trust, or unincorporated enterprise of 

which such person is an officer, 

director, partner, or five percent or more 

owner. 

(b) A class exemption is an 

administrative exemption, granted 

under ERISA section 408(a), Code 

section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3), which applies to any 


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transaction and party in interest within 

the class of transactions and parties in 

interest specified in the exemption 

when the conditions of the exemption 

are satisfied. 

(c) Department means the U.S. 

Department of Labor and includes the 

Secretary of Labor or his or her delegate 

exercising authority with respect to 

prohibited transaction exemptions to 

which this subpart applies. 

(d) Exemption transaction means the 

transaction or transactions for which an 

exemption is requested. 

(e) An individual exemption is an 

administrative exemption, granted 

under ERISA section 408(a), Code 

section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3), which applies only to the 

specific parties in interest and 

transactions named or otherwise 

defined in the exemption. 

(f) A party in interest means a person 

described in ERISA section 3(14) or 5 

U.S.C. 8477(a)(4) and includes a 

disqualified person, as defined in Code 

section 4975(e)(2). 

(g) Pooled fund means an account or 

fund for the collective investment of the 

assets of two or more unrelated plans, 

including (but not limited to) a pooled 

separate account maintained by an 

insurance company and a common or 

collective trust fund maintained by a 

bank or similar financial institution. 

(h) A qualified appraisal report is any 

appraisal report that: 

(1) Is prepared solely on behalf of the 

plan by a qualified independent 

appraiser; and 

(2) Satisfies all of the requirements set 

forth in § 2570.34(c)(4). 

(i) A qualified independent appraiser 

is any individual or entity with 

appropriate training, experience, and 

facilities to provide a qualified appraisal 

report on behalf of the plan regarding 

the particular asset or property 

appraised in the report, that is 

independent of and unrelated to: 

(1) Any party involved in the 

exemption transaction (as defined in 

paragaph (l) of this section); and 

(2) The qualified independent 

fiduciary, if one is present with respect 

to the exemption transaction; in general, 

the determination as to the 

independence of the appraiser is made 

by the Department on the basis of all 

relevant facts and circumstances. In 

making this determination, the 

Department will take into account the 

amount of the appraiser’s revenues and 

projected revenues for the current 

Federal income tax year (including 

amounts received for preparing the 

appraisal report) that will be derived 

from parties involved in the exemption 

transaction relative to the appraiser’s 

revenues from all sources for the 

appraiser’s prior Federal income tax 

year and the appraiser’s projected 

revenue for the current Federal income 

tax year as well as the appraiser’s 

related business interests. An appraiser 

will not be treated as independent if the 

revenues it receives or is projected to 

receive, within the current Federal 

income tax year, from parties involved 

in the exemption transaction are more 

than two percent of such appraiser’s 

annual revenues from all sources based 

upon either its prior Federal income tax 

year or the appraiser’s projected 

revenues for the current Federal income 

tax year, unless, in its sole discretion, 

the Department determines otherwise. 

(j) A qualified independent fiduciary 

is any individual or entity with 

appropriate training, experience, and 

facilities to act on behalf of the plan 

regarding the exemption transaction in 

accordance with the fiduciary duties 

and responsibilities prescribed by 

ERISA, that is independent of and 

unrelated to: Any party involved in the 

exemption transaction (as defined in 

paragraph (l) of this section) and any 

other party involved in the development 

of the exemption request. In general, the 

determination as to the independence of 

a fiduciary will be made by the 

Department on the basis of all relevant 

facts and circumstances. Among other 

things, the Department will consider 

whether the fiduciary has an interest in 

the subject transaction or future 

transactions of the same nature or type. 

In making this determination, the 

Department will also take into account, 

among other things, the amount of both 

the fiduciary’s revenues and projected 

revenues for the current Federal income 

tax year (including amounts received for 

preparing fiduciary reports) that will be 

derived from parties involved in the 

exemption transaction relative to the 

fiduciary’s revenues from all sources for 

the prior Federal income tax year or the 

fiduciary’s projected revenues from all 

sources for the current Federal income 

tax year. A fiduciary will not be treated 

as independent if the revenues it 

receives or is projected to receive, 

within the current Federal income tax 

year, from parties (and their affiliates) 

involved in the exemption transaction 

are more than two percent of either the 

fiduciary’s annual revenues from all 

sources based upon its prior Federal 

income tax year or the fiduciary’s 

projected revenue for the current 

Federal income tax year, unless, in its 

sole discretion, the Department 

determines otherwise. 

(k) A pre-submission applicant is a 

party that contacts the Department, 

either orally or in writing, to inquire 

whether a party with a particular fact 

pattern would need to submit an 

exemption application and, if so, what 

conditions and relief would be 

applicable. A party that contacts the 

Department to inquire broadly, without 

reference to a specific fact pattern, about 

prohibited transaction exemptions is not 

a pre-submission applicant. 

(l) A party involved in the exemption 

transaction includes: 

(1) A party in interest (as defined in 

paragraph (f) of this section); 

(2) Any party that is engaged in the 

exemption transaction or an affiliate of 

the party that is engaged in the 

exemption transaction; and 

(3) Any party providing services to 

either the plan or a party described in 

paragraph (1)(1) or (2) of this section 

with respect to the exemption 

transaction or its affiliates. 

§ 2570.32 Persons who may apply for 

exemptions and the administrative record. 

(a) The persons who may apply for 

exemptions are as follows: 

(1) Any party in interest to a plan who 

is or may be a party to the exemption 

transaction; 

(2) Any plan which is a party to the 

exemption transaction; or 

(3) In the case of an application for an 

exemption covering a class of parties in 

interest or a class of transactions, in 

addition to any person described in 

paragraphs (a)(1) and (2) of this section, 

an association or organization 

representing parties in interest who may 

be parties to the exemption transaction. 

(b) An application by or for a person 

described in paragraph (a) of this 

section may be submitted by the 

applicant or by an authorized 

representative. An application 

submitted by an authorized 

representative of the applicant must 

include proof of authority in the form 

of: 

(1) A power of attorney; or 

(2) A written certification from the 

applicant that the representative is 

authorized to file the application. 

(c) If the authorized representative of 

an applicant submits an application for 

an exemption to the Department 

together with proof of authority to file 

the application as required by paragraph 

(b) of this section, the Department will 

direct all correspondence and inquiries 

concerning the application to the 

representative unless requested to do 

otherwise by the applicant. 

(d)(1) The administrative record is 

open for public inspection, pursuant to 

§ 2570.51(a), from the date an applicant 

or pre-submission applicant provides 

any information or documentation to 

the Office of Exemption Determinations. 


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(2) The administrative record 

includes, but is not limited to: Any 

documents submitted to, and accepted 

by, the Department before the initial 

application, whether provided in 

writing by the applicant or presubmission applicant or as notes taken 

at a pre-submission conference; the 

initial exemption application and any 

modifications or supplements to the 

application; all correspondence with the 

applicant or pre-submission applicant, 

whether before or after the applicant’s 

submission of the exemption 

application; and any supporting 

information provided by the applicant 

or pre-submission applicant, whether 

provided orally or in writing (as well as 

any comments and testimony received 

by the Department in connection with 

an application). 

(3) If documents are required to be 

provided in writing, by either the 

applicant or the Department, the 

documents may be provided either by 

mail or electronically, unless otherwise 

indicated by the Department at its sole 

discretion. 

§ 2570.33 Applications the Department will 

not ordinarily consider. 

(a) The Department ordinarily will not 

consider: 

(1) An application that fails to include 

all the information required by 

§§ 2570.34 and 2570.35 (or fails to 

include current information) or 

otherwise fails to conform to the 

requirements in this subpart; or 

(2) An application involving a 

transaction or transactions which are 

the subject of an investigation for 

possible violations of ERISA, the Code, 

FERSA, or any other Federal or state 

law; or an application involving a party 

in interest who is the subject of such an 

investigation or who is a defendant in 

an action by the Department, the 

Internal Revenue Service, or any other 

regulatory entity to enforce ERISA, the 

Code, FERSA, or any other Federal or 

state laws. 

(b) An application for an individual 

exemption relating to a specific 

transaction or transactions ordinarily 

will not be considered if the Department 

has under consideration a class 

exemption relating to the same type of 

transaction or transactions. 

Notwithstanding the foregoing, the 

Department may consider such an 

application if the issuance of the final 

class exemption may not be imminent, 

and the Department determines that 

time constraints necessitate 

consideration of the transaction on an 

individual basis. 

(c) If a party, excluding a Federal, 

state, or other governmental entity, 

designates as confidential any 

information submitted in connection 

with its exemption request, the 

Department will not process the 

application unless and until the 

applicant withdraws its claim of 

confidentiality. By submitting an 

exemption application, an applicant 

consents to public disclosure, pursuant 

to § 2570.51, of the entire administrative 

record. 

(d) The Department will not engage a 

pre-submission applicant or its 

representative, whether through written 

correspondence or a conference, if the 

pre-submission applicant does not: 

(1) Identify and fully describe the 

exemption transaction; 

(2) Identify the applicant, the 

applicable plan(s), and the relevant 

parties to the exemption transaction; 

and 

(3) Set forth the prohibited 

transactions that the applicant believes 

are applicable. 

§ 2570.34 Information to be included in 

every exemption application. 

(a) All applications for exemptions 

must contain the following information: 

(1) The name(s), address(es), phone 

number(s), and email address(es) of the 

applicant(s); 

(2) A detailed description of the 

exemption transaction, including the 

identification of all the parties involved 

in the exemption transaction, a 

description of any larger integrated 

transaction of which the exemption 

transaction is a part, and a chronology 

of the events leading up to the 

transaction; 

(3) The identity, address, phone 

number, and email address of any 

representatives for the affected plan(s) 

and parties in interest and what 

individuals or entities they represent; 

(4) A description of: 

(i) The reason(s) for engaging in the 

exemption transaction; 

(ii) Any material benefit that may be 

received by a party involved in the 

exemption transaction as a result of the 

subject transaction (including the 

avoidance of any materially adverse 

outcome by a party as a result of 

engaging in the exemption transaction); 

and 

(iii) The costs and benefits of the 

exemption transaction to the affected 

plan(s), participants, and beneficiaries, 

including quantification of those costs 

and benefits to the extent possible; 

(5) A detailed description of the 

alternatives to the exemption 

transaction that did not involve a 

prohibited transaction and why those 

alternatives were not pursued; 

(6) The prohibited transaction 

provisions from which exemptive relief 

is requested and the reason why the 

exemption transaction would violate 

each such provision; 

(7) A description of each conflict of 

interest or potential instance of selfdealing that would be permitted if the 

exemption is granted; 

(8) Whether the exemption 

transaction is or has been the subject of 

an investigation or enforcement action 

by the Department, the Internal Revenue 

Service, or any other regulatory 

authority; and 

(9) The hardship or economic loss, if 

any, which would result to the person 

or persons on behalf of whom the 

exemption is sought, to affected plans, 

and to their participants and 

beneficiaries from denial of the 

exemption. 

(10) With respect to the exemption 

transaction’s definition of affiliate, if 

applicable, either a statement that the 

definition of affiliate set forth in 

§ 2570.31(a) is applicable or a statement 

setting forth why a different affiliate 

definition should be applied. 

(b) All applications for exemption 

must also contain the following: 

(1) A statement explaining why the 

requested exemption would meet the 

requirements of ERISA section 408(a) by 

being— 

(i) Administratively feasible for the 

Department; 

(ii) In the interests of affected plans 

and their participants and beneficiaries; 

and 

(iii) Protective of the rights of 

participants and beneficiaries of affected 

plans. 

(2) A statement that the exemption 

transaction either: 

(i)(A) Will be in the best interest of 

the plan and its participants and 

beneficiaries; 

(B) That all compensation received, 

directly or indirectly, by a party 

involved in the exemption transaction 

does not exceed reasonable 

compensation within the meaning of 

ERISA section 408(b)(2) and Code 

section 4975(d)(2); and 

(C) That all of the statements to the 

Department, the plan, or, if applicable, 

the qualified independent fiduciary or 

qualified independent appraiser about 

the exemption transaction and other 

relevant matters are not, at the time the 

statements are made, materially 

misleading; or 

(ii) Why the exemption standards in 

paragrpahs (b)(2)(i)(A) through (C) of 

this section should not be applicable to 

the exemption transaction. 

(iii) For purposes of this paragraph 

(b)(2), an exemption transaction is in the 

best interest of a plan if the plan 

fiduciary causing the plan to enter into 


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the transaction determines, with the 

care, skill, prudence, and diligence 

under the circumstances then 

prevailing, that a prudent person acting 

in a like capacity and familiar with such 

matters would, in the conduct of an 

enterprise of a like character and with 

like aims, enter into the exemption 

transaction based on the circumstances 

and needs of the plan. Such fiduciary 

shall not place the financial or other 

interests of itself, a party to the 

exemption transaction, or any affiliate 

ahead of the interests of the plan, or 

subordinate the plan’s interests to any 

party or affiliate. 

(3) With respect to the notification of 

interested persons required by 

§ 2570.43: 

(i) A description of the interested 

persons to whom the applicant intends 

to provide notice; 

(ii) The manner in which the 

applicant will provide such notice; and 

(iii) An estimate of the time the 

applicant will need to furnish notice to 

all interested persons following 

publication of a notice of the proposed 

exemption in the Federal Register. 

(4) If any party to the exemption 

transaction has requested either an 

advisory opinion from the Department 

or any similar opinion or guidance from 

another Federal, state, or regulatory 

body with respect to any issue relating 

to the exemption transaction— 

(i) A copy of the opinion, letter, or 

similar document concluding the 

Department’s or other entity’s action on 

the request; or 

(ii) If the Department or other entity 

has not yet concluded its action on the 

request: 

(A) A copy of the request or the date 

on which it was submitted and, solely 

with respect to an advisory opinion 

request to the Department, the 

Department’s correspondence control 

number as indicated in the 

acknowledgment letter; and 

(B) An explanation of the effect of the 

issuance of an advisory opinion by the 

Department or similar opinion or 

guidance from another Federal, state, or 

regulatory body would have upon the 

exemption transaction. 

(5) If the application is to be signed 

by anyone other than the party in 

interest seeking exemptive relief on his 

or her own behalf, a statement which— 

(i) Identifies the individual signing 

the application and his or her position 

or title; and 

(ii) Explains briefly the basis of his or 

her familiarity with the matters 

discussed in the application. 

(6)(i) A declaration in the following 

form: 

Under penalty of perjury, I declare that I 

am familiar with the matters discussed in 

this application and, to the best of my 

knowledge and belief, the representations 

made in this application are true and correct. 

(ii) This declaration must be dated 

and signed by: 

(A) The applicant, in its individual 

capacity, in the case of an individual 

party in interest seeking exemptive 

relief on his or her own behalf; 

(B) A corporate officer or partner 

where the applicant is a corporation or 

partnership; 

(C) A designated officer or official 

where the applicant is an association, 

organization or other unincorporated 

enterprise; or 

(D) The plan fiduciary that has the 

authority, responsibility, and control 

with respect to the exemption 

transaction where the applicant is a 

plan. 

(c) Statements and documents from a 

qualified independent appraiser, 

auditor, or accountant acting solely on 

behalf of the plan, such as appraisal 

reports, analyses of market conditions, 

audits, or financial documents 

submitted to support an application for 

exemption must be accompanied by a 

statement of consent from such 

appraiser, auditor, or accountant 

acknowledging that the statement is 

being submitted to the Department as 

part of an application for exemption. 

Such statements by the qualified 

independent appraiser, auditor, or 

accountant must also contain the 

following written information: 

(1) A signed and dated declaration 

under penalty of perjury that, to the best 

of the qualified independent appraiser’s, 

auditor’s, or accountant’s knowledge 

and belief, all of the representations 

made in such statement are true and 

correct; 

(2) A copy of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s engagement letter and, if 

applicable, contract with the plan 

describing the specific duties the 

appraiser, auditor, or accountant shall 

undertake. The letter or contract may 

not: 

(i) Include any provision that 

provides for the direct or indirect 

indemnification or reimbursement of 

the independent appraiser, auditor, or 

accountant by the plan or another party 

for any failure to adhere to its 

contractual obligations or to Federal and 

state laws applicable to the appraiser’s, 

auditor’s, or accountant’s work; or 

(ii) Waive any rights, claims or 

remedies of the plan or its participants 

and beneficiaries under ERISA, the 

Code, or other Federal and state laws 

against the independent appraiser, 

auditor, or accountant with respect to 

the exemption transaction; 

(3) A summary of the qualified 

independent appraiser’s, auditor’s, or 

accountant’s qualifications to serve in 

such capacity; 

(4) A detailed description of any 

relationship that the qualified 

independent appraiser, auditor, or 

accountant has had or may have with 

the plan or any party involved in the 

exemption transaction, or with any 

party or its affiliates involved in the 

development of the exemption request 

that may influence the appraiser, 

auditor, or accountant, including a 

description of any past engagements 

with the appraiser, auditor, or 

accountant; 

(5) A written appraisal report 

prepared by the qualified independent 

appraiser, acting solely on behalf of the 

plan, rather than, for example, on behalf 

of the plan sponsor, must satisfy the 

following requirements: 

(i) The report must describe the 

method(s) used in determining the fair 

market value of the subject asset(s) and 

an explanation of why such method best 

reflects the fair market value of the 

asset(s); 

(ii) The report must take into account 

any special benefit that a party involved 

in the exemption transaction may derive 

from control of the asset(s), such as from 

owning an adjacent parcel of real 

property or gaining voting control over 

a company; and 

(iii) The report must be current and 

not more than one year old from the 

date of the transaction, and there must 

be a written update by the qualified 

independent appraiser affirming the 

accuracy of the appraisal as of the date 

of the transaction; 

(6) If the subject of the appraisal 

report is real property, the qualified 

independent appraiser shall submit a 

written representation that he or she is 

a member of a professional organization 

of appraisers that can sanction its 

members for misconduct; 

(7) If the subject of the appraisal 

report is an asset other than real 

property, the qualified independent 

appraiser shall submit a written 

representation describing the appraiser’s 

prior experience in valuing assets of the 

same type; and 

(8) The qualified independent 

appraiser shall submit a written 

representation disclosing the percentage 

of its current revenue that is derived 

from any party involved in the 

exemption transaction with respect to 

both the prior Federal income tax year 

and current Federal income tax year; in 

general, such percentage shall be 

computed with respect to the two 


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separate disclosures by comparing, in 

fractional form: 

(i) The amount of the appraiser’s 

projected revenues from the current 

Federal income tax year (including 

amounts received from preparing the 

appraisal report) that will be derived 

from the parties involved in the 

exemption transaction (expressed as a 

numerator); and 

(ii) The appraiser’s revenues from all 

sources for the prior Federal income tax 

year (expressed as a denominator) or the 

appraiser’s projected revenues from all 

sources for the current Federal income 

tax year (expressed as a denominator). 

(d) For those exemption transactions 

requiring the retention of a qualified 

independent appraiser, the applicant 

must include: 

(1) A statement describing the process 

by which the independent appraiser 

was selected, including the due 

diligence performed, the potential 

independent appraiser candidates 

reviewed, and the references contacted; 

and 

(2) A statement that the independent 

appraiser has appropriate technical 

training and proficiency with respect to 

the specific details of the exemption 

transaction. 

(e) For those exemption transactions 

requiring the retention of a qualified 

independent fiduciary to represent the 

interest of the plan, the applicant must 

include: 

(1) A statement describing the process 

by which the independent fiduciary was 

selected, including the due diligence 

performed, the potential independent 

fiduciary candidates reviewed, and the 

references contacted; and 

(2) A statement that the independent 

fiduciary has appropriate technical 

training and proficiency with respect to: 

(i) ERISA and the Code; and 

(ii) The specific details of the 

exemption transaction. 

(f) For exemption transactions 

requiring the retention of a qualified 

independent fiduciary to represent the 

interests of the plan, a statement must 

be submitted by the independent 

fiduciary that contains the following 

written information: 

(1) A signed and dated declaration 

under penalty of perjury that, to the best 

of the qualified independent fiduciary’s 

knowledge and belief, all of the 

representations made in such statement 

are true and correct; 

(2) A copy of the qualified 

independent fiduciary’s engagement 

letter and, if applicable, contract with 

the plan describing the fiduciary’s 

specific duties. The letter or contract 

may not: 

(i) Contain any provisions that 

violates ERISA section 410; 

(ii) Include any provision that 

provides for the direct or indirect 

indemnification or reimbursement of 

the independent fiduciary by the plan or 

other party for any failure to adhere to 

its contractual obligations or to state or 

Federal laws applicable to the 

independent fiduciary’s work; or 

(iii) Waive any rights, claims, or 

remedies of the plan under ERISA, state, 

or Federal law against the independent 

fiduciary with respect to the exemption 

transaction; 

(3)(i) A statement that the 

independent fiduciary maintains 

fiduciary liability insurance in an 

amount that is sufficient to indemnify 

the plan for damages resulting from a 

breach by the independent fiduciary of 

either: 

(A) ERISA, the Code, or any other 

Federal or state law; or 

(B) Its contract or engagement letter. 

(ii) The insurance may not contain an 

exclusion for actions brought by the 

Secretary or any other Federal, state, or 

regulatory body; the plan; or plan 

participants or beneficiaries; 

(4) An explanation of the bases for the 

conclusion that the fiduciary is a 

qualified independent fiduciary, which 

also must include a summary of that 

person’s qualifications to serve in such 

capacity, as well as a description of any 

prior experience by that person or other 

demonstrated characteristics of the 

fiduciary (such as special areas of 

expertise) that render that person or 

entity suitable to perform its duties on 

behalf of the plan with respect to the 

exemption transaction; 

(5) A detailed description of any 

relationship that the qualified 

independent fiduciary has had or may 

have with a party involved in the 

exemption transaction; 

(6) An acknowledgement by the 

qualified independent fiduciary that it 

understands its duties and 

responsibilities under ERISA; is acting 

as a fiduciary of the plan with respect 

to the exemption transaction; has no 

material conflicts of interest with 

respect to the exemption transaction; 

and is not acting as an agent or 

representative of the plan sponsor; 

(7) The qualified independent 

fiduciary’s opinion on whether the 

exemption transaction would be in the 

interests of the plan and its participants 

and beneficiaries, protective of the 

rights of participants and beneficiaries 

of the plan, and in compliance with the 

standards set forth in paragraphs 

(b)(2)(i)(A) through (C) of this section, if 

applicable, along with a statement of the 

reasons on which the opinion is based; 

(8) Where the exemption transaction 

is continuing in nature, a declaration by 

the qualified independent fiduciary that 

it is authorized to take all appropriate 

actions to safeguard the interests of the 

plan, and will, during the pendency of 

the transaction: 

(i) Monitor the exemption transaction 

on behalf of the plan and its participants 

and beneficiaries on a continuing basis; 

(ii) Ensure that the exemption 

transaction remains in the interests of 

the plan and its participants and 

beneficiaries and, if not, take any 

appropriate actions available under the 

particular circumstances; and 

(iii) Enforce compliance with all 

conditions and obligations imposed on 

any party dealing with the plan with 

respect to the transaction; 

(9) The qualified independent 

fiduciary shall submit a written 

representation disclosing the percentage 

of the independent fiduciary’s current 

revenue that is derived from any party 

involved in the exemption transaction 

with respect to both the prior Federal 

income tax year and current Federal 

income tax year; in general, such 

percentage shall be computed with 

respect to the two disclosures by 

comparing in fractional form: 

(i) The amount of the independent 

fiduciary’s projected revenues from the 

current Federal income tax year that 

will be derived from the parties 

involved in the transaction (expressed 

as a numerator); and 

(ii) The independent fiduciary’s 

revenues from all sources (excluding 

fixed, non-discretionary retirement 

income) for the prior Federal income tax 

year (expressed as a denominator) and 

the independent fiduciary’s projected 

revenue from all sources (excluding 

fixed, non-discretionary retirement 

income) for the current Federal income 

tax year (expressed as a denominator); 

(10) A statement that the independent 

fiduciary has no conflicts of interest 

with respect to the exemption 

transaction that could affect the exercise 

of its best judgment as a fiduciary; 

(11) Either: 

(i) A statement that, within the last 

five years, the independent fiduciary 

has not been under investigation or 

examination by, and has not engaged in 

litigation, or a continuing controversy 

with, the Department, the Internal 

Revenue Service, the Justice 

Department, the Pension Benefit 

Guaranty Corporation, the Federal 

Retirement Thrift Investment Board, or 

any other Federal or state entity 

involving compliance with provisions of 

ERISA, the Code, FERSA, or other 

Federal or state law; or 


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(ii) A statement describing the 

applicable investigation, examination, 

litigation or controversy; and 

(12)(i) Either a statement that, within 

the last 13 years, the independent 

fiduciary has not been either convicted 

or released from imprisonment, 

whichever is later, as a result of: 

(A) Any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company, or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime described in 

ERISA section 411; or 

(B) Convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime, however 

denominated by the laws of the relevant 

foreign government, that is substantially 

equivalent to an offense described in: 

(1) And a description of the 

circumstances of any such conviction; 

or 

(2) A statement describing a 

conviction or release from 

imprisonment described in paragraph 

(f)(12)(i)(A) of this section or this 

paragrpah (f)(12)(i)(B). 

(ii) For purposes of this paragraph (f), 

a person shall be deemed to have been 

‘‘convicted’’ from the date of the 

judgment of the trial court, regardless of 

whether that judgment remains under 

appeal; and regardless of whether the 

foreign jurisdiction considers a trial 

court judgment final while under 

appeal. 

(g) Statements, as applicable, from 

other third-party experts, including but 

not limited to economists or market 

specialists, submitted on behalf of the 

plan to support an exemption 

application must be accompanied by a 

statement of consent from such expert 

acknowledging that the statement 

prepared on behalf of the plan is being 

submitted to the Department as part of 

an exemption application. Such 

statements must also contain the 

following written information: 

(1) A copy of the expert’s engagement 

letter and, if applicable, contract with 

the plan describing the specific duties 

the expert will undertake; 

(2) A summary of the expert’s 

qualifications to serve in such capacity; 

and 

(3) A detailed description of any 

relationship that the expert has had or 

may have with any party involved in the 

exemption transaction that may 

influence the actions of the expert. 

(h) An application for exemption may 

also include a draft of the requested 

exemption which describes the 

transaction and parties in interest for 

which exemptive relief is sought and 

the specific conditions under which the 

exemption would apply. 

§ 2570.35 Information to be included in 

applications for individual exemptions only. 

(a) Except as provided in paragraph 

(c) of this section, every application for 

an individual exemption must include, 

in addition to the information specified 

in § 2570.34, the following information: 

(1) The name, address, email address, 

telephone number, and type of plan or 

plans to which the requested exemption 

applies; 

(2) The Employer Identification 

Number (EIN) and the plan number (PN) 

used by such plan or plans in all 

reporting and disclosure required by the 

Department (individuals should not 

submit Social Security numbers); 

(3) Whether any plan or trust affected 

by the requested exemption has ever 

been found by the Department, the 

Internal Revenue Service, or by a court 

to have violated the exclusive benefit 

rule of Code section 401(a), Code 

section 4975(c)(1), ERISA sections 406 

or 407(a), or 5 U.S.C. 8477(c)(3), 

including a description of the 

circumstances surrounding such 

violation; 

(4) Whether any relief under ERISA 

section 408(a), Code section 4975(c)(2), 

or 5 U.S.C. 8477(c)(3) has been 

requested by, or provided to, the 

applicant or any of the parties involved 

in the exemption transaction and, if so, 

the exemption application number or 

the prohibited transaction exemption 

number; 

(5) Whether the applicant or any of 

the parties involved in the exemption 

transaction are currently, or have been 

within the last five years, defendants in 

any lawsuits or criminal actions 

concerning their conduct as a fiduciary 

or party in interest with respect to any 

plan (other than lawsuits with respect to 

a routine claim for benefits), and a 

description of the circumstances of the 

lawsuits or criminal actions; 

(6)(i) Whether the applicant 

(including any person described in 

§ 2570.34(b)(6)(ii)) or any of the parties 

involved in the exemption transaction 

has, within the last 13 years, been either 

convicted or released from 

imprisonment, whichever is later, as a 

result of: 

(A) Any felony involving abuse or 

misuse of such person’s position or 

employment with an employee benefit 

plan or a labor organization; any felony 

arising out of the conduct of the 

business of a broker, dealer, investment 

adviser, bank, insurance company, or 

fiduciary; income tax evasion; any 

felony involving the larceny, theft, 

robbery, extortion, forgery, 

counterfeiting, fraudulent concealment, 

embezzlement, fraudulent conversion, 

or misappropriation of funds or 

securities; conspiracy or attempt to 

commit any such crimes or a crime of 

which any of the foregoing crimes is an 

element; or any crime described in 

ERISA section 411; or 

(B) Convicted by a foreign court of 

competent jurisdiction or released from 

imprisonment, whichever is later, as a 

result of any crime, however 

denominated by the laws of the relevant 

foreign government, that is substantially 

equivalent to an offense described in 

paragraph (a)(6)(i)(A) of this section and 

a description of the circumstances of 

any such conviction in paragraph 

(a)(6)(i)(A) of this section or this 

paragraph (a)(6)(i)(B). 

(ii) For purposes of this paragraph (a), 

a person shall be deemed to have been 

‘‘convicted’’ from the date of the 

judgment of the trial court, regardless of 

whether that judgment remains under 

appeal and regardless of whether the 

foreign jurisdiction considers a trial 

court judgment final while under 

appeal; 

(7) Whether, within the last five years, 

any plan affected by the exemption 

transaction, or any party involved in the 

exemption transaction, has been under 

investigation or examination by, or has 

been engaged in litigation or a 

continuing controversy with, the 

Department, the Internal Revenue 

Service, the Justice Department, the 

Pension Benefit Guaranty Corporation, 

the Federal Retirement Thrift 

Investment Board, or any other 

regulatory body involving compliance 

with provisions of ERISA, the Code, 

FERSA, or any other Federal or state 

law. If so, the applicant must provide a 

brief statement describing the 

investigation, examination, litigation or 

controversy. The Department reserves 

the right to require the production of 

additional information or 

documentation concerning any of the 

above matters. In this regard, a denial of 

the exemption application will result 

from a failure to provide additional 

information requested by the 

Department; 


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(8) Whether any plan affected by the 

requested exemption has experienced a 

reportable event under ERISA section 

4043, and, if so, a description of the 

circumstances of any such reportable 

event; 

(9) Whether a notice of intent to 

terminate has been filed under ERISA 

section 4041 respecting any plan 

affected by the requested exemption, 

and, if so, a description of the 

circumstances for the issuance of such 

notice; 

(10) Names, addresses, phone 

numbers, and email addresses of all 

parties involved in the subject 

transaction; 

(11) The estimated number of 

participants and beneficiaries in each 

plan affected by the requested 

exemption as of the date of the 

application; 

(12) The percentage of the fair market 

value of the total assets of each affected 

plan that is involved in the exemption 

transaction. If the exemption transaction 

includes the acquisition of an asset by 

the plan, the fair market value of the 

asset to be acquired must be included in 

both the numerator and denominator of 

the fraction; 

(13) Whether the exemption 

transaction has been consummated or 

will be consummated only if the 

exemption is granted; 

(14) If the exemption transaction has 

already been consummated: 

(i) The circumstances which resulted 

in plan fiduciaries causing the plan(s) to 

engage in the transaction before 

obtaining an exemption from the 

Department; 

(ii) Whether the transaction has been 

terminated; 

(iii) Whether the transaction has been 

corrected as defined in Code section 

4975(f)(5); 

(iv) Whether Form 5330, Return of 

Excise Taxes Related to Employee 

Benefit Plans, has been filed with the 

Internal Revenue Service with respect to 

the transaction; and 

(v) Whether any excise taxes due 

under Code section 4975(a) and (b), or 

any civil penalties due under ERISA 

section 502(i) or (l) by reason of the 

transaction have been paid. If so, the 

applicant should submit documentation 

(e.g., a canceled check) demonstrating 

that the excise taxes or civil penalties 

were paid; 

(15) The name of every person who 

has authority or investment discretion 

over any plan assets involved in the 

exemption transaction and the 

relationship of each such person to the 

parties in interest involved in the 

exemption transaction and the affiliates 

of such parties in interest; 

(16) Whether or not the assets of the 

affected plan(s) are invested, directly or 

indirectly, in loans to any party 

involved in the exemption transaction, 

in property leased to any party involved 

in the exemption transaction, or in 

securities issued by any party involved 

in the exemption transaction, and, if 

such investments exist, a statement for 

each of these three types of investments 

which indicates: 

(i) The type of investment to which 

the statement pertains; 

(ii) The aggregate fair market value of 

all investments of this type as reflected 

in the plan’s most recent annual report; 

(iii) The approximate percentage of 

the fair market value of the plan’s total 

assets as shown in such annual report 

that is represented by all investments of 

this type; and 

(iv) The statutory or administrative 

exemption covering these investments, 

if any; 

(17) The approximate aggregate fair 

market value of the total assets of each 

affected plan; 

(18) The person(s) or entity who will 

bear the costs of: 

(i) The exemption application; 

(ii) Any commissions, fees, or costs 

associated with the exemption 

transaction, and any related transaction; 

and 

(iii) Notifying interested persons; 

provided, in each case, that the plan 

may not bear the costs of the exemption 

application, commissions, fees, and 

costs incurred to notify interested 

persons unless the Department 

determines, at its sole discretion, that a 

compelling circumstance exists that 

necessitates the payment of these 

expenses by the plan; 

(19) Whether an independent 

fiduciary is or will be involved in the 

exemption transaction and, if so, the 

names of the persons who will bear the 

cost of the fee payable to such fiduciary; 

and 

(20) Any prior transaction between: 

(i) The plan or plan sponsor; and 

(ii) A party involved in the exemption 

transaction. 

(b) Each application for an individual 

exemption must also include: 

(1) True copies of all contracts, deeds, 

agreements, and instruments, as well as 

relevant portions of plan documents, 

trust agreements, and any other 

documents bearing on the exemption 

transaction; 

(2) A discussion of the facts relevant 

to the exemption transaction that are 

reflected in the documents listed in 

paragraph (b)(1) of this section and an 

analysis of their bearing on the 

requested exemption; 

(3) A copy of the most recent financial 

statements of each plan affected by the 

requested exemption; and 

(4) A net worth statement with respect 

to any party that is providing a personal 

guarantee with respect to the exemption 

transaction. 

(c) Special rules for applications for 

individual exemption involving pooled 

funds are as follows: 

(1) The information required by 

paragraphs (a)(8) through (12) of this 

section is not required to be furnished 

in an application for individual 

exemption involving one or more 

pooled funds. 

(2) The information required by 

paragraphs (a)(1) through (7) and (13) 

through (19) of this section and by 

paragraphs (b)(1) through (3) of this 

section must be furnished in reference 

to the pooled fund, rather than to the 

plans participating therein. (For 

purposes of this paragraph (c)(2), the 

information required by paragraph 

(a)(16) of this section relates solely to 

other pooled fund transactions with, 

and investments in, parties in interest 

involved in the exemption transaction 

which are also sponsors of plans which 

invest in the pooled fund.) 

(3) The following information must 

also be furnished— 

(i) The estimated number of plans that 

are participating (or will participate) in 

the pooled fund; and 

(ii) The minimum and maximum 

limits imposed by the pooled fund (if 

any) on the portion of the total assets of 

each plan that may be invested in the 

pooled fund. 

(4) Additional requirements for 

applications for individual exemptions 

involving pooled funds in which certain 

plans participate are as follows: 

(i) This paragraph (c)(4) applies to any 

application for an individual exemption 

involving one or more pooled funds in 

which any plan participating therein— 

(A) Invests an amount which exceeds 

20 percent of the total assets of the 

pooled fund; or 

(B) Covers employees of: 

(1) The party sponsoring or 

maintaining the pooled fund, or any 

affiliate of such party; or 

(2) Any fiduciary with investment 

discretion over the pooled fund’s assets, 

or any affiliate of such fiduciary. 

(ii) The exemption application must 

include, with respect to each plan 

described in paragraph (c)(4)(i) of this 

section, the information required by 

paragraphs (a)(1) through (3), (5) 

through (7), (10), (12) through (16), and 

(18) and (19) of this section. The 

information required by this paragraph 

(c)(4)(ii) must be furnished in reference 

to the plan’s investment in the pooled 


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fund (e.g., the names, addresses, phone 

numbers, and email addresses of all 

fiduciaries responsible for the plan’s 

investment in the pooled fund 

(paragraph (a)(10) of this section), the 

percentage of the assets of the plan 

invested in the pooled fund (paragraph 

(a)(12) of this section), whether the 

plan’s investment in the pooled fund 

has been consummated or will be 

consummated only if the exemption is 

granted (paragraph (a)(13) of this 

section, etc.). 

(iii) The information required by 

paragraph (c)(4) of this section is in 

addition to the information required by 

paragraphs (c)(2) and (3) of this section 

relating to information furnished by 

reference to the pooled fund. 

(5) The special rule and the additional 

requirements described in paragraphs 

(c)(1) through (4) of this section do not 

apply to an individual exemption 

request solely for the investment by a 

plan in a pooled fund. Such an 

application must provide the 

information required by paragraphs (a) 

and (b) of this section. 

(d)(1) Generally, the Department will 

consider exemption requests for 

retroactive relief only when: 

(i) The safeguards necessary for the 

grant of a prospective exemption were 

in place at the time at which the parties 

entered into the transaction; and 

(ii) The plan and its participants and 

beneficiaries have not been harmed by 

the transaction. An applicant for a 

retroactive exemption must demonstrate 

that the responsible plan fiduciaries 

acted in good faith by taking all 

appropriate steps necessary to protect 

the plan from abuse, loss, and risk at the 

time of the transaction. An applicant 

should further explain and describe 

whether the transaction could have been 

performed without engaging in a 

prohibited transaction. 

(2) Among the factors that the 

Department will take into account in 

making a finding that an applicant acted 

in good faith include the following: 

(i) The involvement of an 

independent fiduciary before a 

transaction occurs who acts on behalf of 

the plan and is qualified to negotiate, 

approve, and monitor the transaction; 

provided, however, the Department may 

consider, at its sole discretion, an 

independent fiduciary’s appointment 

and retrospective review after 

completion of the exemption transaction 

due to exigent circumstances; 

(ii) The existence of a 

contemporaneous appraisal by a 

qualified independent appraiser or 

reference to an objective third party 

source, such as a stock or bond index; 

(iii) The existence of a bidding 

process or evidence of comparable fair 

market transactions with unrelated third 

parties; 

(iv) That the applicant has submitted 

an accurate and complete exemption 

application that contains documentation 

of all necessary and relevant facts and 

representations upon which the 

applicant relied. In this regard, the 

Department will accord appropriate 

weight to facts and representations 

which are prepared and certified by a 

source independent of the applicant; 

(v) That the applicant has submitted 

evidence that the plan fiduciary did not 

engage in an act or transaction with 

respect to which the fiduciary should 

have known, consistent with its ERISA 

fiduciary duties and responsibilities, 

was prohibited under ERISA section 406 

and/or Code section 4975. In this regard, 

the Department will accord appropriate 

weight to the submission of a 

contemporaneous, reasoned legal 

opinion of counsel, upon which the 

plan fiduciary relied in good faith before 

engaging in the act or transaction; 

(vi) That the applicant has submitted 

a statement of the circumstances which 

prompted the submission of the 

application for exemption and the steps 

taken by the applicant with regard to the 

transaction upon discovery of the 

violation; 

(vii) That the applicant has submitted 

a statement, prepared and certified by 

an independent person familiar with the 

types of transactions for which relief is 

requested, demonstrating that the terms 

and conditions of the transaction 

(including, in the case of an investment, 

the return in fact realized by the plan) 

were at least as favorable to the plan as 

that obtainable in a similar transaction 

with an unrelated party; and 

(viii) Such other undertakings and 

assurances with respect to the plan and 

its participants that may be offered by 

the applicant which are relevant to the 

criteria under ERISA section 408(a) and 

Code section 4975(c)(2). 

(3) The Department, as a general 

matter, will not consider requests for 

retroactive exemptions where 

transactions or conduct with respect to 

which an exemption is requested 

resulted in a loss to the plan, as 

determined pursuant to the facts 

existing at the time of the exemption 

application. In addition, the Department 

will not consider requests for 

exemptions where the transactions are 

inconsistent with the general fiduciary 

responsibility provisions of ERISA 

sections 403 or 404 or the exclusive 

benefit requirements of Code section 

401(a). 

§ 2570.36 Where to file an application. 

The Department’s prohibited 

transaction exemption program is 

administered by the Employee Benefits 

Security Administration (EBSA). Any 

exemption application governed by this 

subpart may be emailed to the 

Department at e-OED@dol.gov. The 

applicant is not required to submit a 

paper copy if an electronic copy is 

submitted. If the applicant wants to 

submit a paper copy of the application, 

it may be mailed via first-class mail to: 

Employee Benefits Security 

Administration, Office of Exemption 

Determinations, U.S. Department of 

Labor, 200 Constitution Avenue NW, 

Suite 400 Washington, DC 20210 or via 

private carrier service to Employee 

Benefit Security Administration, U.S. 

Department of Labor, Office of 

Exemption Determinations, 122 C Street 

NW, Suite 400, Washington, DC 20001– 

2109. The mail or private carrier service 

addresses, however, may be subject to 

change, and the applicant should 

confirm the address with the Office of 

Exemption Determinations before 

submitting a paper copy of an 

application. 

§ 2570.37 Duty to amend and supplement 

exemption applications. 

(a) During the Department’s 

consideration of an exemption request, 

and following any grant by the 

Department of an exemption request, an 

applicant must promptly notify the 

Department in writing if he or she 

discovers that any material fact or 

representation contained in the 

application or in any documents or 

testimony provided in support of the 

application was inaccurate at the time it 

was provided in support of the 

application. If any material fact or 

representation changes during this 

period, or if anything occurs that may 

affect the continuing accuracy of any 

such fact or representation, the 

applicant must promptly notify the 

Department in writing of the change. In 

addition, an applicant must promptly 

notify the Department in writing if it 

learns that a material fact or 

representation has been omitted from 

the exemption application. 

(b) If, at any time during the pendency 

of an exemption application, the 

applicant or any other party who would 

participate in the exemption transaction 

becomes the subject of an investigation 

or enforcement action by the 

Department, the Internal Revenue 

Service, the Justice Department, the 

Pension Benefit Guaranty Corporation, 

the Federal Retirement Thrift 

Investment Board, or any other Federal 

or state governmental entity involving 


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compliance with provisions of ERISA, 

provisions of the Code relating to 

employee benefit plans, or provisions of 

FERSA relating to the Federal Thrift 

Savings Fund, the applicant must 

promptly notify the Department. 

(c) The Department may require an 

applicant to provide any documentation 

it considers necessary to verify any 

statements contained in the application 

or in supporting materials or 

documents. 

§ 2570.38 Tentative denial letters. 

(a) If, after reviewing an exemption 

file, the Department tentatively 

concludes that it will not propose or 

grant the exemption, it will notify the 

applicant in writing, except as provided 

in paragraph (b) of this section. At the 

same time, the Department will provide 

a brief statement of the reasons for its 

tentative denial. 

Note 1 to paragraph (a). As referenced in 

§ 2570.33(a)(1), the Department will not hold 

a conference with, or issue a tentative denial 

letter to, an applicant who does not submit 

a complete application, or an applicant who 

does not provide current information. 

(b) An applicant will have 20 days 

from the date of a tentative denial letter, 

unless the time period is extended by 

the Department at its sole discretion, to 

request a conference under § 2570.40 

and/or to notify the Department of its 

intent to submit additional information 

under § 2570.39. If the Department does 

not receive a request for a conference or 

a notification of intent to submit 

additional information within that time, 

it will issue a final denial letter 

pursuant to § 2570.41. 

§ 2570.39 Opportunities to submit 

additional information. 

(a) An applicant may notify the 

Department of its intent to submit 

additional information supporting an 

exemption application by telephone, by 

letter sent to the address furnished in 

the applicant’s tentative denial letter, or 

electronically to the email address 

provided in the applicant’s tentative 

denial letter. At the same time, the 

applicant should indicate generally the 

type of information that will be 

submitted. 

(b) The additional information an 

applicant intends to provide in support 

of the application must be in writing 

and be received by the Department 

within 40 days from the date the 

Department issues the tentative denial 

letter unless the time period is extended 

by the Department at its sole discretion. 

All such information must be 

accompanied by a declaration under 

penalty of perjury attesting to the truth 

and correctness of the information 

provided, which is dated and signed by 

a person qualified under § 2570.34(b)(6) 

to sign such a declaration. The 

information may be submitted either 

electronically or by mail. 

(c) If, for reasons beyond its control, 

an applicant is unable to submit all the 

additional information he or she intends 

to provide in support of his or her 

application within the period described 

in paragraph (b) of this section, he or 

she may request an extension of time to 

furnish the information. Such requests 

must be made before the expiration of 

the time period described in paragraph 

(b), and the request will be granted, in 

the Department’s sole discretion, only in 

unusual circumstances and for a limited 

period as determined by the 

Department. The request may be made 

by telephone, mail, or electronically. 

(d) The Department will issue, 

without further notice, either by mail or 

electronically, a final denial letter 

denying the requested exemption 

pursuant to § 2570.41 where— 

(1) The Department has not received 

the additional information that the 

applicant stated his or her intention to 

submit within the period described in 

paragraph (b) of this section, or within 

any additional period granted pursuant 

to paragraph (c) of this section; and 

(2) The applicant did not request a 

conference pursuant to § 2570.38(b). 

§ 2570.40 Conferences. 

(a) Any conference between the 

Department and an applicant pertaining 

to a requested exemption will be held in 

Washington, DC, except that a telephone 

or electronic conference will be held at 

the applicant’s request. 

(b) An applicant is entitled to only 

one conference with respect to any 

exemption application. The Department 

may hold additional conferences at its 

sole discretion if it determines 

additional conference(s) are appropriate. 

An applicant will not be entitled to a 

conference, however, where the 

Department has held a hearing on the 

exemption under either § 2570.46 or 

§ 2570.47. 

(c) Insofar as possible, conferences 

will be scheduled as joint conferences 

with all applicants present where: 

(1) More than one applicant has 

requested an exemption with respect to 

the same or similar types of 

transactions; 

(2) The Department is considering the 

applications together as a request for a 

class exemption; 

(3) The Department contemplates not 

granting the exemption; and 

(4) More than one applicant has 

requested a conference. 

(d) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b) and also has submitted 

additional information pursuant to 

§ 2570.39, the Department will schedule 

a conference under this section for a 

date and time that occurs within 20 

days after the date on which the 

Department has provided either oral or 

written notification to the applicant 

that, after reviewing the additional 

information, it is still not prepared to 

propose the requested exemption or a 

later date at the sole discretion of the 

Department. If, for reasons beyond its 

control, the applicant cannot attend a 

conference within the time limit 

described in this paragraph (d), the 

applicant may request an extension of 

time for the scheduling of a conference, 

provided that such request is made 

before the expiration of the time limit. 

The Department, at its sole discretion, 

will only grant such an extension in 

unusual circumstances and for a brief 

period. 

(e) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b) but has not expressed an 

intent to submit additional information 

in support of the exemption application 

as provided in § 2570.39, the 

Department will schedule a conference 

under this section for a date and time 

that occurs within 40 days after the date 

of the issuance of the tentative denial 

letter described in § 2570.38(a) or a later 

date at the sole discretion of the 

Department. If, for reasons beyond its 

control, the applicant cannot attend a 

conference within the time limit 

described in this paragraph (e), the 

applicant may request an extension of 

time for the scheduling of a conference, 

provided that such request is made 

before the expiration of the time limit. 

The Department, at its sole discretion, 

will only grant such an extension in 

unusual circumstances and for a brief 

period. 

(f) In instances where the applicant 

has requested a conference pursuant to 

§ 2570.38(b), has notified the 

Department of its intent to submit 

additional information pursuant to 

§ 2570.39, and has failed to furnish 

such information within 40 days from 

the date of the tentative denial letter, the 

Department will schedule a conference 

under this section for a date and time 

that occurs within 60 days after the date 

of the issuance of the tentative denial 

letter described in § 2570.38(a) or a later 

date as determined at the sole discretion 

of the Department. If, for reasons 

beyond its control, the applicant cannot 

attend a conference within the time 

limit described in this paragraph (f), the 

applicant may request an extension of 


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14748 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 

1To be added in instances where the Department 

requires the applicant to furnish a Summary of 

Proposed Exemption to interested persons as 

described in paragrpah (d) of this section. 

2The applicant will write in this space the date 

of the last day of the time period specified in the 

notice of proposed exemption. 

3To be added in the case of an exemption that 

provides relief from section 406(b) of ERISA or 

corresponding sections of the Code or FERSA. 

4The applicant will fill in the room number of 

the Office of Exemptions Determinations. As of 

[date of publication of the final regulation], the 

room number of the Office of Exemption 

Determinations is N–5700. 

5The applicant will fill in the exemption 

application number, which is stated in the notice 

of proposed exemption, as well as in all 

correspondence from the Department to the 

applicant regarding the application. 

time for the scheduling of a conference, 

provided that such request is made 

before the expiration of the time limit. 

The Department, at its sole discretion, 

will only grant such an extension in 

unusual circumstances and for a brief 

period. 

(g) If the applicant fails to either 

timely schedule or appear for a 

conference agreed to by the Department 

pursuant to this section, the applicant 

will be deemed to have waived its right 

to a conference. 

(h) Within 20 days after the date of 

any conference held under this section 

or a later date at the sole discretion of 

the Department, the applicant may 

submit to the Department (electronically 

or in paper form) any additional written 

data, arguments, or precedents 

discussed at the conference but not 

previously or adequately presented in 

writing. If, for reasons beyond its 

control, the applicant is unable to 

submit the additional information 

within this time limit, the applicant 

may request an extension of time to 

furnish the information, provided that 

such request is made before the 

expiration of the time limit described in 

this paragraph (h). The Department, at 

its sole discretion, will only grant such 

an extension in unusual circumstances 

and for a brief period. 

(i) The Department, at its sole 

discretion, may hold a conference with 

any party, including the qualified 

independent fiduciary or the qualified 

independent appraiser, regarding any 

matter related to an exemption request 

without the presence of the applicant or 

other parties to the exemption 

transaction, or their representatives. 

Any such conferences may occur in 

addition to the conference with the 

applicant described in paragraph (b) of 

this section. 

§ 2570.41 Final denial letters. 

The Department will issue a final 

denial letter denying a requested 

exemption, either by mail or 

electronically, where: 

(a) Prior to issuing a tentative denial 

letter under § 2570.38 or conducting a 

hearing on the exemption under either 

§ 2570.46 or § 2570.47, the Department 

determines, at its sole discretion, that: 

(1) The applicant has failed to submit 

information requested by the 

Department in a timely manner; 

(2) The information provided by the 

applicant does not meet the 

requirements of §§ 2570.34 and 

2570.35; or 

(3) If a conference has been held 

between the Department and the 

applicant prior to the issuance of a 

tentative denial letter during which the 

Department and the applicant addressed 

the reasons for denial that otherwise 

would have been set forth in a tentative 

denial letter pursuant to § 2570.38; 

(b) The conditions for issuing a final 

denial letter specified in § 2570.38(b) or 

§ 2570.39(d) are satisfied; 

(c) After issuing a tentative denial 

letter under § 2570.38 and considering 

the entire record in the case, including 

all written information submitted 

pursuant to §§ 2570.39 and 2570.40, the 

Department decides not to propose an 

exemption or to withdraw an exemption 

already proposed; 

(d) After proposing an exemption and 

conducting a hearing on the exemption 

under either § 2570.46 or § 2570.47 and 

after considering the entire record in the 

case, including the record of the hearing 

and any public comments, the 

Department decides to withdraw the 

proposed exemption; or 

(e) The applicant either: 

(1) Asks to withdraw the exemption 

application; or 

(2) Communicates to the Department 

that it is not interested in continuing the 

application process. 

§ 2570.42 Notice of proposed exemption. 

If the Department tentatively decides 

that an administrative exemption is 

warranted, it will publish a notice of a 

proposed exemption in the Federal 

Register. In addition to providing notice 

of the pendency of the exemption before 

the Department, the notice will: 

(a) Explain the exemption transaction 

and summarize the information and 

reasons in support of proposing the 

exemption; 

(b) Describe the scope of relief and 

any conditions of the proposed 

exemption; 

(c) Inform interested persons of their 

right to submit comments to the 

Department (either electronically or in 

writing) relating to the proposed 

exemption and establish a deadline for 

receipt of such comments; and 

(d) Where the proposed exemption 

includes relief from the prohibitions of 

ERISA section 406(b), Code section 

4975(c)(1)(E) or (F), or FERSA section 

8477(c)(2), inform interested persons of 

their right to request a hearing under 

§ 2570.46 and establish a deadline for 

receipt of requests for such hearings. 

§ 2570.43 Notification of interested 

persons by applicant. 

(a) If a notice of proposed exemption 

is published in the Federal Register in 

accordance with § 2570.42, the 

applicant must notify interested persons 

of the pendency of the exemption in the 

manner and within the time period 

specified in the application. If the 

Department determines that this 

notification would be inadequate, the 

applicant must obtain the Department’s 

consent as to the manner and time 

period of providing the notice to 

interested persons. Any such 

notification must include: 

(1) A copy of the notice of proposed 

exemption as published in the Federal 

Register; and 

(2) A supplemental statement in the 

following form: 

You are hereby notified that the United 

States Department of Labor is considering 

granting an exemption from the prohibited 

transaction restrictions of the Employee 

Retirement Income Security Act of 1974, the 

Internal Revenue Code of 1986, or the 

Federal Employees’ Retirement System Act of 

1986. The exemption under consideration is 

summarized in the enclosed [Summary of 

Proposed Exemption, and described in 

greater detail in the accompanying] 1Notice 

of Proposed Exemption. As a person who 

may be affected by this exemption, you have 

the right to comment on the proposed 

exemption by [date].2 [If you may be 

materially affected by the grant of the 

exemption, you also have the right to request 

a hearing on the exemption by [date].] 3

All comments and/or requests for a hearing 

should be addressed to the Office of 

Exemption Determinations, Employee 

Benefits Security Administration, Room 

ll,4 U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, DC 

20210, ATTENTION: Application No. ll.5

Comments and hearing requests may also be 

transmitted to the Department electronically 

at e-OED@dol.gov or at https://

www.regulations.gov (follow instructions for 

submission), and should prominently 

reference the application number listed 

above. Individuals submitting comments or 

requests for a hearing on this matter are 

advised not to disclose sensitive personal 

data, such as social security numbers or 

information that they consider confidential 

or otherwise protected. 

The Department will make no final 

decision on the proposed exemption until it 

reviews the comments received in response 

to the enclosed notice. If the Department 

decides to hold a hearing on the exemption 

request before making its final decision, you 


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Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 14749 

will be notified of the time and place of the 

hearing. 

(b) The method used by an applicant 

to furnish notice to interested persons 

must be reasonably calculated to ensure 

that interested persons actually receive 

the notice. In all cases, personal 

delivery and delivery by first-class mail 

will be considered reasonable methods 

of furnishing notice. If the applicant 

elects to furnish notice electronically, 

he or she must provide satisfactory 

proof that the entire class of interested 

persons will be able to receive the 

notice. 

(c) After furnishing the notification 

described in paragraph (a) of this 

section, an applicant must provide the 

Department with a written statement 

confirming that notice was furnished in 

accordance with the requirements in 

paragraph (b) of this section. This 

statement must be accompanied by a 

declaration under penalty of perjury 

attesting to the truth of the information 

provided in the statement and signed by 

a person qualified under § 2570.34(b)(6) 

to sign such a declaration. No 

exemption will be granted until such a 

statement and its accompanying 

declaration have been furnished to the 

Department. 

(d) In addition to the provision of 

notification required by paragraph (a) of 

this section, the Department, in its 

discretion, may also require an 

applicant to furnish interested persons 

with a brief summary of the proposed 

exemption (Summary of Proposed 

Exemption), written in a manner 

calculated to be understood by the 

average recipient, which objectively 

describes: 

(1) The exemption transaction and the 

parties in interest thereto; 

(2) Why such transaction would 

violate the prohibited transaction 

provisions of ERISA, the Code, and/or 

FERSA from which relief is sought; 

(3) The reasons why the plan seeks to 

engage in the transaction; and 

(4) The conditions and safeguards 

proposed to protect the plan and its 

participants and beneficiaries from 

potential abuse or unnecessary risk of 

loss in the event the Department grants 

the exemption. 

(e) Applicants who are required to 

provide interested persons with the 

Summary of Proposed Exemption 

described in paragraph (d) of this 

section shall furnish the Department 

with a copy of such summary for review 

and approval prior to its distribution to 

interested persons. Such applicants 

shall also provide confirmation to the 

Department that the Summary of 

Proposed Exemption was furnished to 

interested persons as part of the written 

statement and declaration required of 

exemption applicants by paragraph (c) 

of this section. 

§ 2570.44 Withdrawal of exemption 

applications. 

(a) An applicant may withdraw an 

application for an exemption at any 

time by oral or written (including 

electronic) notice to the Department. A 

withdrawn application generally shall 

not prejudice any subsequent 

applications for an exemption submitted 

by an applicant. 

(b) Upon receiving an applicant’s 

notice of withdrawal regarding an 

application for an individual 

exemption, the Department will issue a 

final denial letter in accordance with 

§ 2570.41(e) and will terminate all 

proceedings relating to the application. 

If a notice of proposed exemption has 

been published in the Federal Register, 

the Department will publish a notice 

withdrawing the proposed exemption. 

(c) Upon receiving an applicant’s 

notice of withdrawal regarding an 

application for a class exemption or for 

an individual exemption that is being 

considered with other applications as a 

request for a class exemption, the 

Department will inform any other 

applicants for the exemption of the 

withdrawal. The Department will 

continue to process other applications 

for the same exemption. If all applicants 

for a particular class exemption 

withdraw their applications, the 

Department may either terminate all 

proceedings relating to the exemption or 

propose the exemption on its own 

motion. 

(d) If, following the withdrawal of an 

exemption application, an applicant 

decides to reapply for the same 

exemption, he or she may contact the 

Department in writing (including 

electronically) to request that the 

application be reinstated. The applicant 

should refer to the application number 

assigned to the original application. If, 

at the time the original application was 

withdrawn, any additional information 

to be submitted to the Department under 

§ 2570.39 was outstanding, that 

information must accompany the 

request for reinstatement of the 

application. The applicant must also 

update all previously furnished 

information to the Department in 

connection with a withdrawn 

application. 

(e) Any request for reinstatement of a 

withdrawn application submitted, in 

accordance with paragraph (d) of this 

section, will be granted by the 

Department, and the Department will 

take whatever steps remained at the 

time the application was withdrawn to 

process the application. 

(f) Following the withdrawal of an 

exemption application, the 

administrative record will remain 

subject to public inspection and copy 

pursuant to § 2570.51. 

§ 2570.45 Requests for reconsideration. 

(a) The Department will entertain one 

request for reconsideration of an 

exemption application that has been 

finally denied pursuant to § 2570.41 if 

the applicant presents in support of the 

application significant new facts or 

arguments, which, for good reason, 

could not have been submitted for the 

Department’s consideration during its 

initial review of the exemption 

application. 

(b) A request for reconsideration of a 

previously denied application must be 

made within 180 days after the issuance 

of the final denial letter and must be 

accompanied by a copy of the 

Department’s final letter denying the 

exemption and a statement setting forth 

the new information and/or arguments 

that provide the basis for 

reconsideration. 

(c) A request for reconsideration must 

also be accompanied by a declaration 

under penalty of perjury attesting to the 

truth of the new information provided, 

which is signed by a person qualified 

under § 2570.34(b)(6) to sign such a 

declaration. 

(d) If, after reviewing a request for 

reconsideration, the Department decides 

that the facts and arguments presented 

do not warrant reversal of its original 

decision to deny the exemption, it will 

send a letter to the applicant reaffirming 

that decision. 

(e) If, after reviewing a request for 

reconsideration, the Department 

decides, based on the new facts and 

arguments submitted, to reconsider its 

final denial letter, it will notify the 

applicant of its intent to reconsider the 

application in light of the new 

information presented. The Department 

will then take whatever steps remained 

at the time it issued its final denial letter 

to process the exemption application. 

(f) If, at any point during its 

subsequent processing of the 

application, the Department decides 

again that the exemption is 

unwarranted, it will issue a letter 

affirming its final denial. 

(g) A request for reinstatement of an 

exemption application pursuant to 

§ 2570.44(d) is not a request for 

reconsideration governed by this 

section. 


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14750 Federal Register / Vol. 87, No. 50 / Tuesday, March 15, 2022 / Proposed Rules 

§ 2570.46 Hearings in opposition to 

exemptions from restrictions on fiduciary 

self-dealing and conflicts of interest. 

(a) Any person who may be materially 

affected by an exemption which the 

Department proposes to grant from the 

restrictions of ERISA section 406(b), 

Code section 4975(c)(1)(E) or (F), or 

FERSA section 8477(c)(2) may request a 

hearing before the Department within 

the period of time specified in the 

Federal Register notice of the proposed 

exemption. Any such request must state: 

(1) The name, address, telephone 

number, and email address of the 

person making the request; 

(2) The nature of the person’s interest 

in the exemption and the manner in 

which the person would be materially 

affected by the exemption; and 

(3) A statement of the issues to be 

addressed and a general description of 

the evidence to be presented at the 

hearing. 

(b) The Department will grant a 

request for a hearing made in 

accordance with paragraph (a) of this 

section where a hearing is necessary to 

fully explore material factual issues 

with respect to the proposed exemption 

identified by the person requesting the 

hearing. A notice of such hearing shall 

be published by the Department in the 

Federal Register. The Department may 

decline to hold a hearing where: 

(1) The request for the hearing is not 

timely, or otherwise fails to include the 

information required by paragraph (a) of 

this section; 

(2) The only issues identified for 

exploration at the hearing are matters of 

law; or 

(3) The factual issues identified can 

be fully explored through the 

submission of evidence in written 

(including electronic) form. 

(c) An applicant for an exemption 

must notify interested persons in the 

event that the Department schedules a 

hearing on the exemption. Such 

notification must be given in the form, 

time, and manner prescribed by the 

Department. Ordinarily, however, 

adequate notification can be given by 

providing to interested persons a copy 

of the notice of hearing published by the 

Department in the Federal Register 

within 10 days of its publication, using 

any of the methods approved in 

§ 2570.43(b). 

(d) After furnishing the notice 

required by paragraph (c) of this section, 

an applicant must submit a statement 

confirming that notice was given in the 

form, manner, and time prescribed. This 

statement must be accompanied by a 

declaration under penalty of perjury 

attesting to the truth of the information 

provided in the statement, which is 

signed by a person qualified under 

§ 2570.34(b)(6) to sign such a 

declaration. 

§ 2570.47 Other hearings. 

(a) In its discretion, the Department 

may schedule a hearing on its own 

motion where it determines that issues 

relevant to the exemption can be most 

fully or expeditiously explored at a 

hearing. A notice of such hearing shall 

be published by the Department in the 

Federal Register. 

(b) An applicant for an exemption 

must notify interested persons of any 

hearing on an exemption scheduled by 

the Department in the manner described 

in § 2570.46(c). In addition, the 

applicant must submit a statement 

subscribed as true under penalty of 

perjury like that required in 

§ 2570.46(d). 

§ 2570.48 Decision to grant exemptions. 

(a) The Department may not grant an 

exemption under ERISA section 408(a), 

Code section 4975(c)(2), or 5 U.S.C. 

8477(c)(3)(C) unless, following 

evaluation of the facts and 

representations comprising the 

administrative record of the proposed 

exemption (including any comments 

received in response to a notice of 

proposed exemption and the record of 

any hearing held in connection with the 

proposed exemption), it finds that the 

exemption meets the statutory 

requirements by being: 

(1) Administratively feasible for the 

Department; 

(2) In the interests of the plan (or the 

Thrift Savings Fund in the case of 

FERSA) and of its participants and 

beneficiaries; and 

(3) Protective of the rights of 

participants and beneficiaries of such 

plan (or the Thrift Savings Fund in the 

case of FERSA). 

(b) In each instance where the 

Department determines to grant an 

exemption, it shall publish a notice in 

the Federal Register which summarizes 

the transaction or transactions for which 

exemptive relief has been granted and 

specifies the conditions under which 

such exemptive relief is available. 

§ 2570.49 Limits on the effect of 

exemptions. 

(a) An exemption does not take effect 

with respect to the exemption 

transaction unless the material facts and 

representations contained in the 

application and in any materials and 

documents submitted in support of the 

application were true and complete. 

(b) An exemption is effective only for 

the period of time specified and only 

under the conditions set forth in the 

exemption. 

(c) Only the specific parties to whom 

an exemption grants relief may rely on 

the exemption. If the notice granting an 

exemption does not limit exemptive 

relief to specific parties, all parties to 

the exemption transaction may rely on 

the exemption. 

(d) For transactions that are 

continuing in nature, an exemption 

ceases to be effective if, during the 

continuation of the transaction, there 

are material changes to the original facts 

and representations underlying such 

exemption or if one or more of the 

exemption’s conditions cease to be met. 

(e) The determination as to whether, 

under the totality of the facts and 

circumstances, a particular statement 

contained in (or omitted from) an 

exemption application constitutes a 

material fact or representation is made 

by the Department in its sole discretion. 

§ 2570.50 Revocation or modification of 

exemptions. 

(a) If, after an exemption takes effect, 

material changes in facts, 

circumstances, or representations occur, 

including whether a qualified 

independent fiduciary resigns, is 

terminated, or is convicted of a crime, 

the Department, at its sole discretion, 

may take steps to revoke or modify the 

exemption. In the event that the 

qualified independent fiduciary resigns, 

is terminated, or is convicted of a crime, 

the applicant must notify the 

Department within 30 days of the 

resignation, termination, or conviction, 

and the Department reserves the right to 

request that the applicant provide the 

Department with any of the information 

required pursuant to § 2570.34(e) and (f) 

pursuant to a time determined by the 

Department at its sole discretion. 

(b) Before revoking or modifying an 

exemption, the Department will publish 

a notice of its proposed action in the 

Federal Register and provide interested 

persons with an opportunity to 

comment on the proposed revocation or 

modification. Prior to the publication of 

such notice, the applicant will be 

notified of the Department’s proposed 

action and the reasons therefore. 

Subsequent to the publication of the 

notice, the applicant will have the 

opportunity to comment on the 

proposed revocation or modification. 

(c) The revocation or modification of 

an exemption will have prospective 

effect only. 

§ 2570.51 Public inspection and copies. 

(a) From the date the administrative 

record of each exemption is established 

pursuant to § 2570.32(d), the 

administrative record of each exemption 

will be open to public inspection and 


khammond on DSKJM1Z7X2PROD with PROPOSALS3
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copying at the EBSA Public Disclosure 

Room, U.S. Department of Labor, 200 

Constitution Avenue NW, Washington, 

DC 20210. 

(b) Upon request, the staff of the 

Public Disclosure Room will furnish 

photocopies of an administrative record, 

or any specified portion of that record, 

for a specified charge per page; or, at the 

discretion of the staff, provide the 

administrative record electronically for 

a specified charge. 

§ 2570.52 Effective date. 

This subpart is effective with respect 

to all exemptions filed with or initiated 

by the Department under ERISA section 

408(a), Code section 4975(c)(2), and/or 5 

U.S.C. 8477(c)(3) at any time on or after 

[date 90 days after date of publication of 

the final rule]. Applications for 

exemptions under ERISA section 408(a), 

Code section 4975(c)(2), and/or 5 U.S.C. 

8477(c)(3) filed on or after December 27, 

2011, but before [date 90 days after date 

of publication of the final rule], are 

governed by 29 CFR part 2570 (revised 

effective December 27, 2011). 

Signed at Washington, DC, this 3rd day of 

March, 2022. 

Ali Khawar, 

Acting Assistant Secretary, Employee Benefits 

Security Administration, U.S. Department of 

Labor. 

[FR Doc. 2022–04963 Filed 3–14–22; 8:45 am] 

BILLING CODE 4510–29–P 


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