[Federal Register: March 24, 2004 (Volume 69, Number 57)]
[Notices]
[Page 13878-13883]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr04-87]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
Prohibited Transaction Exemption 2004-05; [Exemption Application
No. D-10957] et al.; Grant of Individual Exemptions; John Hancock Life
Insurance Company
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Grant of individual exemptions.
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SUMMARY: This document contains exemptions issued by the Department of
Labor (the Department) from certain of the prohibited transaction
restrictions of the Employee Retirement Income Security Act of 1974
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
A notice was published in the Federal Register of the pendency
before the Department of a proposal to grant such exemption. The notice
set forth a summary of facts and representations contained in the
application for exemption and referred interested persons to the
application for a complete statement of the facts and representations.
The application has been available for public inspection at the
Department in Washington, D.C. The notice also invited interested
persons to submit comments on the requested exemption to the
Department. In addition the notice stated that any interested person
might submit a written request that a public hearing be
[[Page 13879]]
held (where appropriate). The applicant has represented that it has
complied with the requirements of the notification to interested
persons. No requests for a hearing were received by the Department.
Public comments were received by the Department as described in the
granted exemption.
The notice of proposed exemption was issued and the exemption is
being granted solely by the Department because, effective December 31,
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1
(1996), transferred the authority of the Secretary of the Treasury to
issue exemptions of the type proposed to the Secretary of Labor.
Statutory Findings
In accordance with section 408(a) of the Act and/or section
4975(c)(2) of the Code and the procedures set forth in 29 CFR part
2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon
the entire record, the Department makes the following findings:
(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its participants
and beneficiaries; and
(c) The exemption is protective of the rights of the participants and
beneficiaries of the plan.
John Hancock Life Insurance Company, Located in Boston, Massachusetts;
[Prohibited Transaction Exemption 2004-05 Application No. D-10957]
Exemption
The restrictions of section 406(b)(2) of the Act shall not apply to
purchases and sales of farmland asset(s) (the Farmland Asset(s)), as
defined in Condition 12(b), or entire farmland account(s) (the Entire
Farmland Account(s)), as defined in Condition 12(n), between various
account(s) (the Account(s)), as defined in Condition 12(a), that are
managed by Hancock Natural Resource Group, Inc. (HNRG) or the
affiliate(s) (the Affiliate(s)), as defined in Condition 12(e), of John
Hancock Life Insurance Company (JHLIC).
Conditions and Definitions
This exemption is subject to the following conditions:
1. A plan or plans covered by the Act (the ERISA-Covered Plan(s)),
as defined in Condition 12(c), may participate in a subject transaction
only if each such plan has total assets in excess of $100 million.
2. At least 30 days prior to entering a subject transaction, each
affected customer (the Customer(s)), as defined in Condition 12(l),
invested in an Account participating in such transaction will be
provided with information regarding the Farmland Asset(s) or the Entire
Farmland Account involved and the terms of the transaction, including
the purchase price and how the transaction would meet the goals and
investment policies of each such affected Customer. Notice of any
change in the purchase price will be provided to each affected Customer
at least 30 days prior to the consummation of the transaction.
3. An independent fiduciary (an Independent Fiduciary), as defined
in Condition 12(h), is appointed by JHLIC or an Affiliate as follows:
(a) One Independent Fiduciary is appointed to represent the
Account(s) in which an ERISA-Covered Plan or ERISA-Covered Plans is/are
invested, whether the Account(s) is/are the buyer(s) or the seller(s)
in a subject transaction, where one side of such transaction involves
one or more: (i) ERISA-Covered Plan(s), (ii) pooled separate account(s)
(the Pooled Separate Account(s), as defined in Condition 12(k), in
which an ERISA-Covered Plan or ERISA-Covered Plans invest, and/or (iii)
other Account(s) holding ``plan assets'' subject to the Act \1\ and the
other side of such transaction involves one or more plan(s) or other
customer(s) not covered by the Act (the Non-ERISA Plan(s) or Non-ERISA
Customer(s), as defined in Condition 12(d)),
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\1\ See 29 CFR 2510.3-101 for the Department's definition of
``plan assets'' relating to plan investments.
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(b) One Independent Fiduciary is appointed to represent the buying
account(s) (the Buying Account(s)), as defined in Condition 12(f), in a
subject transaction, where such transaction is between two (2) or more:
(i) ERISA-Covered Plans, (ii) Pooled Separate Accounts in which an
ERISA-Covered Plan or ERISA-Covered Plans invest, and/or (iii) other
Accounts holding ``plan assets'' subject to the Act, and the decision
to liquidate the Farmland Asset(s) or Entire Farmland Account is the
result of one or more ``triggering events,'' as described below. A
``triggering event'' will exist whenever:
(1) JHLIC or an Affiliate receives a direction from a Customer to
liquidate such Customer's Entire Farmland Account, and the decision to
liquidate such Entire Farmland Account is outside of the control of
JHLIC and its Affiliates; or
(2) JHLIC or an Affiliate receives a request by a Customer to
liquidate a specified Farmland Asset or Farmland Assets held in the
Customer's Account, and the decision to liquidate the Farmland Asset(s)
is outside of the control of JHLIC and its Affiliates; or
(3) a liquidation of all of the Farmland Assets held in a selling
account(s) (the Selling Account(s)), as defined in Condition 12(g), or
an Entire Farmland Account, or a particular Farmland Asset or Farmland
Assets held by such Account(s) is required under the terms of the
investment contract, insurance contract, or investment guidelines
governing the Account(s), and the decision to select any particular
Farmland Asset(s) to be sold or the decision to sell an Entire Farmland
Account is outside of the control of JHLIC and its Affiliates; and
(c) One Independent Fiduciary is appointed to represent the Buying
Account(s) and one Independent Fiduciary is appointed to represent the
Selling Account(s) involved in a subject transaction:
(1) where such transaction is between two (2) or more: (i) ERISA-
Covered Plans, (ii) Pooled Separate Accounts in which an ERISA-Covered
Plan or ERISA-Covered Plans invest, and/or (iii) other Accounts holding
``plan assets'' subject to the Act, and there is no ``triggering
event,'' as described above in Condition 3(b), or
(2) where such transaction is between two (2) or more: (i) ERISA-
Covered Plans, (ii) Pooled Separate Accounts in which an ERISA-Covered
Plan or ERISA-Covered Plans invest, and/or (iii) other Accounts holding
``plan assets'' subject to the Act, and one or more of the participants
in such transaction is a Pooled Separate Account and/or other Account
holding ``plan assets'' subject to the Act in which a John Hancock plan
(the Hancock Plan(s)), as defined in Condition 12(m), participates.
4. With respect to each transaction requiring the participation of
an Independent Fiduciary, as described in Condition 3, the purchase and
sale of a Farmland Asset or Farmland Assets or an Entire Farmland
Account shall not be consummated, unless the Independent Fiduciary
determines that the transaction, including the price to be paid or
received for each Farmland Asset or Entire Farmland Account, would be
in the best interest of the particular Account(s) involved based on the
investment policies and objectives of such Account(s).
5. Each Account which buys or sells a particular Farmland Asset or
Farmland Assets or Entire Farmland Account pays no more than or
receives no less than the fair market value of each Farmland Asset or
Entire Farmland Account at the time of the transaction. For a Farmland
Asset, fair market value
[[Page 13880]]
shall be determined by a qualified, independent real estate appraiser
experienced with the valuation of farmland properties similar to the
type involved in the transaction, and may include customary closing
adjustments, as described in Condition 12(o).
For an Entire Farmland Account, fair market value shall be
determined by a qualified, independent entity experienced in the
auditing and valuation of farmland accounts similar to the type
involved in the transaction and the valuation of assets or liabilities
other than Farmland Assets, including but not limited to assets such as
short-term investments or accounts receivable from prior crop sales or
leases, and liabilities such as investment or property management fees
payable or property taxes payable, and may include customary closing
adjustments, as described in Condition 12(o).
6. Each purchase or sale of a Farmland Asset or Farmland Assets or
Entire Farmland Account between Accounts is a one-time cash
transaction. A Buying Account may assume liabilities associated with an
Entire Farmland Account, subject to valuation procedures described in
Condition 5, above.
7. Each Account involved in the purchase or sale of a Farmland
Asset or Farmland Assets or Entire Farmland Account pays no real estate
commissions or brokerage fees relating to the transaction.
8. JHLIC or an Affiliate acts as a discretionary investment manager
for the assets of the Account(s) involved in each transaction, provided
that this condition will not fail to have been satisfied solely because
the Customer retains the right to veto or approve the purchase or sale
of a Farmland Asset or Farmland Assets or Entire Farmland Account.
9. An Account may not participate in a subject transaction, if the
assets of any Hancock Plan or Hancock Plans in the Account exceed 20
percent (20%) of the total assets of the Account.
10. No purchase or sale transaction shall be designed to benefit
the interests of one particular Account over another.
11. The general accounts of both JHLIC and John Hancock Variable
Life Insurance Company (JHVLIC) (the General Accounts) shall not
participate, directly or indirectly, in the subject transactions;
12. For purposes of this exemption:
(a) The term, ``Account(s),'' means a separate account or separate
accounts (the Separate Account(s)), as defined in Condition 12(i),
including Non-Pooled Separate Account(s), or Pooled Separate
Account(s), as well as holding entities (Holding Entities), such as:
(1) a partnership, corporation, trust, or any other form of entity
established and maintained by JHLIC or an Affiliate and for which JHLIC
or an Affiliate serves as general partner, investment manager, or
adviser; or (2) a limited liability company or any other form of entity
established by pension plan investors;
(b) the term, ``Farmland Asset(s),'' means a fee simple in farmland
(and appurtenant rights), an interest in related equipment, a farmland
lease, farm improvements, contractual agreements with respect to the
production and harvesting of farm products, such as crop quotas, crop
receivables, or delivery contracts, stock in farm cooperatives, and
direct or indirect interest in entities holding such assets. With
respect to any farmland lease: (i) the underlying fee simple must be
owned by a person other than JHLIC or an Affiliate or any Account at
the time of sale; and (ii) the entire lease originally acquired by the
Selling Account must be sold to the Buying Account;
(c) the term, ``ERISA-Covered Plan(s),'' means an employee benefit
plan or plans as defined under section 3(3) of the Act and not excluded
from coverage under section 4 of the Act;
(d) the terms, ``Non-ERISA Plan(s)'' or ``Non-ERISA Customer(s),''
mean an entity or entities or investor(s) not covered by the provisions
of Title I of the Act, such as a governmental plan, a university
endowment fund, or other institutional investor, whose assets are
managed in an Account for which JHLIC or an Affiliate acts as
investment manager;
(e) the term, ``Affiliate(s),'' means any person(s) directly or
indirectly through one or more intermediaries, controlling, controlled
by, or under common control with such person;
(f) the term, ``Buying Account(s),'' means the Account(s) that
seek(s) to purchase a Farmland Asset or Farmland Assets or an Entire
Farmland Account from another Account;
(g) the term, ``Selling Account(s),'' means the Account(s) that
seek(s) to sell a Farmland Asset or Farmland Assets or an Entire
Farmland Account to another Account;
(h) the term, ``Independent Fiduciary,'' means a person or entity
with authority to both review the appropriateness of a subject
transaction for an Account, that is considered to hold ``plan assets''
subject to the fiduciary responsibility provisions of the Act, based on
the investment policy established for that Account, and to negotiate
the terms of the transaction, including the price to be paid for the
Farmland Asset, the Farmland Assets, or the Entire Farmland Account. An
individual or firm selected to serve as an Independent Fiduciary shall
meet the following criteria:
(1) The individual or firm shall have no current employment
relationship with JHLIC or an Affiliate, although a prior employment
relationship would not disqualify the individual or firm;
(2) No individual or firm shall serve as an Independent Fiduciary
during any year in which gross receipts received from business with
JHLIC and its Affiliates for that year exceed five (5) percent of such
individual's or firm's gross receipts from all sources for the prior
year;
(3) The individual or firm must be an expert with respect to
farmland valuations;
(4) The individual or firm must have the ability to access (itself
or through persons engaged by it) appropriate farmland sales comparison
data and make appropriate adjustments to the subject property,
properties, or Account; and
(5) The individual or firm must not have a criminal record
involving fraud, fiduciary standards, or securities laws violations.
(i) the term, ``Separate Account(s),'' means a segregated asset
Account or Accounts which receive premiums or contributions from
Customers, including employee benefit plans subject to the Act, in
connection with group annuity contracts and funding agreements, with
investments held in the name of JHLIC, but where the value of the
contract or agreement to the Customer (contract holder) fluctuates with
the value of the investment associated with such Account;
(j) the terms, ``Non-Pooled Separate Account(s)'' or ``Non-Pooled
Account(s),'' mean a Separate Account or Separate Accounts established
to back a single contract issued to one Customer, which may be an
employee benefit plan subject to the Act;
(k) the terms, ``Pooled Separate Account(s),'' or ``Pooled
Account(s),'' mean a Separate Account or Separate Accounts established
to back a group of substantially identical contracts issued to a number
of unrelated Customers, including employee benefit plans subject to the
Act;
(l) the term, ``Customer(s),'' means a person or persons or entity
or entities that act as the authorized representative for the investor
in an Account involved in a purchase or sale of Farmland Assets or an
Entire Farmland Account, that is independent of JHLIC and its
Affiliates, provided, however, that for any Hancock Plan, as defined in
Condition
[[Page 13881]]
12(m), below, a ``Customer'' shall mean the Plan Investment Advisory
Committee of JHLIC;
(m) the term, ``Hancock Plan(s),'' means an employee benefit plan
or employee benefit plans sponsored by JHLIC or an Affiliate which
invest(s) in an Account;
(n) the term, ``Entire Farmland Account(s),'' means all the assets
and liabilities of an Account or Accounts, as defined in Condition
12(a), including but not limited to the Farmland Assets in such Account
or Accounts; and
(o) ``customary closing adjustments'' for purposes of this
exemption are limited to the following: management fees, taxes,
assessments, water rates, assignment of amounts under leases, recording
taxes, survey costs, title review and title insurance costs and
premiums, due diligence costs, escrow fees, licensing fees, fuel costs,
equipment leases or contracts, reimbursements and adjustments for
capital expenditures by the seller, crop adjustments, adjustments for
documented expenses incurred by the seller during a growing period
prior to closing, and agreement that a buyer may retain a certain
amount of crops upon harvest, and the seller will receive all or part
of the proceeds for any crops in excess of the amount retained by the
buyer.
Written Comments
In the Notice of Proposed Exemption (the Notice), the Department of
Labor (the Department) invited all interested persons to submit written
comments and requests for a hearing on the proposed exemption within
forty-five (45) days of the date of the publication of the Notice in
the Federal Register on November 14, 2003. All comments and requests
for a hearing were due by December 29, 2003.
During the comment period, the Department received no requests for
a hearing. However, the Department did receive a comment letter from
the applicant. In this regard, in a letter dated December 24, 2003, the
applicant requested certain amendments to the conditions of the
exemption, as proposed in the Notice, and various changes to the
representations which according to the applicant should have been
reflected in the Summary of Facts and Representations (the SFR) in the
Notice, as published in the Federal Register.
The applicant's comments on the conditions of the exemption and on
the representations in the SFR, and the Department's responses,
thereto, are discussed in the numbered paragraphs below in an order
that corresponds to the appearance of the relevant language in the
Notice.
1. The applicant requests modification of Condition 11 of the
exemption. Condition 11, as set forth in the Notice, at 68 FR 64645,
column 2, lines 45-50, reads as follows:
The general accounts (the General Accounts) of both JHLIC and John
Hancock Variable Life Insurance Company (JHVLIC) shall not
participate, directly or indirectly, in the subject transactions.
To make clear that references to ``General Accounts,'' in the
exemption only include the general accounts of JHLIC and its
affiliates, the applicant proposes that Condition 11 be revised as
follows:
The general accounts of both JHLIC and John Hancock Variable Life
Insurance Company (JHVLIC) (the General Accounts) shall not
participate, directly or indirectly, in the subject transactions.
The Department concurs with the applicant's request, and
accordingly, has amended the language of Condition 11 in the exemption.
2. The applicant requests modification of Condition 12(a) of the
exemption. Condition 12(a), as set forth in the Notice, at 68 FR 64645,
column 2, lines 51-65, reads as follows:
(a) the term, ``Account(s),'' means a separate account or
separate accounts (the Separate Account(s)), as defined in Condition
12(i), including Non-Pooled Separate Account(s), or Pooled Separate
Account(s), as well as holding entities (Holding Entities), such as
a partnership, corporation, or trust for which JHLIC or an Affiliate
serves as general partner, investment manager, or adviser and
include entities established or maintained by JHLIC, and limited
liability companies established by pension plan investors (emphasis
added).
In the opinion of the applicant, it is unclear whether the phrase
emphasized in the quotation above is intended by the Department as a
further limitation on what may be defined as a Holding Entity. The
applicant confirms that currently Holding Entities are limited to
entities established by JHLIC and limited liability companies
established by pension plan investors. However, the applicant believes
it is not clear what purpose is served by limiting future use of the
exemption to these entities, when pension plans may wish to establish
partnerships or trusts that would qualify as Holding Entities under the
exemption, but for the emphasized language. Accordingly, the applicant
requests that the definition of ``Account(s),'' as published in
Condition 12(a) of the Notice be modified to delete the phrase
emphasized in the quotation above.
The Department concurs in part and disagrees in part. Specifically,
the Department concurs with the applicant's request to delete the
phrase, ``and include entities established or maintained by JHLIC, and
limited liability companies established by pension plan investors,''
from the definition of ``Account(s),'' as set forth in Condition 12(a).
However, the Department believes that the reference to Holding Entities
should be limited. Accordingly, the definition of ``Account(s),'' as
set forth in Condition 12(a), as set forth in the exemption had been
amended to read as follows:
(a) the term, ``Account(s),'' means a separate account or
separate accounts (the Separate Account(s)), as defined in Condition
12(i), including Non-Pooled Separate Account(s), or Pooled Separate
Account(s), as well as holding entities (Holding Entities), such as:
(1) a partnership, corporation, trust, or any other form of entity
established and maintained by JHLIC or an Affiliate and for which
JHLIC or an Affiliate serves as general partner, investment manager,
or adviser; or (2) a limited liability company or any other form of
entity established by pension plan investors.
3. The applicant requests modification of Condition 12(d) of the
exemption. Condition 12(d), as set forth in the Notice, at 68 FR 64645,
column 3, lines 21-29, reads as follows:
(d) the terms, ``Non-ERISA Plans'' or ``Non-ERISA Customers,''
mean entities or investors not covered by the provisions of Title I
of the Act, such as a governmental plan, a university endowment
fund, or other institutional investors, whose assets are managed in
an Account for which JHLIC or an Affiliate acts as investment
manager.
The applicant proposes that the terms, ``Non-ERISA Plans'' and
``Non-ERISA Customers,'' be changed to ``Non-ERISA Plan(s)'' and ``Non-
ERISA Customer(s)'' in order to maintain consistency with the way
singular and plural terms were treated in other provisions of the
exemption.
The Department concurs with the applicant's request, and
accordingly, has modified the language of Condition 12(d) in the
exemption to read as follows:
(d) the terms, ``Non-ERISA Plan(s)'' or ``Non-ERISA
Customer(s),'' mean an entity or entities or investor(s) not covered
by the provisions of Title I of the Act, such as a governmental
plan, a university endowment fund, or other institutional investor,
whose assets are managed in an Account for which JHLIC or an
Affiliate acts as investment manager.
4. The applicant requests modification of Condition 12(o) of the
exemption. Condition 12(o), as set forth in the Notice, at 68 FR 64646,
column 2, lines 1-14, reads as follows:
[[Page 13882]]
(o) ``customary closing adjustments'' means adjustments that may
arise where agricultural land bearing crops is sold prior to harvest
and may involve an agreement between the buyer and seller that
either: (1) the buyer reimburse the seller for documented expenses
incurred during the growing period in the cultivation of such crops,
up to the date of closing; or (2) the buyer retain a certain amount
of the crops and the seller receive the proceeds for any crops in
excess of the amount retained by the buyer.
The applicant confirms that this definition is consistent with the
examples provided to the Department regarding the types of expenses
that may be considered ``customary closing adjustments.'' However, the
applicant believes that this definition of ``customary closing
adjustments'' could be unnecessarily restrictive. For example,
additional closing adjustments for management fees, real and personal
property taxes, assignment of leases, and certain capital expenditures
by the seller between an agreed-upon date and the date of closing are
also ``customary.'' Accordingly, in their comment letter, dated
December 24, 2003, the applicant requested that the term, ``customary
closing adjustments,'' be defined as follows:
(o) ``customary closing adjustments'' means those mutually
agreed upon adjustments to the consideration paid or received by a
party made at closing that are customary or common in similar
agricultural transactions, such as, but not limited to (1)
adjustments for documented expenses incurred by the seller during a
growing period prior to closing, or (2) agreement that a buyer may
retain a certain amount of crops upon harvest, and the seller will
receive all or part of the proceeds for any crops in excess of the
amount retained by the buyer.
Subsequently, in response to the Department's concern that the
requested amendment to the definition of ``customary closing
adjustments'' did not specifically list such adjustments, the
applicant, in a letter, dated March 4, 2004, proposed the following
revised language for the definition:
(o) ``customary closing adjustments'' means those mutually
agreed upon adjustments to the consideration paid or received by a
party made at closing that are customary or common in similar
agricultural transactions including management fees, taxes,
assessments, water rates, assignment of amounts under leases,
recording taxes, survey costs, title review and title insurance
costs and premiums, due diligence costs, escrow fees, licensing
fees, fuel costs, equipment leases or contracts, reimbursements and
adjustments for capital expenditures by the seller, crop
adjustments, adjustments for documented expenses incurred by the
seller during a growing period prior to closing, and agreement that
a buyer may retain a certain amount of crops upon harvest, and the
seller will receive all or part of the proceeds for any crops in
excess of the amount retained by the buyer.
The Department believes that the applicant's revisions to the
definition of ``customary closing adjustments'' are too open-ended. In
this regard, the Department believes that the definition of ``customary
closing adjustments'' for purposes of the exemption should be limited
to a list of potential adjustments clearly enumerated. Accordingly, the
Department has determined that Condition 12(o) in the exemption should
read as follows:
(o) ``customary closing adjustments'' for purposes of this
exemption are limited to the following: management fees, taxes,
assessments, water rates, assignment of amounts under leases,
recording taxes, survey costs, title review and title insurance
costs and premiums, due diligence costs, escrow fees, licensing
fees, fuel costs, equipment leases or contracts, reimbursements and
adjustments for capital expenditures by the seller, crop
adjustments, adjustments for documented expenses incurred by the
seller during a growing period prior to closing, and agreement that
a buyer may retain a certain amount of crops upon harvest, and the
seller will receive all or part of the proceeds for any crops in
excess of the amount retained by the buyer.
5. The applicant requests a change to the language in the SFR,
describing ``customary closing adjustments,'' as set forth in the
Notice, at 68 FR 64648, column 3, lines 57-68 and at 68 FR 64649,
column 1, lines 1-2. Specifically, the applicant requested that the
description of ``customary closing adjustments,'' in the SFR conform to
the applicant's requested modification of the language of Condition
12(o).
As the Department did not concur with the applicant's requested
modification to the language of Condition 12(o), the Department does
not agree to the change requested by the applicant to the description
of ``customary closing adjustment,'' as set forth in the SFR, at 68 FR
64648, column 3, lines 57-68 and at 68 FR 64649, column 1, lines 1-2.
It is the Department's view that, the definition of ``customary closing
adjustments,'' as set forth in Condition 12(o) of this final exemption,
should supercede the description of ``customary closing adjustments''
in the SFR, as set forth in the Notice.
6. The applicant requests that changes should have been made to the
language in various locations in the SFR, as set forth in the Notice.
Specifically, the applicant states that: (a) the word, ``Account(s),''
should have been used instead of the phrase, ``Farmland Separate
Account(s),'' and (b) the word, ``Account's,'' should have been used
instead of the phrase, ``Farmland Separate Account's,'' or the phrase,
``Farmland Account's,'' in the following locations:
a. in paragraph 7, 68 FR 64647, column 2, lines 7-8, 10-11, 36, 46-
47, 51-52, 56-57, 57-58, and 61-62;
b. in paragraph 8, 68 FR 64647, column 3, lines 16-17, 25-26, 29-
30, 32, 36, 42-43, 45, 48, 52, 57-58 and 64;
c. in paragraph 8, 68 FR 64648, column 1, lines 10-11, 11-12, and
23;
d. in paragraph 10, 68 FR 64648, column 1, lines 59-60;
e. in paragraph 12, 68 FR 64648, column 2, line 46;
f. in paragraph 18, 68 FR 64649, column 1, lines 64-65;
g. in paragraph 18, 68 FR 64649, column 2, lines 23-24; and
h. in paragraph 19, 68 FR 64649, column 2, line 55.
The Department concurs.
7. Paragraph 8 of the SFR contains a description of the operation
of HAIG's investment queue procedures in the event that a Farmland
Asset or Entire Farmland Account would be an appropriate investment for
more than one Account. In this regard, paragraph 8 of the Notice, as
set forth at 68 FR 64647, column 3, 51-55, reads:
In the event that two or more Farmland Separate Accounts have
objectives and constraints that are sufficiently similar, HAIG
implements its investment queue procedures.
The applicant notes that one condition of participation in the
investment queue is that an investor have assets awaiting investment in
farmland. Accordingly, the applicant proposes that the quotation, as
set forth in the Notice, should have read as follows:
In the event that two or more Accounts have objectives and
constraints that are sufficiently similar and have assets awaiting
investment in farmland, HAIG implements its investment queue
procedures.
The Department concurs.
8. The applicant points out a typographical error in the SFR, as
set forth in the Notice. In this regard, it appears that the word,
``is,'' is missing, in paragraph 13 of the Notice, as set forth at 68
FR 64648, column 2, line 66. The applicant indicates that the word,
``is,'' should have been inserted before the word, ``between.''
The Department concurs. Accordingly, the SFR, as set forth in the
Notice, at paragraph 13, 68 FR 64648, column 2, line 66, should have
read as follows:
Where a transaction is between ERISA-Covered Plans and a triggering
event has occurred, the fee for the services of the Independent
Fiduciary will be charged as an
[[Page 13883]]
acquisition expense to the Buying Account(s).
9. In order to maintain consistency with the language in the rest
of the Notice, the applicant requests that certain changes should have
been made to the language of the SFR, as set forth in the Notice.
Specifically, in paragraph 14, at 68 FR 64648, column 3, line 34, the
reference to ``proposed transactions,'' should have referred instead to
``subject transactions.''
The Department concurs. Accordingly, the language in the SFR in
paragraph 14 of the Notice, at 68 FR 64648, column 3, line 34, should
have read as follows:
In this regard, participation in the subject transactions by ERISA-
Covered Plans is limited to plans having total assets in excess of
$100 million.
After giving full consideration to the entire record, including the
written comments from the applicant, the Department has decided to
grant the exemption, as described, amended, clarified, and concurred in
above. In this regard, the comment letter submitted by the applicant to
the Department has been included as part of the public record of the
exemption application. The complete application file, including all
supplemental submissions received by the Department, is made available
for public inspection in the Public Documents Room of the Pension
Welfare Benefits Administration, Room N-1513, U. S. Department of
Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption refer to
the Notice of Proposed Exemption published on November 14, 2003, at 68
FR 64643.
FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc of the
Department, telephone (202) 693-8540. (This is not a toll-free number.)
Painters District Council No. 4 Apprenticeship, Upgrading & Retraining
Trust Fund (the Plan) Located in Cheektowaga, New York [Prohibited
Transaction Exemption No. 2004-06; [Application No. L-11190]
Exemption
The restrictions of section 406(a) of the Act shall not apply to a
lease (the Lease) of certain space (the Leased Premises) in a building
(the Building) owned by the Plan to Lipsitz, Green, Fahringer, Roll,
Salisbury & Cambria, LLP (the Applicant), a party in interest with
respect to the Plan. This exemption is conditioned upon the adherence
to the material facts and representations described herein and upon the
satisfaction of the following requirements:
(a) All terms and conditions of the Lease are at least as favorable
to the Plan as those which the Plan could obtain in an arm's-length
transaction with an unrelated party;
(b) The decision by the Plan to enter into the Lease will be made
by the trustees of the Plan (the Trustees); and
(c) The fair market rental amount for the Lease will be determined
by an independent, qualified appraiser as of the date of the
commencement of the Lease; and
(d) After commencement of the Lease, an additional fair market
rental appraisal of the Leased Premises will be performed by an
independent, qualified appraiser every thirty months with the rental
rate being adjusted accordingly.
For a more complete statement of the facts and representations
supporting the Department's decision to grant this exemption, refer to
the Notice of Proposed Exemption published on December 17, 2003 at 68
FR 70310.
FOR FURTHER INFORMATION CONTACT: Khalif Ford of the Department,
telephone (202) 693-8540 (this is not a toll-free number).
General Information
The attention of interested persons is directed to the following:
(1) The fact that a transaction is the subject of an exemption
under section 408(a) of the Act and/or section 4975(c)(2) of the Code
does not relieve a fiduciary or other party in interest or disqualified
person from certain other provisions to which the exemption does not
apply and the general fiduciary responsibility provisions of section
404 of the Act, which among other things require a fiduciary to
discharge his duties respecting the plan solely in the interest of the
participants and beneficiaries of the plan and in a prudent fashion in
accordance with section 404(a)(1)(B) of the Act; 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;
(2) This exemption is supplemental to and not in derogation of, any
other provisions of the Act and/or the Code, including statutory or
administrative exemptions and transactional rules. Furthermore, the
fact that a transaction is subject to an administrative or statutory
exemption is not dispositive of whether the transaction is in fact a
prohibited transaction; and
(3) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describes all material terms of the transaction
which is the subject of the exemption.
Signed at Washington, DC, this 19th day of March, 2004.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, Department of Labor.
[FR Doc. 04-6583 Filed 3-23-04; 8:45 am]
BILLING CODE 4510-29-P