53172 Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Proposed Rules 

1The 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. 

2The 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. 

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. 

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: e-OED@dol.gov 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. 

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

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 


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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 Departmentinitiated 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 decisionmaking 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 selfdealing. 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 


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3Additional 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. 

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. 

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. 

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 ERISArelated 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. 

In 2002, Congress enacted the EGovernment 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, 

e-OED@dol.gov, 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. 


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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 

(§ 2570.30 through § 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 § 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 § 2570.32(a) under the 

section heading that describes ‘‘Persons 

who may apply for exemptions.’’ Apart 

from repositioning this regulatory 

language, the revised § 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 § 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 § 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 

§ 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 

§ 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 

§ 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 noncomplex transactions) have required the 

designation of an independent fiduciary 

or second fiduciary (e.g., the employer 

or an officer of the employer who is 


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5See 49 FR 9494 (March 13, 1984), as amended 

by 70 FR 49305 (August 23, 2005). 

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 § 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 § 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 

(§ 2570.35(a)(5)), convicted of a crime 

described in section 411 of ERISA 

(§ 2570.35(a)(6)), or under investigation 

or examination or engaged in litigation 

or a continuing controversy with certain 

Federal agencies (§ 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 § 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 § 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 § 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 § 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. 

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 § 2570.35(a)(14)(v) requires 


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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 

§ 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 

§ 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 (§ 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, § 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 § 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 


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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 § 2570.41. The 

Department proposes to further amend 

§ 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 § 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 § 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 

§ 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 § 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 e-OED@dol.gov 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 firstclass 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 § 2570.43 (through addition of 

new subsections (d) and (e)) to require 

that certain exemption applicants (e.g., 


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6Apart 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). 

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 § 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 selfdealing 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 

§ 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 

§ 2570.46(c) and § 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 

§ 2570.46(b) and § 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 § 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. 

Section 2570.49 Limits to the Effect of 

Exemptions 

Under § 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 e-OED@dol.gov 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 


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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. 


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7This 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. 

8The 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. 

9Based 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. 

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 § 2570.43 to permit applicants 

to utilize electronic means (such as email) 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. 

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

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). 

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. 


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10The Department notes that it determines 

whether it is appropriate to distribute notices by 

means other than mailing on a case-by-case basis. 

11The 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. 

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

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 forprofit; 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. 

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. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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1Section 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. 

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 

§ 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 

(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. 

§ 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. 


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(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 

§ 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. 

§ 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. 

§ 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 

§§ 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. 

§ 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 


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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 

§ 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 


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53186 Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Proposed Rules 

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, nondiscretionary 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. 

§ 2570.35 Information to be included in 

applications for individual exemptions only. 

(a) Except as provided in paragraph 

(c) of this section, every application for 

an individual exemption must include, 

in addition to the information specified 

in § 2570.34 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 

§ 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; 


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(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 [§ 2570.35(a) (10)], the 

percentage of the assets of the plan 

invested in the pooled fund 

[§ 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 

[§ 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 


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53188 Federal Register / Vol. 75, No. 167 / Monday, August 30, 2010 / Proposed Rules 

2The current facsimile number for the Office of 

Exemption Determinations is (202) 219–0204. 

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. 

§ 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: e-OED@dol.gov 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. 

§ 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. 

§ 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 § 2570.40 

of this subpart and/or to notify the 

Department of its intent to submit 

additional information under § 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 § 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 

§ 2570.46 or § 2570.47. 

§ 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 email address provided in the tentative 


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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 § 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 § 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 § 2570.44. 

(e) The Department will issue, 

without further notice, a final denial 

letter denying the requested exemption 

pursuant to § 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 § 2570.38(b) of 

this subpart; and 

(3) The applicant has not withdrawn 

the application as permitted by 

paragraph (d) of this section. 

§ 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 § 2570.46 or § 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 

§ 2570.38(b) and also has submitted 

additional information pursuant to 

§ 2570.39, the Department will schedule 

a conference under this section for a 

date and time that occurs within 20 

days after the date on which the 

Department has provided either oral or 

written notification to the applicant 

that, after reviewing the additional 

information provided by the applicant 

pursuant to § 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 

§ 2570.38(b) of this subpart but has not 

submitted additional information 

pursuant to § 2570.39, the Department 

will schedule a conference under this 

section for a date and time that occurs 

within 40 days after the date of the 

issuance of the tentative denial letter 

described in § 2570.38(a). 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. 

§ 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 § 2570.38(b) or 

§ 2570.39(e) of this subpart are satisfied; 

(b) After issuing a tentative denial 

letter under § 2570.38 of this subpart 

and considering the entire record in the 

case, including all written information 

submitted pursuant to § 2570.39 and 

§ 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 § 2570.46 or § 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. 

§ 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; 


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3To be added in instances where the Department 

requires the applicant to furnish a Summary of 

Proposed Exemption to interested persons as 

described in § 2570.43(d). 

4The applicant will write in this space the date 

of the last day of the time period specified in the 

notice of proposed exemption. 

5To 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. 

6Apart 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). 

7The 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. 

8The current facsimile number for the Office of 

Exemption Determinations is (202) 219–0204. 

(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 § 2570.46 of this 

subpart and establish a deadline for 

receipt of requests for such hearings. 

§ 2570.43 Notification of interested 

persons by applicant. 

(a) If a notice of proposed exemption 

is published in the Federal Register in 

accordance with § 2570.42 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

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 e-oed@dol.gov 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. 

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 § 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. 

§ 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 


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withdraw their applications, the 

Department may either terminate all 

proceedings relating to the exemption or 

propose the exemption on its own 

motion. 

(d) If, following the withdrawal of an 

exemption application, an applicant 

decides to reapply for the same 

exemption, he or she may contact the 

Department in writing (including 

electronically) to request that the 

application be reinstated. The applicant 

should refer to the application number 

assigned to the original application. If, 

at the time the original application was 

withdrawn, any additional information 

to be submitted to the Department under 

§ 2570.39 was outstanding, that 

information must accompany the 

request for reinstatement of the 

application. 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. 

§ 2570.45 Requests for reconsideration. 

(a) The Department will entertain one 

request for reconsideration of an 

exemption application that has been 

finally denied pursuant to § 2570.41 if 

the applicant presents in support of the 

application significant new facts or 

arguments, which, for good reason, 

could not have been submitted for the 

Department’s consideration during its 

initial review of the exemption 

application. 

(b) A request for reconsideration of a 

previously denied application must be 

made within 180 days after the issuance 

of the final denial letter and must be 

accompanied by a copy of the 

Department’s final letter denying the 

exemption and a statement setting forth 

the new information and/or arguments 

that provide the basis for 

reconsideration. 

(c) A request for reconsideration must 

also be accompanied by a declaration 

under penalty of perjury attesting to the 

truth of the new information provided, 

which is signed by a person qualified 

under § 2570.34(b)(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. 

§ 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 

§ 2570.43(b). 

(d) After furnishing the notice 

required by paragraph (c) of this section, 

an applicant must submit a statement 

confirming that notice was given in the 

form, manner, and time prescribed. This 

statement must be accompanied by a 

declaration under penalty of perjury 

attesting to the truth of the information 

provided in the statement, which is 

signed by a person qualified under 

§ 2570.34(b)(5) to sign such a 

declaration. 

§ 2570.47 Other hearings. 

(a) In its discretion, the Department 

may schedule a hearing on its own 

motion where it determines that issues 

relevant to the exemption can be most 

fully or expeditiously explored at a 

hearing. A notice of such hearing shall 

be published by the Department in the 

Federal Register. 

(b) An applicant for an exemption 

must notify interested persons of any 

hearing on an exemption scheduled by 

the Department in the manner described 

in § 2570.46(c). In addition, the 

applicant must submit a statement 

subscribed as true under penalty of 

perjury like that required in 

§ 2570.46(d). 

§ 2570.48 Decision to grant exemptions. 

(a) The Department may not grant an 

exemption under 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 


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the Federal Register which summarizes 

the transaction or transactions for which 

exemptive relief has been granted and 

specifies the conditions under which 

such exemptive relief is available. 

§ 2570.49 Limits on the effect of 

exemptions. 

(a) An exemption does not take effect 

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. 

§ 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. 

§ 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. 

§ 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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