[Federal Register Volume 75, Number 167 (Monday, August 30, 2010)]
[Proposed Rules]
[Pages 53172-53192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21073]



[[Page 53171]]

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Part V





Department of Labor





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Employee Benefits Security Administration



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29 CFR Part 2570



Prohibited Transaction Exemption Procedures; Employee Benefit Plans; 
Proposed Rule

Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / 
Proposed Rules

[[Page 53172]]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2570

RIN 1210-AA98


Prohibited Transaction Exemption Procedures; Employee Benefit 
Plans

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Proposed rule.

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SUMMARY: This document contains a proposed rule that, if adopted, would 
supersede the 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 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 clarify and consolidate the Department of Labor's exemption 
procedures and provide the public with a more comprehensive description 
of the prohibited transaction exemption process.

DATES: Comment Date: Written comments on the proposed regulation should 
be received by the Department of Labor on or before October 14, 2010. 
Effective Date: The Department proposes to make this regulation 
effective 60 days after the date of publication of the final rule in 
the Federal Register.

ADDRESSES: To facilitate the receipt and processing of responses, the 
Department encourages interested persons to submit their responses 
electronically by e-mail to: <a href="/cdn-cgi/l/email-protection#53367e1c161713373c3f7d343c25"><span class="__cf_email__" data-cfemail="c0a5ed8f858480a4afaceea7afb6">[email protected]</span></a> or by using the Federal 
eRulemaking portal at http://www.regulations.gov (follow instructions 
for submission of comments). Persons submitting responses 
electronically are encouraged not to submit paper copies. Persons 
interested in submitting written responses in paper form should send or 
deliver their responses (preferably, at least three copies) to the 
Office of Exemption Determinations, Employee Benefits Security 
Administration, Room N-5700, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attention: Prohibited Transaction 
Exemption Procedures Proposed Regulation. All written responses will be 
available to the public, without charge, online at http://www.regulations.gov and http://www.dol.gov/ebsa, and at the Public 
Disclosure Room, Room N-1513, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Mr. Mark W. Judge, Office of Exemption 
Determinations, Employee Benefits Security Administration, Room N-5700, 
U.S. Department of Labor, Washington, DC 20210, telephone (202) 693-
8550. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

    Part 4 of Title I of ERISA establishes an extensive framework of 
standards and rules governing the conduct of plan fiduciaries; 
collectively, these rules are designed to safeguard the integrity of 
employee benefit plans. As part of this structure, section 406 of ERISA 
generally prohibits the fiduciary of a plan from causing such 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 section 3(14) of ERISA.\1\ 
Section 406 also generally prohibits a plan fiduciary from (i) dealing 
with the assets of a plan in his or her own interest or for his or her 
account, (ii) 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 (iii) 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.
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    \1\ The transactions that are generally prohibited by section 
406 include sales, exchanges, or leases of property; loans or 
extensions of credit; and the furnishing of goods, services, or 
facilities. In addition, section 406 generally prohibits a plan 
fiduciary from allowing the transfer to (or use by or for the 
benefit of) a party in interest of any assets of a plan.
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    To supplement these provisions, sections 406 and 407(a) of ERISA 
impose restrictions on the nature and extent of plan investments in 
assets such as ``employer securities'' (as defined in section 407(d)(1) 
of ERISA) and ``employer real property'' (as defined in section 
407(d)(2) of ERISA). Most of the transactions prohibited by section 406 
of ERISA are likewise prohibited by section 4975 of the Code, which 
imposes an excise tax on those transactions to be paid by each 
``disqualified person'' (defined in section 4975(e)(2) of the Code in 
virtually the same manner as the term ``party in interest'') who 
engages in the prohibited transactions.
    Both ERISA and the Code contain various statutory exemptions from 
the prohibited transaction rules; these exemptions were enacted by 
Congress to prevent the disruption of a number of customary business 
practices involving employee benefit plans. The enumerated statutory 
exemptions generally afford relief for, among other things, loans to 
participants, the provision of services necessary for the operation of 
a plan for no more than reasonable compensation, loans to employee 
stock ownership plans, and deposits in certain financial institutions 
regulated by state or federal agencies.\2\
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    \2\ The Pension Protection Act of 2006 (Pub. L. 109-280, 120 
Stat. 780), enacted on August 17, 2006, amended both ERISA and the 
Code to establish additional statutory exemptions for certain 
transactions, such as those involving the block trading of 
securities or other property between a plan and a party in interest, 
the cross trading of a security between a plan and any other account 
managed by the same investment manager, and the execution of certain 
foreign exchange transactions between a plan and a bank or broker-
dealer.
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    In addition, section 408(a) of ERISA authorizes the Secretary of 
Labor to grant administrative exemptions (on either an individual or a 
class basis) from the restrictions of ERISA sections 406 and 407(a) in 
instances where the Secretary makes findings on the record that such 
relief is (i) administratively feasible, (ii) in the interests of the 
plan and its participants and beneficiaries, and (iii) protective of 
the rights of participants and beneficiaries of such plan. Similarly, 
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. Interested persons must be given the 
opportunity to comment on the proposed exemption. If the transaction 
involves potential fiduciary self-dealing or conflicts of interest, an 
opportunity for a public hearing must be provided.
    Sections 408(a) of ERISA and 4975(c)(2) of the Code also direct the 
Secretary of Labor and the Secretary of the Treasury, respectively, to 
establish procedures for granting administrative

[[Page 53173]]

exemptions. In this connection, section 3003(b) of ERISA directs the 
Secretary of Labor and the Secretary of the Treasury (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. In 
addition, under section 3004 of ERISA, the Secretaries are authorized 
to develop rules on a joint basis that are appropriate for the 
efficient administration of ERISA.
    Pursuant to the foregoing 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 section 408(a) of ERISA and section 4975 of the Code was obliged 
to file an exemption application with both the Internal Revenue Service 
and the Department of Labor. However, the requirement of seeking 
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 332 (1978), 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 section 4975 of the Code, with certain enumerated 
exceptions, to the Secretary of Labor. As a result, the Secretary of 
Labor now possesses authority under section 4975(c)(2) of the Code, as 
well as under section 408(a) of ERISA, to issue individual and class 
exemptions from the prohibited transaction restrictions of ERISA and 
the Code. The Secretary of Labor 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. See Secretary of Labor's Order 6-2009, 74 FR 21524 (May 
7, 2009).
    FERSA, enacted in 1986, contained 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 of Labor is directed under FERSA to 
prescribe, by regulation, a procedure for granting administrative 
exemptions from certain of those prohibited transactions. See 5 U.S.C. 
section 8477(c)(3). The Secretary of Labor has delegated this 
rulemaking authority under FERSA to the Assistant Secretary of Labor 
for the Employee Benefits Security Administration. See Secretary of 
Labor's Order 6-2009.
    Four years after the enactment of FERSA, the Department published a 
final regulation (29 CFR 2570.30 et seq. (1991), reprinted in 55 FR 
32847 (August 10, 1990)) setting forth a revised exemption procedure 
that superseded ERISA Procedure 75-1. This regulation, which became 
effective on September 10, 1990, reflects the jurisdictional changes 
made by Presidential Reorganization Plan No. 4 and extends the scope of 
the exemption procedure to applications for relief from the FERSA 
prohibited transaction rules. In addition, the 1990 final regulation 
codified various informal exemption guidelines developed by the 
Department since the adoption of ERISA Procedure 75-1.
    As noted previously, section 408(a) of ERISA authorizes the 
Secretary of Labor 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/or 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. In their broad applicability and policy implications, class 
exemptions possess several of the characteristics of agency rulemaking; 
accordingly, persons who are in conformity with all of 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/or FERSA have been satisfied in a particular instance.
    While the vast majority of administrative exemptions issued by the 
Department have been the product of requests for relief from individual 
applicants and/or the employee benefits community, section 408(a) of 
ERISA also authorizes the Department to initiate exemptions on its own 
motion. Recent examples of such Department-initiated exemptions include 
Prohibited Transaction Exemption (PTE) 2002-51 (class exemption, as 
amended in 2006, providing relief from the sanctions contained in 
section 4975 of the Code for certain eligible transactions identified 
in the Department's Voluntary Fiduciary Correction Program) and PTE 
2003-39 (class exemption providing relief for the receipt of 
consideration by a plan from a party in interest in connection with the 
release of a claim in settlement of actual or threatened litigation).
    In considering individual exemption requests from applicants, the 
Department has consistently exercised its authority under ERISA section 
408(a) by carefully examining the decision-making process utilized by a 
plan's fiduciaries with respect to a transaction. In applying this 
policy, the Department determines whether it can make findings that the 
transaction is designed to adequately safeguard the interests of the 
plan's participants and beneficiaries. Therefore, the Department 
requires, as a condition of every exemption, that the terms of the 
subject transaction be no less favorable to the plan than the terms 
which the plan could obtain in an arm's-length transaction with an 
unrelated party. Depending on the facts and circumstances of a 
particular transaction, additional conditions for exemptive relief 
generally are required.
    The Department has followed this policy in considering requests for 
either prospective or retroactive exemptive relief. In general, the 
Department does not make determinations concerning the appropriateness, 
attractiveness, 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 sections 403 and 404 of ERISA. 
Accordingly, the Department requires that an exemption transaction be 
designed to minimize the potential for conflicts of interest or self-
dealing. This approach allows qualified professionals or responsible 
fiduciaries to assess the prudence of a transaction independently and 
in a manner that is protective of the plan's assets. Moreover, the 
structure of the transaction under consideration should preclude 
unilateral action by the applicant which could disadvantage the 
investing plan.
    In keeping with the policy of evaluating the decisional processes 
surrounding a transaction, many of the exemptions issued by the 
Department are conditioned on the retention of an independent fiduciary 
to represent the interests of the plan, particularly where a plan 
fiduciary has interests with respect to a transaction which may 
conflict with his or her fiduciary duties to the plan. In these 
situations, an independent fiduciary typically will

[[Page 53174]]

exercise his or her authority to negotiate, approve, and/or monitor an 
exemption transaction on behalf of the plan. Similarly, valuations and 
other assessments relevant to an exemption are expected to be made by 
qualified professionals independent of the party in interest proposing 
to deal with the plan's assets in the subject transaction.
    Over time, the Department has issued 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 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 1995, the Department issued a publication, 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 for technical terms such as 
``qualified independent fiduciary,'' ``qualified independent 
appraiser,'' and ``qualified appraisal report.'' These definitions, 
derived from conditions contained in previously granted exemptions, 
provided important guidance about the Department's standards concerning 
the independence, knowledge, and competence of third-party experts 
retained by a plan to review and/or oversee an exemption transaction, 
as well as the contents of the reports and representations ordinarily 
required from such experts.
    During its first two decades of evaluating individual exemption 
requests, the Department observed that a significant proportion 
involved transactions, terms, and safeguards which were remarkably 
similar to those contained in previously granted exemptions. 
Accordingly, to facilitate the prompt consideration of such routine 
applications, the Department published an administrative class 
exemption, PTE 96-62 (61 FR 39988 (July 31, 1996), as amended at 67 FR 
44622 (July 3, 2002)). Under this class exemption (commonly referred to 
as EXPRO), the Department may authorize exemptive relief, on an 
expedited basis, for certain prospective transactions that would 
otherwise be prohibited under ERISA, the Code, or FERSA, provided that 
the applicant satisfies all of the conditions of the EXPRO exemption. 
Among other things, PTE 96-62 stipulates that the transaction for which 
an applicant seeks authorization must be substantially similar in all 
material respects to at least two other transactions for which the 
Department recently granted administrative relief from the same 
restriction.\3\ Under PTE 96-62, authorization may be available in as 
few as 78 days from the acknowledgement of the receipt by the 
Department of a written submission filed in accordance with the class 
exemption. From 1996 to 2009, more than 400 applicants obtained 
expedited relief from the Department pursuant to the requirements of 
PTE 96-62.
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    \3\ Additional information concerning the requirements for 
obtaining administrative relief under PTE 96-62 (as amended) may be 
obtained by accessing the complete text of the class exemption at 
the Department's Web site: http://www.dol.gov/ebsa/Regs/ClassExemptions. A chronological listing of all final authorizations 
granted by the Department pursuant to PTE 96-62 since 1996 may also 
be found at: http://www.dol.gov/ebsa/Regs/expro_exemptions.html.
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    In the years since the current exemption procedure was adopted in 
1990, the accelerated development and expanded usage of various 
electronic media for the transmission of information--including the 
Internet, electronic mail (e-mail), and facsimile machines--has 
provided the Department with more technologically advanced means for 
discharging its responsibilities to the public. This rapid 
transformation has also altered the manner in which the Department 
ordinarily processes and disseminates prohibited transaction 
exemptions. In 1996, the Department established a Web site, http://www.dol.gov, which featured the electronic posting of notices of 
proposed and final prohibited transaction exemptions as published in 
the Federal Register.\4\ Shortly thereafter, the Department established 
a public e-mail portal on its Web site for ERISA-related questions and 
created individual e-mail accounts for its employees; these 
developments enabled exemption applicants and others to transmit 
exemption-related messages and documents to the Department on a 
virtually instantaneous basis.
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    \4\ In addition, the texts of all Federal Register notices 
relating to prohibited transaction exemptions published since 1995 
are available in electronic format at the following Web site 
maintained by the U.S. Government Printing Office: http://www.gpoaccess.gov/fr.
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    In 2002, Congress enacted the E-Government Act (Pub. L. 107-347, 
116 Stat. 2915) to facilitate Internet-based public access to, and 
participation in, the Federal rulemaking process; to implement the 
requirements of this statute, the Office of Management and Budget (OMB) 
launched a Web site, http://www.regulations.gov, in 2003. This Web site 
(which was upgraded in 2005 with the introduction of an electronic 
regulatory docket management system) enables individuals and 
organizations to access and comment upon proposed rulemaking documents 
issued by Federal agencies, as well as prohibited transaction 
exemptions proposed by the Department. In addition, the Department has 
recently established a dedicated e-mail address, <a href="/cdn-cgi/l/email-protection#e085cdafa5a4a0848f8cce878f96"><span class="__cf_email__" data-cfemail="acc981e3e9e8ecc8c3c082cbc3da">[email protected]</span></a>, which 
permits interested persons to submit comments electronically concerning 
a proposed exemption.
    The proposed regulation contained in this document updates the 
prohibited transaction exemption procedure to reflect changes in the 
Department's exemption practices since the current procedure was 
implemented in 1990. Among other things, key elements of the exemption 
policies and guidance currently found in ERISA Technical Release 85-1 
and the 1995 Exemption Publication would be consolidated within the 
text of a unitary, comprehensive final regulation, thus reducing the 
regulatory burdens on applicants for exemptive relief. Adoption of 
these revised procedures should also encourage the prompt and fair 
consideration of all exemption applications by clarifying the types of 
information and documentation generally required for a complete filing, 
by affording expanded opportunities for the electronic submission of 
information and comments relating to an exemption, and by providing 
plan participants and other interested persons with a more thorough 
understanding of the exemption under consideration.

[[Page 53175]]

B. Overview of Proposed Changes to the Exemption Procedure Regulation

    The current exemption procedure regulation at 29 CFR part 2570, 
subpart B consists of 23 discrete sections (Sec.  2570.30 through Sec.  
2570.52), arranged by topic and generally reflecting the chronological 
order of steps involved in processing an exemption application. This 
proposed revision to the exemption procedure retains the section-by-
section topical structure of the existing regulation, along with most 
of the operative language. However, the Department also proposes 
several important substantive amendments; these changes are summarized 
below on a section-by-section basis.

Section 2570.30 Scope of the Regulation

    Section 2570.30(a) of the proposed regulation describes the 
statutory provisions of ERISA, the Code, and FERSA under which the 
Department is authorized to establish procedures governing the granting 
of administrative exemptions, and cites appropriately the Department's 
jurisdictional mandate pertaining to exemptions under Presidential 
Reorganization Plan No. 4 of 1978. A revised section 2570.30(b) 
describes the extent of exemptive relief generally permissible under 
section 408(a) of ERISA and corresponding sections of the Code and 
FERSA, including the availability (under limited circumstances) of 
retroactive relief for past prohibited transactions.
    An updated Sec.  2570.30(c) describes the authority of the 
Department to propose and issue administrative exemptions on its own 
motion. Currently, this authority is referenced somewhat awkwardly at 
the beginning of Sec.  2570.32(a) under the section heading that 
describes ``Persons who may apply for exemptions.'' Apart from 
repositioning this regulatory language, the revised Sec.  2570.30(c) 
also specifies the provisions of the updated exemption procedure 
regulation generally applicable to exemptions initiated on the 
Department's own motion.
    In addition, proposed Sec.  2570.30(d) incorporates language found 
in the text of prior granted exemptions emphasizing that the scope of 
exemptive relief available from the Department does not extend to 
certain other fiduciary provisions of ERISA or to the exclusive benefit 
rule found in section 401(a) of the Code. Proposed sections 2570.30(e) 
and (f) replicate language in the current regulation relating to the 
provision of oral advice by Department employees concerning an 
exemption, and the handling of exemption applications that are filed 
solely under section 408(a) of ERISA or solely under section 4975(c)(2) 
of the Code.

Section 2570.31 Definitions

    Section 2570.31 of the current exemption procedure regulation 
defines the following terms for purposes of the exemption procedures: 
Affiliate, class exemption, Department, exemption transaction, 
individual exemption, party in interest and pooled fund. The Department 
proposes to add three additional definitions, a qualified appraisal 
report, a qualified independent appraiser, and a qualified independent 
fiduciary, to the regulation. These three definitions are referred to 
in the glossary of the Department's 1995 Exemption Publication, and are 
commonly used in individual and class exemptions.

Section 2570.33 Applications the Department Will Not Ordinarily 
Consider

    Under Sec.  2570.33(c) of the current regulation, an application 
for an individual exemption ordinarily will not receive separate 
consideration if the Department is considering a class exemption 
relating to the same type of transaction or transactions. Under the 
proposed regulation, however, this general rule may be waived in 
instances where (i) the issuance of the final class exemption may not 
be imminent, and (ii) the applicant can demonstrate that exigent 
circumstances compel it to seek immediate exemptive relief from the 
Department in order to protect the interests of the plan and its 
participants (such as the sale of an illiquid asset that has decreased 
in value).

Section 2570.34 Information To Be Included in Every Exemption 
Application

    Section 2570.34 of the current regulation describes the information 
to be included in every exemption application. An expanded Sec.  
2570.34(a)(2) would require the inclusion of a chronology of the events 
leading to the exemption transaction. In addition, as detailed below, 
section 2570.34 would be amended (through the addition of new 
subsections (c) and (d)) to incorporate key elements of the exemption 
policy and guidance currently found in the 1995 Exemption Publication, 
specifically with respect to the required content of the specialized 
statements that are obtained from independent appraisers and 
fiduciaries in support of an exemption transaction.
    Statements from qualified independent appraisers--A new Sec.  
2570.34(c), setting forth the requirements for specialized statements 
from qualified, independent appraisers, would replace and clarify the 
content of section 2570.34(b)(5)(iii) of the existing regulation. This 
section requires that the independent appraisal report submitted by the 
appraiser on behalf of the plan be current and not more than one year 
old on the date of the transaction. Further, there must be a written 
update by the qualified independent appraiser reaffirming the accuracy 
of the prior appraisal as of the date of the transaction. If an 
appraisal report is a year old or more, a new appraisal must be 
submitted to the Department by the applicant. In addition, the 
appraisal must include the appraiser's rationale, credentials, and a 
statement regarding the appraiser's independence from the parties 
involved in the transaction. The appraiser would be required to submit 
a copy of its engagement letter with the plan (i.e., the appraiser's 
client is the plan) outlining the appraiser's specific duties. Among 
other things, the appraiser's report must specify the valuation 
methodology applied by the appraiser, and should include documentation 
that supports the appraiser's conclusions on valuation. In addition, 
the applicant also must disclose the percentage of the appraiser's 
compensation that was derived from any party in interest (or any 
affiliate of the party in interest) involved in the exemption 
transaction. As a general matter, the appraisers retained in connection 
with an exemption transaction must not receive more than a de minimis 
amount of compensation from the parties in interest to the transaction 
or their affiliates.
    Statements from qualified independent fiduciaries--A new Sec.  
2570.34(d), setting forth the requirements for specialized statements 
from qualified, independent fiduciaries, would replace and clarify the 
content of section 2570.34(b)(5)(iv) of the existing regulation. Many 
of the exemptions previously issued by the Department have been 
conditioned on the designation of an independent fiduciary who is 
qualified to represent the interests of the plan, particularly where 
the plan's named or other fiduciary has interests with respect to a 
transaction which may conflict with its fiduciary duties to the plan. 
Accordingly, certain past exemptions issued by the Department 
(generally involving non-complex transactions) have required the 
designation of an independent fiduciary or second fiduciary (e.g., the 
employer or an officer of the employer who is

[[Page 53176]]

independent of the party engaging in the exemption transaction with the 
plan). See, for example, PTE 2008-01, 73 FR 3274 (Jan. 17, 2008) and 
PTE 2009-06, 74 FR 8992 (Feb. 27, 2009). However, even where an 
employer or a plan sponsor is independent of the parties engaging in 
the exemption transaction, such parties may nevertheless lack the 
expertise necessary to represent the interests of the plan in certain 
types of transactions. In such situations, the Department may condition 
relief upon the plan's retention of a ``qualified independent 
fiduciary'' who is neither the plan's named fiduciary nor a plan 
fiduciary who ordinarily provides fiduciary services to the plan. In 
such cases, the qualified independent fiduciary is responsible both for 
determining whether such transaction is in the interests of the plan 
and of its participants and beneficiaries, and for exercising its 
discretionary authority as to whether a plan should proceed with the 
transaction that is the subject of a prohibited transaction request.
    Under Sec.  2570.34(d), the Department would require the disclosure 
of the following information from a qualified independent fiduciary: A 
copy of such fiduciary's engagement letter with the plan describing the 
duties the fiduciary will undertake on behalf of the plan; a detailed 
explanation of why the proposed transaction is in the interests of the 
participants and beneficiaries; a statement that, in instances where 
the transaction is ongoing, the fiduciary agrees to monitor the 
proposed transaction throughout its duration on behalf of the plan, 
taking any appropriate action to safeguard the interests of the plan; 
what qualifications the fiduciary has to perform these duties on behalf 
of the plan and the level of ERISA experience the person has; and a 
representation to the effect that such fiduciary understands and 
acknowledges his or her ERISA duties and responsibilities in acting as 
a fiduciary on behalf of the plan. The fiduciary must also disclose if 
it is related in any way to the employer or its principals, as well as 
the percentage of its current compensation that was derived from any 
party in interest (or any affiliate of the party in interest) involved 
in the exemption transaction. As a general matter, an independent 
fiduciary retained in connection with an exemption transaction must 
receive no more than a de minimis amount of compensation from the 
parties in interest to the transaction or their affiliates.
    Statements from other experts--A new Sec.  2570.34(e) sets forth 
the content requirements for statements submitted by independent, 
third-party experts other than independent appraisers or fiduciaries. 
The new section would clarify the language currently found at section 
2570.34(b)(5)(iii) of the existing regulation. This new section would 
also require: a copy of the expert's engagement letter with the plan 
(i.e., the third-party expert's client is the plan) describing the 
specific duties the expert will undertake on behalf of a plan; a 
summary of the expert's qualifications to serve in such capacity 
(including the expert's training, experience, and facilities); and a 
detailed description of any relationship that the expert may have with 
the party in interest engaging in the transaction with the plan, or its 
affiliates, that may influence the actions of the expert.

Section 2570.35 Information To Be Included in Applications for 
Individual Exemptions Only

    Sections 2570.35(a)(5), (6), and (7) of the current regulation 
requires exemption applications to disclose information regarding 
whether the applicant or any of the parties to the exemption 
transaction is or has been, within a specified number of years past, a 
defendant in any lawsuit or criminal action concerning conduct as a 
fiduciary or other party in interest with respect to any employee 
benefit plan (Sec.  2570.35(a)(5)), convicted of a crime described in 
section 411 of ERISA (Sec.  2570.35(a)(6)), or under investigation or 
examination or engaged in litigation or a continuing controversy with 
certain Federal agencies (Sec.  2570.35(a)(7)). Section 2570.35(a)(7) 
also requires disclosure of whether any plan affected by the exemption 
transaction has been under such investigation or examination, or has 
been engaged in litigation or a continuing controversy, and further 
obligates the applicant to submit copies of all correspondence with the 
specified Federal agencies regarding the substantive issues involved in 
such proceedings which relate to compliance with the provisions of 
ERISA, provisions of the Code relating to plans, or provisions of 
FERSA.
    Disclosure of prior investigations, examinations, and lawsuits--In 
an effort to reduce administrative burdens on applicants, the 
Department proposes to amend Sec.  2570.35(a)(5) so as not to require 
disclosure of lawsuits relating solely to routine benefit claims. In 
addition, the Department proposes to amend Sec.  2570.35(a)(7) to 
permit an applicant to submit a brief statement describing the Federal 
investigation, examination, litigation or controversy involving the 
plan in lieu of the submission of all correspondence relating to such 
matters. However, the revised Sec.  2570.35(a)(7) would reserve the 
Department's right to require the production of additional relevant 
information or documentation concerning any of these matters, and would 
stipulate that a denial of the exemption application will result if the 
additional requested information is not provided.
    Disclosure of prior convictions--Under Sec.  2570.35(a)(6) of the 
current regulation, an individual exemption application must describe 
whether an applicant or any of the parties in interest involved in the 
exemption transaction has, during the thirteen years preceding the 
application, been convicted of any crime described in section 411 of 
ERISA. Section 411, however, does not list all crimes that involve the 
abuse or misuse of a position of trust by a person with respect to 
client funds or securities. Accordingly, the Department proposes to 
amend this section by requiring individual exemption applications to 
disclose prior convictions of applicants or parties in interest 
involving the broader range of crimes described in section I(g) of PTE 
84-14 (known as the QPAM class exemption) \5\ that occurred in the 
thirteen years prior to the filing of the exemption application. Among 
other things, section I(g) of PTE 84-14 disqualifies certain 
individuals who have been convicted of felonies arising out of the 
conduct of the business of a broker, dealer, investment adviser, bank, 
insurance company or fiduciary from serving as a QPAM under the class 
exemption; in addition, the class exemption bars any individual 
convicted of a crime described in ERISA section 411 from serving as a 
QPAM. The Department believes that incorporating the disclosure of this 
additional information concerning the criminal records of the applicant 
and other parties in interest participating in the exemption 
transaction is necessary to evaluate the credibility and integrity of 
such parties, some of whom may possess substantial discretion regarding 
the exemption transaction or may make representations upon which the 
Department relies in determining whether the statutory criteria for an 
exemption have been satisfied.
---------------------------------------------------------------------------

    \5\ See 49 FR 9494 (March 13, 1984), as amended by 70 FR 49305 
(August 23, 2005).
---------------------------------------------------------------------------

    Disclosure of payment of civil monetary penalties and excise taxes 
assessed by the Treasury and Labor Departments in connection with prior 
prohibited transactions--The current version of Sec.  2570.35(a)(14)(v) 
requires

[[Page 53177]]

an applicant to disclose whether any excise taxes due under sections 
4975(a) and (b) of the Code by reason of a consummated exemption 
transaction have been paid. The Department proposes to amend this 
provision to also require disclosure as to whether any civil monetary 
penalties due under section 502(i) or (l) of ERISA have been paid. In 
addition, the applicant would be required to furnish documentary 
evidence (such as a cancelled check) demonstrating payment of all 
applicable excise taxes or civil penalties.
    Disclosure of party-in-interest investments--The general purpose of 
the disclosure provision at Sec.  2570.35(a)(16) is to enable the 
Department to determine whether the exemption transaction, in 
conjunction with other plan investments involving parties in interest, 
would unduly concentrate the plan's assets in certain investments so as 
to raise questions under the fiduciary responsibility provisions of 
section 404 of ERISA. Under the current version of Sec.  
2570.35(a)(16), the extent of applicant disclosure is limited to 
whether or not the assets of the affected plan(s) are invested in loans 
to any party in interest involved in the exemption transaction, 
property leased to any such party in interest, or securities issued by 
any party in interest involved in the exemption transaction. Where such 
investments exist, the current regulation requires an applicant to 
include an additional statement detailing the nature and extent of 
these investments, and whether a statutory or administrative exemption 
covers such investments. In the interest of greater transparency, the 
Department proposes to amend this section to require an applicant to 
disclose whether or not the assets of the affected plan(s) have been 
invested directly or indirectly in any other transactions (e.g., 
securities lending or extensions of credit), whether exempt or non-
exempt, with the party in interest involved in the exemption 
transaction; accordingly, such disclosure would not be limited to plan 
investments in loans or leases involving the party in interest, or 
securities issued by the party in interest. In cases where any such 
investments exist, the applicant must also provide the Department with 
additional information describing, among other things: (1) The type of 
investment to which the statement pertains; (2) The aggregate fair 
market value of all investments of this type as reflected in the plan's 
most recent annual report; (3) 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 (4) The 
applicable statutory or administrative exemption covering these 
investments (if any).
    Disclosure of net worth statement--The Department proposes to add a 
new subsection (Sec.  2570.35(b)(4)) which would require that each 
application for an individual exemption furnish a net worth statement 
for any party in interest that provides a personal guarantee with 
respect to an exemption transaction.
    Retroactive exemptions--The Department proposes the addition of a 
new subsection, Sec.  2570.35(d), to provide guidance to applicants who 
are seeking retroactive relief for past prohibited transactions. This 
new subsection would incorporate the standards for retroactive 
exemptions issued by the Department in ERISA Technical Release 85-1 
(January 22, 1985). The Department believes that the inclusion of these 
standards as part of an updated and comprehensive exemption procedure 
regulation will provide greater clarity to applicants for retroactive 
relief, thereby facilitating the prompt evaluation of such 
applications. Among other things, the new subsection reaffirms that, as 
a general matter, the Department will only consider granting 
retroactive relief for transactions already entered into where an 
applicant can satisfactorily demonstrate that the safeguards necessary 
for the grant of a prospective exemption were in place at the time of 
the consummated transaction. In this regard, an applicant should 
provide evidence that it acted in good faith at the time of the subject 
transaction by taking reasonable and appropriate steps to protect the 
plan from abuse and unnecessary risk. The new subsection also 
enumerates a variety of objective considerations that the Department 
ordinarily takes into account when evaluating whether the conduct of 
the applicant at the time of a previously consummated transaction 
satisfies the good faith standard.

Section 2570.36 Where To File an Application

    The Department is revising this section to apprise applicants of 
the fax and e-mail information necessary to expedite delivery of the 
application or any other relevant information relating to the 
application. In addition, the Department is amending this section to 
require applicants to submit two paper copies of applications: One for 
the Department's file and one for the analyst's working copy, as well 
as an electronic version of the application.

Section 2570.37 Duty To Amend and Supplement Exemption Application

    As in the current regulation, this section would require an 
applicant to notify the Department in writing if it discovers that any 
material fact or representation contained in the application or in any 
documents or testimony provided in support of the application is 
inaccurate, if any such fact or representation changes during this 
period, or if, during the pendency of the application, anything occurs 
which may affect the continuing accuracy of such fact or 
representation. The Department proposes to amend this section to 
clarify that an applicant must also notify the Department of any 
material fact or representation that has been omitted from the 
exemption application. The determination 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. To the extent that a material 
representation is omitted, becomes inaccurate or changes, the 
prohibited transaction exemptive relief will no longer be available 
starting on the first day on which any one of these events occur.

Section 2570.39 Opportunities To Submit Additional Information

    Under the current rule, in instances where the Department has 
issued a tentative denial letter to an applicant pursuant to Sec.  
2570.38 and the applicant has timely notified the Department of its 
intent to submit additional written information in support of the 
exemption application, the applicant must submit such information 
within 30 days from the date on which it expressed its intent to 
provide the information. In order to promote the uniform and efficient 
consideration of such additional information, the Department proposes 
to amend this section by requiring that the applicant submit the 
additional written information within 40 days from the date of the 
tentative denial letter. An applicant may only request an extension of 
time to submit the additional information in situations where reasons 
beyond its control render it unable to furnish the information within 
the 40-day limit. Such requests for an extension of time for the 
submission of additional information also must be made by the applicant 
before the expiration of the foregoing 40-day period. The Department 
will only grant such requests for extension in unusual circumstances 
and for a limited period of time as determined, respectively, by

[[Page 53178]]

the Department in its sole discretion. If the applicant is unable to 
timely submit such additional written information, the Department will 
issue a final denial letter pursuant to Sec.  2570.41. The Department 
proposes to further amend Sec.  2570.39 to indicate that the applicant 
may notify the Department of its intent to submit additional 
information electronically via the e-mail address provided in the 
tentative denial letter.

Section 2570.40 Conferences

    Under the current rule, the Department will attempt to schedule (in 
response to a request made by an applicant under Sec.  2570.38(b)) a 
conference concerning a tentative denial letter within the 45-day 
period following the later of (1) the date the Department receives the 
applicant's request for a conference, or (2) the date the Department 
notifies the applicant, after reviewing additional information 
submitted pursuant to Sec.  2570.39, that it is not prepared to propose 
the requested exemption. The Department proposes to amend this section 
by substituting a simplified procedure that is intended to facilitate 
the prompt and efficient scheduling of such conferences. In instances 
where the applicant has expressed both a request for a conference and 
an intent to submit additional information in support of the 
application, pursuant to proposed Sec.  2570.39, the Department would 
schedule a conference at a mutually convenient date and time that 
occurs within 20 days after the date on which the Department has 
provided notification to the applicant that it remains unprepared to 
propose the requested exemption based upon the additional information 
submitted by the applicant. Alternatively, in instances where the 
applicant requests a conference without expressing an intent to submit 
additional information pursuant to proposed Sec.  2570.39, the 
Department would schedule a conference at a mutually convenient date 
and time that occurs within 40 days after the date of the issuance of 
the tentative denial letter. An applicant may only request an extension 
of time to schedule a conference in situations where reasons beyond its 
control render it unable to attend a conference within the foregoing 
time frames. Such requests for an extension of time for scheduling a 
conference must also be made before the expiration of the respective 
20-day and 40-day periods. The Department will only grant such requests 
for extension in unusual circumstances and for a brief period of time 
as determined, respectively, by the Department in its sole discretion.
    Under the current rule, in instances where a conference has already 
been held, the applicant may submit to the Department within 20 days of 
the conference any additional data, arguments, or precedents discussed 
at the conference but not previously or adequately presented in 
writing. The Department proposes to amend this provision by permitting 
the applicant to request an extension of time for the submission of 
this additional information where reasons beyond the applicant's 
control render it unable to submit the information within the foregoing 
20-day limit. Such requests for an extension must be made before the 
expiration of the 20-day period. The Department will only grant such 
requests for extension in unusual circumstances and for a brief period 
of time as determined, respectively, by the Department in its sole 
discretion.

Section 2570.42 Notice of Proposed Exemption

    Under section 2570.42 of the proposed regulation, the Department 
would publish a notice of proposed exemption in the Federal Register 
if, after reviewing the record pertaining to the exemption transaction 
(including any information submitted by an applicant), the Department 
tentatively concludes that the proposed exemption satisfies the 
statutory criteria for the granting of an exemption. In addition to 
providing notice of the pendency of the exemption before the 
Department, the revised section would describe the contents of the 
notice of proposed exemption.

Section 2570.43 Notification of Interested Persons by Applicant

    Section 2570.43 of the current regulation describes the methods 
that an applicant may use to notify interested persons of a proposed 
exemption and the required content of the notice. In addition to a copy 
of the Notice of Proposed Exemption published in the Federal Register, 
the applicant must include in the notification to interested persons a 
supplemental statement. Section 2570.43 also states that, once the 
Department has published a notice of proposed exemption, the applicant 
must notify the interested persons described in the application in the 
manner indicated in the application unless the Department has informed 
the applicant beforehand that it considers the method of notification 
described in the application to be inadequate. Where the Department has 
determined the proposed method of notification to be inadequate, the 
applicant must obtain the Department's consent as to the manner and 
time period of providing the notice to interested persons. After 
furnishing notification, an applicant must provide the Department with 
a declaration under penalty of perjury certifying that notice was given 
to the persons and in the time and manner that the Department deems 
adequate.
    Supplemental statement--The Department proposes to modify the 
current text of the supplemental statement by expressly permitting 
interested persons to submit comments or requests for a hearing 
concerning a proposed exemption electronically (at either <a href="/cdn-cgi/l/email-protection#1c79315359585c787370327b736a"><span class="__cf_email__" data-cfemail="4520680a000105212a296b222a33">[email protected]</span></a> 
or http://www.regulations.gov) or by facsimile. The supplemental 
statement also would be modified to contain a statement advising those 
individuals submitting comments or requests for a hearing on an 
exemption to refrain from disclosing sensitive personal data, such as 
Social Security numbers.
    Methods of providing notice--Under the current regulation, the 
method used by an applicant to furnish notice to interested persons 
must be reasonably calculated to ensure that such persons actually 
receive the notice. In all cases, personal delivery and delivery by 
first-class mail are considered reasonable methods of providing notice. 
The Department proposes to amend this provision to also permit 
applicants to utilize electronic means (such as e-mail) to deliver 
notice to interested persons of a pending exemption, provided that the 
applicant can satisfactorily prove electronic delivery to the entire 
class of interested persons.
    Summary of proposed exemption--Since the current exemption 
procedure was adopted in 1990, the Department has noted that recipients 
of the Notice of Proposed Exemption and supplemental statement 
sometimes have difficulty understanding these documents. Many 
recipients, especially plan participants, contact the Department to 
express concern that their benefits under the plan may be adversely 
affected by the exemption transaction. As a consequence, the Department 
devotes considerable time explaining to plan participants and 
beneficiaries the basis for the proposed exemption and informing plan 
participants and beneficiaries of their right to submit written 
comments to the Department relating to the proposed exemption.
    In order to provide notice recipients with a clearer understanding 
of the exemption transaction under consideration, the Department 
proposes to amend Sec.  2570.43 (through addition of new subsections 
(d) and (e)) to require that certain exemption applicants (e.g.,

[[Page 53179]]

those seeking exemptive relief for relatively complex transactions) 
provide notice recipients with an additional statement that succinctly 
explains the essential facts and circumstances surrounding the proposed 
exemption. This additional supplementary statement, to be known as a 
Summary of Proposed Exemption (SPE), must be written in a manner 
calculated to be understood by the average recipient. Among other 
things, the SPE must objectively describe the exemption transaction and 
the parties thereto, the reasons why the plan seeks to engage in the 
transaction, and the conditions and safeguards proposed to protect the 
plan and its participants from potential abuse or unnecessary risk of 
loss in the event the Department grants the exemption. Applicants who 
are directed to provide interested persons with an SPE would also be 
required to furnish the Department with a copy of such summary for 
review prior to its distribution to interested persons.

Sections 2570.44 Withdrawal of Exemption Application

    Section 2570.44 has been modified to clarify that if an applicant 
chooses to withdraw an application for exemption, such withdrawal 
generally shall not prejudice any subsequent applications for exemption 
filed by the applicant.

Sections 2570.46 and 2570.47 Hearings

    Under Sec.  2570.46 of the current regulation, the Department 
requires that persons who may be adversely affected by the grant of an 
exemption from the fiduciary self-dealing provisions of section 406(b) 
of ERISA and corresponding sections of the Code and FERSA must be given 
an opportunity to demonstrate the existence of issues that can only be 
fully explored in the context of a hearing. When persuasive evidence of 
the existence of such issues is provided, the Department will grant the 
requested hearing. This procedure is consistent with the requirements 
of ERISA section 408(a), which precludes the Department from granting 
an exemption from the fiduciary self-dealing restrictions unless the 
Department affords an opportunity for a hearing and makes a 
determination on the record with respect to the three statutory 
findings required for granting an exemption. In addition, under Sec.  
2570.47 of the current regulation, the Department may schedule a 
hearing on its own motion concerning a proposed exemption if it 
determines that such a hearing would be useful in exploring issues 
relevant to the exemption.
    Prior notice of a hearing on an exemption application has always 
been provided by the Department, and is also implicit in the existing 
language of Sec.  2570.46(c) and Sec.  2570.47(b), under which an 
applicant may satisfy its own notice of hearing obligations to 
interested persons by furnishing such individuals with a copy of the 
hearing notice previously published by the Department in the Federal 
Register (provided that such copy is provided by the applicant within 
10 days of its publication by the Department). The current language of 
the regulation, however, does not make clear the Department's 
obligation to provide notice of a hearing in connection with an 
administrative exemption that was proposed by the Department on its own 
motion. Accordingly, the texts of Sec.  2570.46(b) and Sec.  2570.47(a) 
would be modified to state expressly that, in instances where a hearing 
on a proposed exemption is indicated, the Department will publish a 
notice of such hearing in the Federal Register.

Section 2570.48 Grant of Exemption

    Section 2570.48 of the proposed regulation describes the standards 
that must be satisfied for the Department to grant a final exemption. 
The language of the current exemption procedure regulation 
inadvertently omits the statutory requirement contained in both section 
408(a) of ERISA and section 4975(c)(2) of the Code which stipulates 
that, prior to granting an exemption, the Department must make a 
finding that such relief is (1) administratively feasible, (2) in the 
interests of the plan's participants and beneficiaries, and (3) 
protective of the rights of the participants and beneficiaries of the 
plan. Accordingly, the text of the proposed regulation has been revised 
to conform to this statutory mandate.\6\ In adopting this change, 
however, the Department wishes to emphasize that the tripartite 
administrative findings stipulated in section 408(a) of ERISA and/or 
section 4975(c)(2) of the Code have always constituted an integral part 
of the record in each of its prior exemption grants. In addition, the 
language of Sec.  2570.48 has been broadened to encompass not only 
exemptions granted to applicants, but also exemptions that were 
initiated through the Department's own motion.
---------------------------------------------------------------------------

    \6\ Apart from the satisfaction of this statutory prerequisite, 
the legislative history of ERISA makes it clear that the Department 
retains broad discretion in determining whether the grant of an 
exemption is appropriate in a particular instance. H.R. Rep. No. 
1280, 93d Cong., 2d Sess. 311 (1974).
---------------------------------------------------------------------------

Section 2570.49 Limits to the Effect of Exemptions

    Under Sec.  2570.49(a), (b) and (c) of the current regulation, the 
Department describes the limits on the effect of exemptions. This 
section would be amended by adding a new subsection (d) stipulating 
that, for transactions that are continuing in nature, an exemption does 
not protect parties in interest from liability with respect to an 
exemption transaction if, subsequent to the granting of an exemption, 
there are material changes to the original facts and representations 
underlying such exemption or if one or more of the exemption's 
conditions are not met.
    Thus, for example, in the case of a continuing exemption 
transaction such as a loan or a lease, if any of the material facts 
were to change after the exemption is granted, the exemption would 
cease to apply as of the date of such change. In the event of any such 
change, the parties in interest involved in the exemption transaction 
may apply for a new exemption to protect themselves from liability on 
or after the date of such change.

C. Request for Comments

    The Department invites comments from interested persons on all 
aspects of the proposed regulation. Comments should be addressed to the 
Office of Exemption Determinations, Employee Benefits Security 
Administration, Room N-5700, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attention: Prohibited Transaction 
Exemption Procedures Proposed Regulation. Commenters are encouraged to 
submit their comments electronically to <a href="/cdn-cgi/l/email-protection#b4d199fbf1f0f4d0dbd89ad3dbc2"><span class="__cf_email__" data-cfemail="13763e5c565753777c7f3d747c65">[email protected]</span></a> or http://www.regulations.gov (follow instructions for submission of comments). 
All written responses will be available to the public, without charge, 
online at http://www.regulations.gov and http://www.dol.gov/ebsa, and 
at the Public Disclosure Room, Room N-1513, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.
    Comments on this proposal should be submitted to the Department on 
or before October 14, 2010.

D. 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

[[Page 53180]]

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 the Executive Order, 
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 of Labor conducts a preclearance consultation 
program to provide the general public and Federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the Paperwork Reduction Act of 1995 (PRA 
95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that 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 Rule for 
the Prohibited Transaction Exemption Procedures. 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) 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; Attention: Desk Officer for the 
Employee Benefits Security Administration. Although comments may be 
submitted through October 29, 2010, OMB requests that comments be 
received within 30 days of publication of the Proposed Rule for the 
Prohibited Transaction Exemption Procedures to ensure their 
consideration.
    PRA Addressee: Address requests for copies of the ICR to G. 
Christopher Cosby, Office of Policy and Research, U.S. Department of 
Labor, Employee Benefits Security Administration, 200 Constitution 
Avenue, NW., Room N-5718, Washington, DC 20210. Telephone: (202) 693-
8410; Fax: (202) 219-5333. These are not toll-free numbers. A copy of 
the ICR also may be obtained at http://www.RegInfo.gov.
Background
    Both ERISA and the Code contain various statutory exemptions from 
the prohibited transaction rules. In addition, section 408(a) of ERISA 
authorizes the Secretary of Labor to grant administrative exemptions 
from the restrictions of ERISA sections 406 and 407(a), while section 
4975(c)(2) of the Code authorizes the Secretary of the Treasury or his 
delegate to grant exemptions from the prohibitions of Code section 
4975(c)(1). Sections 408(a) of ERISA and 4975(c)(2) of the Code also 
direct the Secretary of Labor and the Secretary of the Treasury, 
respectively, to establish procedures to carry out the purposes of 
these sections.
    Under section 3003(b) of ERISA, the Secretary of Labor 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 section 3004 of ERISA, moreover, the 
Secretary of Labor 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 
(Reorganization Plan No. 4), the foregoing authority of the Secretary 
of the Treasury to issue exemptions under section 4975 of the Code was 
transferred, with certain enumerated exceptions not discussed herein, 
to the Secretary of Labor. Accordingly, the Secretary of Labor now 
possesses the authority under section 4975(c)(2) of the Code, as well 
as under section 408(a) of ERISA, 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 replaced ERISA 
Procedure 75-1, for applications for prohibited transaction exemptions 
filed on or after September 10, 1990. (29 CFR 2570.30 et seq., 55 FR 
32836, Aug. 10, 1990).
    Under the current exemption procedure regulation, in order to make 
exemption determinations, the Department requires full information 
regarding all aspects of the transaction, the parties, and the assets 
involved, which is an information collection request (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: 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; 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; and several other 
statements. In addition, the applicant must certify that the 
information supplied is accurate and complete.

[[Page 53181]]

    The amended rule proposed by the Department would expand the ICR 
contained in sections 2570.34 and 2570.35 of the current exemption 
procedure regulation in several respects. For instance, the current 
requirement of specialized statements from qualified independent 
appraisers, where applicable, would be clarified to include the 
appraiser's rationale, credentials, and a statement regarding the 
appraiser's independence from the parties involved in the transaction. 
In this connection, the appraisal report prepared by the independent 
appraiser must be current and not more than one year old as of the date 
of the transaction. In addition, the content of specialized statements 
submitted by qualified independent fiduciaries, where applicable, would 
be clarified to require the disclosure of information concerning the 
independent fiduciary's qualifications, duties, independence from the 
parties involved in the transaction, and current compensation. The 
content of specialized statements from other kinds of experts would 
also be clarified in the new regulation to require disclosure of 
information concerning the expert's qualifications and their 
independence from the parties involved in the transaction.
    In addition, a new requirement contained in section 2570.43(d) and 
(e) of the proposal, if adopted, would provide the Department with the 
discretion to require an applicant to furnish interested persons with a 
Summary of Proposed Exemption (SPE). The Department expects this 
requirement to be used in instances where the proposed transaction is 
relatively complex, and the notice of proposed exemption may not be 
readily understandable by interested persons (i.e., participants and 
beneficiaries) because of the complexity of the transaction. Among 
other things, the SPE must objectively describe the exemption 
transaction and the parties thereto, the reasons why the plan seeks to 
engage in the transaction, and the conditions and safeguards proposed 
to protect the plan and its participants from potential abuse or 
unnecessary risk of loss in the event the Department grants the 
exemption, and be written in a manner calculated to be understood by 
the average recipient. Applicants who must provide interested persons 
with an SPE also would be required to furnish the Department with a 
copy of the SPE for its review and approval before the SPE is 
distributed to interested persons.
    Finally, the Department also proposes to amend Sec.  2570.43 to 
permit applicants to utilize electronic means (such as e-mail) to 
deliver notice to interested persons of a pending exemption, provided 
that the applicant can demonstrate satisfactory proof of electronic 
delivery to the entire class of interested persons.
    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. Additionally, mailing costs of the 
application are now built into the fees of the outside firm, as are 
costs for the new SPEs required under the proposal in certain 
circumstances.
Annual Hour Burden
    Between 2005 and 2008, the Department received an average of 56 
requests annually for prohibited transaction exemptions. For purposes 
of this analysis, the Department assumes that approximately the same 
number of applications will be received annually over the next three 
years.\7\ The paperwork burden consists of the time required to prepare 
the information the outside legal counsel will use to prepare and 
submit an application for exemption and notice of an application to 
interested persons. Because notices are only distributed once a 
proposed application for an exemption has been published in the Federal 
Register, the Department estimates, based on the number of notices 
published between 2005 and 2008, that 25 applications annually will 
proceed to the notice stage.
---------------------------------------------------------------------------

    \7\ This number excludes applications seeking expedited 
exemptive relief under Prohibited Transaction Class Exemption 96-62. 
The estimated burden hours associated with PTE 96-62 are provided in 
a separate ICR under OMB Control Number 1210-0098.
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    The Department estimates that, on average, 10 hours of in-house 
legal professional and 10 hours of in-house clerical time will be spent 
preparing the documentation for the application that will be used by 
the outside counsel. Therefore, the Department estimates that preparing 
the application will require 560 in-house legal professional hours (56 
applications times 10 hours) and 560 clerical hours (56 applications 
times 10 hours) for a total of 1,120 hours at an equivalent cost of 
$79,861.\8\
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    \8\ The hourly wage estimates used in this analysis are 
estimates for 2008 and are based on data from the Bureau of Labor 
Statistics National Occupational Employment Survey (May 2008) and 
the Bureau of Labor Statistics Employment Cost Index (March 2009). 
Total labor costs (wages plus benefits plus overhead) for clerical 
staff were estimated to average $25.67 per hour over the period 
based on metropolitan wage rates for clerical staff. Total labor 
cost for legal staff was estimated to average $116.93 per hour based 
on metropolitan wage estimates for attorneys. The 560 clerical hours 
are estimated to cost $14,375 and the 560 legal professional hours 
$65,486. This totals to $79,861.
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    For the notice to interested persons, the Department estimates that 
25 applications will be published annually, and that approximately 
17,175 notices to interested parties will be distributed.\9\ The 
Department estimates the 5 minutes of clerical time will be spent 
assisting outside counsel with distribution of the notices. Therefore, 
distribution of notices will require approximately 1,431 hours at an 
equivalent cost of $36,740 ((5 minutes/60 minutes) times 17,175 times 
$25.67, the hourly clerical rate).
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    \9\ Based on a weighted average of 2006 Form 5500 Pension data. 
The data is split into plans with more than 100 participants and 
those with fewer than 100 participants. The Department estimates 
that half of the applications are from small plans (those with less 
than 100 participants) and half from larger plans (those with 100 or 
more participants). This gives a weighted average of 687 
participants per plan, which when multiplied by 25 yields 17,175.
---------------------------------------------------------------------------

Annual Cost Burden
    An application for a prohibited transaction exemption generally is 
prepared and submitted 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 to interested 
persons. Because of the large amount of paperwork that is prepared and 
submitted (applications average approximately 60 pages with varying 
numbers of supporting documents), the Department estimates that legal 
fees will total approximately $17,500 on average per case. This 
estimate includes potential meetings with DOL personnel as well as 
preparation of supplementary documents that are requested following 
some of these meetings and an SPE for some of the more complex cases. 
The Department estimates that the costs for the combined services of 
the qualified independent fiduciary and appraiser/expert will total 
approximately $10,000.

[[Page 53182]]

The new requirements contained in the proposal are incorporated into 
these cost estimates. Thus, the Department estimates that the cost per 
exemption application of the outside law firm, independent fiduciary, 
and appraiser/expert will be approximately $27,500, which when 
multiplied by the estimated 56 cases is expected to result in a cost 
burden of approximately $1,540,000.
    The Department estimates that 17,175 notices to interested persons 
will be sent, and that 13,470 of the notices (80 percent) will 
distributed via first class mail with a material cost of $.05 per page 
and distribution costs of $.44 per notice. This generates an estimated 
cost of $6,733. The Department further estimates that 2,576 of the 
notices (15 percent of the total number of notices) will be distributed 
electronically and 859 (5 percent) will be distributed by alternative 
means approved by the Department.\10\
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    \10\ The Department notes that it determines whether it is 
appropriate to distribute notices by means other than mailing on a 
case-by-case basis.
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    The Department estimates that SPEs will be requested with respect 
to 8 submissions (15% of the 56 submissions) per year, and that the 
SPEs will be sent with the notices. Based on an average plan size of 
687 participants per plan, this results in the distribution of 5,496 
SPEs, of which 4,397 (80 percent) will be mailed. The material cost 
associated with mailing the 4,397 SPEs at $.05 per page is $220. 
Therefore, the total cost burden for distribution of the notices and 
SPEs is estimated to be approximately $6,953 ($6,733 for the notices + 
$220 for the cost of including the SPEs).
    Type of Review: New collection.
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Title: Proposed Rule for Prohibited Transaction Exemption 
Procedures.
    OMB Number: 1210-0060.
    Affected Public: Business or other for-profit; not-for-profit 
institutions.
    Respondents: 56.
    Responses: 22,727.
    Frequency of Response: Occasionally.
    Estimated Total Annual Burden Hours: 2,551.
    Estimated Total Annual Burden Cost: $1,546,953.

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.\11\ 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.
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    \11\ The basis for this definition is found in section 104(a)(2) 
of the Act, which permits the Secretary of Labor to prescribe 
simplified annual reports for pension plans that cover fewer than 
100 participants. Pursuant to the authority of 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.
---------------------------------------------------------------------------

    By this standard, the Department estimates that nearly half the 
requests for exemptions are from small plans. Thus, of the 
approximately 613,000 ERISA-covered small plans, the Department 
estimates that 28 small plans (.000046% 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. Section 514 of ERISA 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.

[[Page 53183]]

    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:

PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT

    1. The authority citation for part 2570 reads 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, 3 CFR 332 
(1978), reprinted in 5 U.S.C. app. at 672 (2006), and in 92 Stat. 
3790 (1978); Secretary of Labor's Order 6-2009, 74 FR 21524 (May 7, 
2009).

    2. Revise subpart B to part 2570 to read as follows:
Subpart B--Procedures Governing the Filing and Processing of Prohibited 
Transaction Exemption Applications
Sec.
2570.30 Scope of rules.
2570.31 Definitions.
2570.32 Persons who may apply for exemptions.
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.
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


Sec.  2570.30  Scope of rules.

    (a) The rules of procedure set forth in this subpart apply to 
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); \1\ or
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    \1\ Section 102 of Presidential Reorganization Plan No. 4 of 
1978 (3 CFR 332 (1978), reprinted in 5 U.S.C. app. at 672 (2006), 
and in 92 Stat. 3790 (1978)), effective December 31, 1978, generally 
transferred the authority of the Secretary of the Treasury to issue 
administrative exemptions under section 4975(c)(2) of the Code to 
the Department of Labor.
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    (3) The Federal Employees' Retirement System Act of 1986 (FERSA) (5 
U.S.C. 8477(c)(3)).
    (b) Under these rules of procedure, 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 section 406 of ERISA and the corresponding 
restrictions of the Code and FERSA. While administrative exemptions 
granted under these rules are ordinarily prospective in nature, an 
applicant may also obtain retroactive relief for past prohibited 
transactions if certain safeguards described in this subpart were in 
place at the time the transaction was consummated.
    (c) These rules 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 these procedural rules does not relieve a fiduciary or other 
party in interest or disqualified person with respect to a plan from 
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 
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 section 401(a) of the Code that 
the plan must operate for the exclusive benefit of the employees of the 
employer maintaining the plan and their beneficiaries.
    (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 
advice from Department employees in preparing an exemption application. 
However, such advice does not constitute part of the administrative 
record and is not binding on the Department in its processing of an 
exemption application or in its examination or audit of a plan.
    (f) The Department will generally treat any exemption application 
that is filed solely under section 408(a) of ERISA or solely under 
section 4975(c)(2) of the Code as an exemption request filed under both 
section 408(a) and section 4975(c)(2) if it relates to a transaction 
that would be prohibited both by ERISA and the corresponding provisions 
of the Code.


Sec.  2570.31  Definitions.

    For purposes of these procedures, 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;
    (2) Any director of, relative of, or partner in, any such person;
    (3) Any corporation, partnership, trust, or unincorporated 
enterprise of which such person is an officer, director, or a 5 percent 
or more partner or owner; and
    (4) Any employee or officer of the person who--
    (i) Is highly compensated (as defined in section 4975(e)(2)(H) of 
the Code), or
    (ii) Has direct or indirect authority, responsibility, or control 
regarding the custody, management, or disposition of plan assets.
    (b) A class exemption is an administrative exemption, granted under 
section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3), which applies to any parties in interest within the 
class of parties in interest specified in the exemption who meet the 
conditions of the exemption.
    (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 section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3), which applies only to the specific parties in 
interest named or otherwise defined in the exemption.

[[Page 53184]]

    (f) A party in interest means a person described in section 3(14) 
of ERISA or 5 U.S.C. 8477(a)(4) and includes a disqualified person, as 
defined in section 4975(e)(2) of the Code.
    (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 
satisfies all of the requirements set forth in this subpart at Sec.  
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 any party in interest engaging in the 
exemption transaction and its affiliates; the determination as to the 
independence of the appraiser is made by the Department on the basis of 
all relevant facts and circumstances. As a general matter, an 
independent appraiser retained in connection with an exemption 
transaction must not receive more than a de minimis amount of 
compensation (including amounts received for performing the appraisal) 
from the parties in interest to the transaction or their affiliates. 
For purposes of determining whether the compensation received by the 
appraiser is de minimis, all compensation received by the appraiser is 
taken into account. Such de minimis amount will ordinarily constitute 
1% or less of the annual income of the qualified independent appraiser. 
In all events, the burden is on the applicant to demonstrate the 
independence of the appraiser.
    (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 in interest engaging in the 
exemption transaction and its affiliates; the determination as to the 
independence of a fiduciary is made by the Department on the basis of 
all relevant facts and circumstances. As a general matter, an 
independent fiduciary retained in connection with an exemption 
transaction must receive no more than a de minimis amount of 
compensation (including amounts received for preparing fiduciary 
reports and other related duties) from the parties in interest to the 
transaction or their affiliates. For purposes of determining whether 
the compensation received by the fiduciary is de minimis, all 
compensation received by the fiduciary is taken into account. Such de 
minimis amount will ordinarily constitute 1% or less of the annual 
income of the qualified independent fiduciary. In all events, the 
burden is on the applicant to demonstrate the independence of the 
fiduciary.


Sec.  2570.32  Persons who may apply for exemptions.

    (a) The Department will initiate exemption proceedings upon the 
application of:
    (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 (a)(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 a 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.


Sec.  2570.33  Applications the Department will not ordinarily 
consider.

    (a) The Department will not ordinarily consider:
    (1) An application that fails to include all the information 
required by Sec. Sec.  2570.34 and 2570.35 of this subpart or otherwise 
fails to conform to the requirements of these procedures; or
    (2) An application involving a transaction or transactions which 
are the subject of an investigation for possible violations of part 1 
or 4 of subtitle B of Title I of ERISA or section 8477 or 8478 of FERSA 
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 or the Internal Revenue Service to enforce the above-
mentioned provisions of ERISA or FERSA.
    (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 an application for an individual 
exemption where there is a pending class exemption if the issuance of 
the final class exemption may not be imminent, and the applicant can 
demonstrate that time constraints necessitate consideration of the 
transaction on an individual basis.
    (c) If for any reason the Department decides not to consider an 
exemption application, it will inform the applicant of that decision in 
writing and of the reasons therefore.


Sec.  2570.34  Information to be included in every exemption 
application.

    (a) All applications for exemptions must contain the following 
information:
    (1) The name(s) of the applicant(s);
    (2) A detailed description of the exemption transaction including 
identification of all the parties in interest involved, 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 of any representatives for the affected plan(s) 
and parties in interest and what individuals or entities they 
represent;
    (4) The reasons a plan would have for entering into the exemption 
transaction;
    (5) The prohibited transaction provisions from which exemptive 
relief is requested and the reason why the transaction would violate 
each such provision;
    (6) Whether the exemption transaction is customary for the industry 
or class involved;
    (7) Whether the exemption transaction is or has been the subject of 
an investigation or enforcement action by the Department or by the 
Internal Revenue Service; and
    (8) 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

[[Page 53185]]

beneficiaries from denial of the exemption.
    (b) All applications for exemption must also contain the following:
    (1) A statement explaining why the requested exemption would be--
    (i) Administratively feasible;
    (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) With respect to the notification of interested persons required 
by Sec.  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.
    (3) 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--
    (i) A copy of the letter concluding the Department's action on the 
advisory opinion request; or
    (ii) If the Department has not yet concluded its action on the 
request:
    (A) 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; and
    (B) An explanation of the effect of the issuance of an advisory 
opinion upon the exemption transaction.
    (4) If the application is to be signed by anyone other than an 
individual 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.
    (5)(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;
    (D) The plan fiduciary that has the authority, responsibility, and 
control with respect to the exemption transaction where the applicant 
is a plan.
    (c) Specialized statements, as applicable, from a qualified 
independent appraiser on behalf of the plan, such as appraisal reports 
or analyses of market conditions, submitted to support an application 
for exemption must be accompanied by a statement of consent from such 
appraiser acknowledging that the statement is being submitted to the 
Department as part of an application for exemption. Such statements 
must also contain the following written information:
    (1) A copy of the qualified independent appraiser's engagement 
letter with the plan describing the specific duties the appraiser shall 
undertake;
    (2) A summary of the qualified independent appraiser's 
qualifications to serve in such capacity;
    (3) A detailed description of any relationship that the qualified 
independent appraiser has had or may have with any party in interest 
engaging in the transaction with the plan, or its affiliates, that may 
influence the appraiser;
    (4) A written appraisal report prepared by the qualified 
independent appraiser, on behalf of the plan, which satisfies 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 the 
party in interest or its affiliate(s) may derive from control of the 
asset(s), such as 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. If the appraisal report is 
a year old or more, a new appraisal shall be submitted to the 
Department by the applicant.
    (5) 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 acts of malfeasance;
    (6) 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
    (7) The qualified independent appraiser shall submit a written 
representation disclosing the percentage of its current income that was 
derived from any party in interest involved in the transaction or its 
affiliates; in general, such percentage shall be computed by comparing, 
in fractional form:
    (i) The amount of the appraiser's projected personal or business 
income from the current federal income tax year (including amounts 
received from preparing the appraisal report) that will be derived from 
the party in interest or its affiliates (expressed as a numerator); and
    (ii) The appraiser's gross personal or business income for the 
prior federal income tax year (expressed as a denominator).
    (d) For those exemption transactions requiring the retention of a 
qualified independent fiduciary to represent the interests of the plan, 
a statement must be submitted by such 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 with the plan describing the fiduciary's specific duties;
    (3) An explanation 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 in acting as a 
qualified independent fiduciary with respect to a plan;
    (4) A detailed description of any relationship that the qualified 
independent fiduciary has had or may have with the party in interest 
engaging in the transaction with the plan or its affiliates;
    (5) An acknowledgement by the qualified independent fiduciary that 
it

[[Page 53186]]

understands its duties and responsibilities under ERISA in acting as a 
fiduciary on behalf of the plan;
    (6) The qualified independent fiduciary's opinion on whether the 
proposed transaction would be in the interests of the plan and of its 
participants and beneficiaries, and protective of the rights of 
participants and beneficiaries of such plan, along with a statement of 
the reasons on which the opinion is based;
    (7) Where the proposed 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 shall, during the pendency of the transaction:
    (i) Monitor the transaction on behalf of the plan on a continuing 
basis;
    (ii) Ensure that the transaction remains in the interests of the 
plan 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; and
    (8) The qualified independent fiduciary shall submit a written 
representation disclosing the percentage of such fiduciary's current 
income that was derived from any party in interest involved in the 
transaction or its affiliates; in general, such percentage shall be 
computed by comparing, in fractional form:
    (i) The amount of the fiduciary's projected personal or business 
income from the current federal income tax year that will be derived 
from the party in interest or its affiliates (expressed as a 
numerator); and
    (ii) The fiduciary's gross personal or business income (excluding 
fixed, non-discretionary retirement income) for the prior federal 
income tax year (expressed as a denominator).
    (e) Specialized 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 application for exemption 
must be accompanied by a statement of consent from such expert 
acknowledging that the statement is being submitted to the Department 
as part of an application for exemption. Such statements must also 
contain the following written information:
    (1) A copy of the expert's engagement letter 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 in interest engaging in the transaction 
with the plan, or its affiliates, that may influence the actions of the 
expert.
    (f) 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.


Sec.  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 Sec.  2570.34 of this subpart, the 
following information:
    (1) The name, 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;
    (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 section 
401(a) of the Code, section 4975(c)(1) of the Code, section 406 or 
407(a) of ERISA, or 5 U.S.C. 8477(c)(3), including a description of the 
circumstances surrounding such violation;
    (4) Whether any relief under section 408(a) of ERISA, section 
4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) has been requested by, 
or provided to, the applicant or any of the parties on behalf of whom 
the exemption is sought and, if so, the exemption application number or 
the prohibited transaction exemption number;
    (5) Whether the applicant or any of the parties in interest 
involved in the exemption transaction is currently, or has been within 
the last five years, a defendant in any lawsuit or criminal action 
concerning such person's conduct as a fiduciary or party in interest 
with respect to any plan (other than a lawsuit with respect to a 
routine claim for benefits), and a description of the circumstances of 
such lawsuit or criminal action;
    (6) Whether the applicant (including any person described in Sec.  
2570.34(b)(5)(ii)) or any of the parties in interest 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: 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 other crime 
described in section 411 of ERISA, 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 
judgment of the trial court, regardless of whether that judgment 
remains under appeal;
    (7) Whether, within the last five years, any plan affected by the 
exemption transaction or any party in interest 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, or the Federal Retirement Thrift 
Investment Board involving 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. 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.
    (8) Whether any plan affected by the requested exemption has 
experienced a reportable event under section 4043 of ERISA, 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 
section 4041 of ERISA respecting any plan affected by the requested 
exemption, and, if so, a description of the circumstances for the 
issuance of such notice;

[[Page 53187]]

    (10) Names, addresses, and taxpayer identifying numbers of all 
parties in interest 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;
    (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 section 4975(a) and (b) of 
the Code, or any civil penalties due under section 502(i) or (l) of 
ERISA 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 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) have been 
invested, directly or indirectly, in any other exempt or non-exempt 
transactions with the party in interest involved in the exemption 
transaction (including, but not limited to, plan investments in loans 
or leases involving the party in interest, securities lending with the 
party in interest, extensions of credit with the party in interest, or 
plan investment in securities issued by the party in interest), and, if 
such investments exist, a statement 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) who will bear the costs of the exemption 
application and of notifying interested persons; and
    (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.
    (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 these documents 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 in interest 
that is providing a personal guarantee with respect to the exemption 
transaction.
    (c) Special rule for applications for individual exemption 
involving pooled funds:
    (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 
(a)(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, the information required by paragraph (a)(16) of this 
section relates solely to other investment transactions between the 
pooled fund or funds and any parties in interest involved in the 
exemption transaction.);
    (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 
exemption involving pooled funds in which certain plans participate.
    (i) This paragraph 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% 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), (a)(5) through (7), (a)(10), 
(a)(12) through (16), and (a)(18) and (19), of this section. The 
information required by this paragraph must be furnished in reference 
to the plan's investment in the pooled fund (e.g., the names, addresses 
and taxpayer identifying numbers of all fiduciaries responsible for the 
plan's investment in the pooled fund [Sec.  2570.35(a) (10)], the 
percentage of the assets of the plan invested in the pooled fund [Sec.  
2570.35(a)(12)], whether the plan's investment in the pooled fund has 
been consummated or will be consummated only if the exemption is 
granted [Sec.  2570.35(a)(13)], 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) Retroactive exemptions:
    (1) Generally, the Department will favorably consider requests for 
retroactive relief, in all exemption applications, where the safeguards 
necessary for the grant of a prospective exemption were in place at the 
time at

[[Page 53188]]

which the parties entered into the transaction. An applicant for a 
retroactive exemption must demonstrate that it acted in good faith by 
taking reasonable and appropriate steps to protect the plan from abuse 
and unnecessary risk at the time of the transaction.
    (2) Among the factors that the Department would take into account 
in making a finding that an applicant acted in good faith include the 
following:
    (i) The participation of an independent fiduciary acting on behalf 
of the plan who is qualified to negotiate, approve and monitor the 
transaction;
    (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 
application for exemption containing documentation of all necessary and 
relevant facts and representations upon which the applicant relied. In 
this regard, additional weight will be given 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 knowing that such act 
or transaction was prohibited under section 406 of ERISA and/or section 
4975 of the Code. 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 entering 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 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 section 408(a) of ERISA and section 
4975(c)(2) of the Code.
    (3) The Department, as a general matter, will not favorably 
consider requests for retroactive exemptions where transactions or 
conduct with respect to which an exemption is requested resulted in a 
loss to the plan. In addition, the Department will not favorably 
consider requests for exemptions where the transactions are 
inconsistent with the general fiduciary responsibility provisions of 
sections 403 or 404 of ERISA or the exclusive benefit requirements of 
section 401(a) of the Code.


Sec.  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 these procedures may be mailed 
via first-class mail to: Employee Benefits Security Administration, 
Office of Exemption Determinations, U.S. Department of Labor, Room N-
5700, 200 Constitution Avenue, NW., Washington, DC 20210. 
Alternatively, applications may be e-mailed to the Department at: <a href="/cdn-cgi/l/email-protection#2e4b03616b6a6e4a414200494158"><span class="__cf_email__" data-cfemail="e683cba9a3a2a682898ac8818990">[email protected]</span></a> or transmitted via facsimile.\2\ Notwithstanding the 
foregoing methods of transmission, applicants are also required to 
submit two paper copies of applications--one for the Department's file 
and one for the analyst's working copy.
---------------------------------------------------------------------------

    \2\ The current facsimile number for the Office of Exemption 
Determinations is (202) 219-0204.
---------------------------------------------------------------------------


Sec.  2570.37  Duty to amend and supplement exemption applications.

    (a) While an exemption application is pending final action with the 
Department, 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 is inaccurate, if any such fact or 
representation changes during this period, or if, during the pendency 
of the application, anything occurs that may affect the continuing 
accuracy of any such fact or representation. 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 in interest 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, or the Federal Retirement Thrift Investment Board 
involving 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 
documentation it considers necessary to verify any statements contained 
in the application or in supporting materials or documents.
    (d) 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 shall be made by the Department. To the extent that a 
material representation is omitted, becomes inaccurate, or changes, the 
prohibited transaction exemptive relief will no longer be available 
starting on the earliest date of these events.


Sec.  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. At the same time, the 
Department will provide a brief statement of the reasons for its 
tentative denial.
    (b) An applicant will have 20 days from the date of a tentative 
denial letter to request a conference under Sec.  2570.40 of this 
subpart and/or to notify the Department of its intent to submit 
additional information under Sec.  2570.39 of this subpart. 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 Sec.  2570.41.
    (c) The Department need not issue a tentative denial letter to an 
applicant before issuing a final denial letter where the Department has 
conducted a hearing on the exemption pursuant to either Sec.  2570.46 
or Sec.  2570.47.


Sec.  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 either by 
telephone or by letter sent to the address furnished in the applicant's 
tentative denial letter, or electronically via the e-mail address 
provided in the tentative

[[Page 53189]]

denial letter. At the same time, the applicant should indicate 
generally the type of information that will be submitted.
    (b) An applicant will have 40 days from the date of the tentative 
denial letter described in Sec.  2570.38(a) to submit in writing all of 
the additional information he or she intends to provide in support of 
the application. 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 Sec.  2570.34(b)(5) of this subpart to sign such 
a declaration.
    (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 application within the 40-day 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 40-day period and will be granted only in unusual 
circumstances and for a limited period of time as determined, 
respectively, by the Department in its sole discretion.
    (d) If an applicant is unable to submit all of the additional 
information he or she intends to provide in support of his exemption 
application within the 40-day period specified in paragraph (b) of this 
section, or within any additional period of time granted pursuant to 
paragraph (c) of this section, the applicant may withdraw the exemption 
application before expiration of the applicable time period and 
reinstate it later pursuant to Sec.  2570.44.
    (e) The Department will issue, without further notice, a final 
denial letter denying the requested exemption pursuant to Sec.  2570.41 
where--
    (1) The Department has not received all the additional information 
that the applicant was required to submit within the 40-day period 
described in paragraph (b) of this section, or within any additional 
period of time granted pursuant to paragraph (c) of this section;
    (2) The applicant did not request a conference pursuant to Sec.  
2570.38(b) of this subpart; and
    (3) The applicant has not withdrawn the application as permitted by 
paragraph (d) of this section.


Sec.  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 conference will be held at the applicant's 
request.
    (b) An applicant is entitled to only one conference with respect to 
any exemption application. An applicant will not be entitled to a 
conference, however, where the Department has held a hearing on the 
exemption under either Sec.  2570.46 or Sec.  2570.47 of this subpart.
    (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 Sec.  2570.38(b) and also has submitted additional 
information pursuant to Sec.  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 provided by the applicant pursuant to Sec.  
2570.39, it is still not prepared to propose the requested exemption. 
If, for reasons beyond its control, the applicant cannot attend a 
conference within the 20-day limit described in this paragraph, 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 20-day limit. The Department will only grant such an extension in 
unusual circumstances and for a brief period of time as determined, 
respectively, by the Department in its sole discretion.
    (e) In instances where the applicant has requested a conference 
pursuant to Sec.  2570.38(b) of this subpart but has not submitted 
additional information pursuant to Sec.  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 Sec.  2570.38(a). If, for reasons beyond its 
control, the applicant cannot attend a conference within the 40-day 
limit described in this paragraph, 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 40-day limit. The 
Department will only grant such an extension in unusual circumstances 
and for a brief period of time as determined, respectively, by the 
Department in its sole discretion.
    (f) If the applicant fails to either timely schedule or appear for 
a conference agreed to by the Department pursuant to paragraphs (d) or 
(e) of this section, the applicant will be deemed to have waived its 
right to a conference.
    (g) Within 20 days after the date of any conference held under this 
section, the applicant may submit to the Department (electronically or 
in paper form) any additional 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 20-day limit, the 
applicant may request an extension of time to furnish the information, 
provided that such request is made before the expiration of the 20-day 
limit described in this paragraph. The Department will only grant such 
an extension in unusual circumstances and for a brief period of time as 
determined, respectively, by the Department in its sole discretion.


Sec.  2570.41  Final denial letters.

    The Department will issue a final denial letter denying a requested 
exemption where:
    (a) The conditions for issuing a final denial letter specified in 
Sec.  2570.38(b) or Sec.  2570.39(e) of this subpart are satisfied;
    (b) After issuing a tentative denial letter under Sec.  2570.38 of 
this subpart and considering the entire record in the case, including 
all written information submitted pursuant to Sec.  2570.39 and Sec.  
2570.40(e) of this subpart, the Department decides not to propose an 
exemption or to withdraw an exemption already proposed; or
    (c) After proposing an exemption and conducting a hearing on the 
exemption under either Sec.  2570.46 or Sec.  2570.47 of this subpart 
and after considering the entire record in the case, including the 
record of the hearing, the Department decides to withdraw the proposed 
exemption.


Sec.  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;

[[Page 53190]]

    (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 section 406(b) of ERISA, section 4975(c)(1)(E) or (F) 
of the Code, or section 8477(c)(2) of FERSA, inform interested persons 
of their right to request a hearing under Sec.  2570.46 of this subpart 
and establish a deadline for receipt of requests for such hearings.


Sec.  2570.43  Notification of interested persons by applicant.

    (a) If a notice of proposed exemption is published in the Federal 
Register in accordance with Sec.  2570.42 of this subpart, the 
applicant must notify interested persons of the pendency of the 
exemption in the manner and 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] \3\ 
Notice 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].\4\ [If you may be adversely affected by the 
grant of the exemption, you also have the right to request a hearing 
on the exemption by [date].] \5\
---------------------------------------------------------------------------

    \3\ To be added in instances where the Department requires the 
applicant to furnish a Summary of Proposed Exemption to interested 
persons as described in Sec.  2570.43(d).
    \4\ The applicant will write in this space the date of the last 
day of the time period specified in the notice of proposed 
exemption.
    \5\ To 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.
---------------------------------------------------------------------------

    All comments and/or requests for a hearing should be addressed 
to the Office of Exemption Determinations, Employee Benefits 
Security Administration, Room ------------, \6\ U.S. Department of 
Labor, 200 Constitution Avenue, NW., Washington, DC 20210, 
Attention: Application No. ------------. \7\ Comments and hearing 
requests may also be transmitted to the Department electronically at 
<a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="0f6a22606a6b4f6b606321686079">[email protected]</a> or at http://www.regulations.gov (follow instructions 
for submission), and should prominently reference the application 
number listed above. In addition, comments and hearing requests may 
be transmitted to the Department via facsimile at ------------.\8\ 
Individuals submitting comments or requests for a hearing on this 
matter are advised not to disclose sensitive personal data, such as 
social security numbers.
---------------------------------------------------------------------------

    \6\ Apart from the satisfaction of this statutory prerequisite, 
the legislative history of ERISA makes it clear that the Department 
retains broad discretion in determining whether the grant of an 
exemption is appropriate in a particular instance. H.R. Rep. No. 
1280, 93d Cong., 2d Sess. 311 (1974).
    \7\ The 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.
    \8\ The current facsimile number for the Office of Exemption 
Determinations is (202) 219-0204.
---------------------------------------------------------------------------

    The Department will make no final decision on the proposed 
exemption until it reviews all 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 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 of electronic 
delivery to the entire class of interested persons.
    (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 
foregoing requirements 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 Sec.  2570.34(b)(5) of this subpart 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.


Sec.  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 confirm by 
letter the applicant's withdrawal of the application 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

[[Page 53191]]

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 Sec.  2570.39 was outstanding, 
that information must accompany the request for reinstatement of the 
application. However, the applicant need not resubmit information 
previously furnished to the Department in connection with a withdrawn 
application unless reinstatement of the application is requested more 
than two years after the date of its withdrawal.
    (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.


Sec.  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 
Sec.  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 Sec.  
2570.34(b)(5) 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.


Sec.  2570.46  Hearings in opposition to exemptions from restrictions 
on fiduciary self-dealing.

    (a) Any interested person who may be adversely affected by an 
exemption which the Department proposes to grant from the restrictions 
of section 406(b) of ERISA, section 4975(c)(1)(E) or (F) of the Code, 
or section 8477(c)(2) of FERSA 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 e-mail 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 adversely 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 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 does not meet the requirements of 
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 Sec.  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 Sec.  2570.34(b)(5) to sign such a 
declaration.


Sec.  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 Sec.  2570.46(c). In addition, the applicant must submit a 
statement subscribed as true under penalty of perjury like that 
required in Sec.  2570.46(d).


Sec.  2570.48  Decision to grant exemptions.

    (a) The Department may not grant an exemption under section 408(a) 
of ERISA, section 4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) 
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 is:
    (1) Administratively feasible;
    (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

[[Page 53192]]

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.


Sec.  2570.49  Limits on the effect of exemptions.

    (a) An exemption does not take effect or protect parties in 
interest from liability 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 
does not protect parties in interest from liability with respect to an 
exemption transaction 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.


Sec.  2570.50  Revocation or modification of exemptions.

    (a) If, after an exemption takes effect, changes in circumstances, 
including changes in law or policy, occur which call into question the 
continuing validity of the Department's original findings concerning 
the exemption, the Department may take steps to revoke or modify the 
exemption.
    (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) Ordinarily the revocation or modification of an exemption will 
have prospective effect only.


Sec.  2570.51  Public inspection and copies.

    (a) The administrative record of each exemption will be open to 
public inspection and 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.


Sec.  2570.52  Effective date.

    This subpart is effective with respect to all exemptions filed with 
or initiated by the Department under section 408(a) of ERISA, section 
4975(c)(2) of the Code, and/or 5 U.S.C. 8477(c)(3) at any time after 
[DATE 60 DAYS AFTER DATE OF PUBLICATION OF THE FINAL RULE]. 
Applications for exemptions under section 408(a) of ERISA, section 
4975(c)(2) of the Code, and/or 5 U.S.C. 8477(c)(3) filed on or after 
September 10, 1990 but before [DATE 60 DAYS AFTER DATE OF PUBLICATION 
OF THE FINAL RULE] are governed by part 2570 of chapter XXV of title 29 
of the Code of Federal Regulations (title 29 CFR part 2570 as revised 
July 1, 1991).
* * * * *

    Signed at Washington, DC, this 18th day of August 2010.
Michael L. Davis,
Deputy Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2010-21073 Filed 8-27-10; 8:45 am]
BILLING CODE 4510-29-P


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