Prohibited Transaction Exemption Procedures; Employee Benefit Plans, 53172-53192 [2010-21073]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

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



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Part V





Department of Labor





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Employee Benefits Security Administration



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29 CFR Part 2570



Prohibited Transaction Exemption Procedures; Employee Benefit Plans; 
Proposed Rule

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

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2570

RIN 1210-AA98


Prohibited Transaction Exemption Procedures; Employee Benefit 
Plans

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Proposed rule.

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SUMMARY: This document contains a proposed rule that, if adopted, would 
supersede the existing procedure governing the filing and processing of 
applications for administrative exemptions from the prohibited 
transaction provisions of the Employee Retirement Income Security Act 
of 1974 (ERISA), the Internal Revenue Code of 1986 (the Code), and the 
Federal Employees' Retirement System Act of 1986 (FERSA). The Secretary 
of Labor is authorized to grant exemptions from the prohibited 
transaction provisions of ERISA, the Code, and FERSA and to establish 
an exemption procedure to provide for such relief. The proposed rule 
would clarify and consolidate the Department of Labor's exemption 
procedures and provide the public with a more comprehensive description 
of the prohibited transaction exemption process.

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

ADDRESSES: To facilitate the receipt and processing of responses, the 
Department encourages interested persons to submit their responses 
electronically by e-mail to: e-OED@dol.gov or by using the Federal 
eRulemaking portal at https://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 https://www.regulations.gov and https://www.dol.gov/ebsa, and at the Public 
Disclosure Room, Room N-1513, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.

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

SUPPLEMENTARY INFORMATION:

A. Background

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

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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 Department-initiated exemptions include 
Prohibited Transaction Exemption (PTE) 2002-51 (class exemption, as 
amended in 2006, providing relief from the sanctions contained in 
section 4975 of the Code for certain eligible transactions identified 
in the Department's Voluntary Fiduciary Correction Program) and PTE 
2003-39 (class exemption providing relief for the receipt of 
consideration by a plan from a party in interest in connection with the 
release of a claim in settlement of actual or threatened litigation).
    In considering individual exemption requests from applicants, the 
Department has consistently exercised its authority under ERISA section 
408(a) by carefully examining the decision-making process utilized by a 
plan's fiduciaries with respect to a transaction. In applying this 
policy, the Department determines whether it can make findings that the 
transaction is designed to adequately safeguard the interests of the 
plan's participants and beneficiaries. Therefore, the Department 
requires, as a condition of every exemption, that the terms of the 
subject transaction be no less favorable to the plan than the terms 
which the plan could obtain in an arm's-length transaction with an 
unrelated party. Depending on the facts and circumstances of a 
particular transaction, additional conditions for exemptive relief 
generally are required.
    The Department has followed this policy in considering requests for 
either prospective or retroactive exemptive relief. In general, the 
Department does not make determinations concerning the appropriateness, 
attractiveness, or prudence of the investment proposals submitted by 
exemption applicants. However, the Department ordinarily will not give 
favorable consideration to an exemption request if the Department 
believes that the proposed transactions are inconsistent with the 
fiduciary responsibility provisions of sections 403 and 404 of ERISA. 
Accordingly, the Department requires that an exemption transaction be 
designed to minimize the potential for conflicts of interest or self-
dealing. This approach allows qualified professionals or responsible 
fiduciaries to assess the prudence of a transaction independently and 
in a manner that is protective of the plan's assets. Moreover, the 
structure of the transaction under consideration should preclude 
unilateral action by the applicant which could disadvantage the 
investing plan.
    In keeping with the policy of evaluating the decisional processes 
surrounding a transaction, many of the exemptions issued by the 
Department are conditioned on the retention of an independent fiduciary 
to represent the interests of the plan, particularly where a plan 
fiduciary has interests with respect to a transaction which may 
conflict with his or her fiduciary duties to the plan. In these 
situations, an independent fiduciary typically will

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exercise his or her authority to negotiate, approve, and/or monitor an 
exemption transaction on behalf of the plan. Similarly, valuations and 
other assessments relevant to an exemption are expected to be made by 
qualified professionals independent of the party in interest proposing 
to deal with the plan's assets in the subject transaction.
    Over time, the Department has issued guidance explaining its 
policies and practices relating to the consideration of exemption 
applications. In 1985, the Department published a statement of policy 
concerning the issuance of retroactive exemptions from the prohibited 
transaction provisions of section 406 of ERISA and section 4975 of the 
Code (ERISA Technical Release 85-1, January 22, 1985). This statement 
noted that, in evaluating future applications for retroactive 
exemptions, the Department would ordinarily take into account a variety 
of objective factors in determining whether a plan fiduciary had 
exhibited good faith conduct in connection with the past prohibited 
transaction for which relief is sought (such as whether the fiduciary 
had utilized a contemporaneous independent appraisal or reference to an 
objective third-party source, e.g., a stock exchange, in establishing 
the fair market value of the plan assets acquired or disposed of by the 
plan in connection with the transaction at issue). However, while 
noting that the satisfaction of such objective criteria might be 
indicative of a fiduciary's good faith conduct, the release cautioned 
that the Department would routinely examine the totality of facts and 
circumstances surrounding a past prohibited transaction before reaching 
a final determination on whether a retroactive exemption is warranted.
    In 1995, the Department issued a publication, Exemption Procedures 
Under Federal Pension Law (the 1995 Exemption Publication). In addition 
to providing a brief overview of the exemption process, the 1995 
Exemption Publication included definitions for technical terms such as 
``qualified independent fiduciary,'' ``qualified independent 
appraiser,'' and ``qualified appraisal report.'' These definitions, 
derived from conditions contained in previously granted exemptions, 
provided important guidance about the Department's standards concerning 
the independence, knowledge, and competence of third-party experts 
retained by a plan to review and/or oversee an exemption transaction, 
as well as the contents of the reports and representations ordinarily 
required from such experts.
    During its first two decades of evaluating individual exemption 
requests, the Department observed that a significant proportion 
involved transactions, terms, and safeguards which were remarkably 
similar to those contained in previously granted exemptions. 
Accordingly, to facilitate the prompt consideration of such routine 
applications, the Department published an administrative class 
exemption, PTE 96-62 (61 FR 39988 (July 31, 1996), as amended at 67 FR 
44622 (July 3, 2002)). Under this class exemption (commonly referred to 
as EXPRO), the Department may authorize exemptive relief, on an 
expedited basis, for certain prospective transactions that would 
otherwise be prohibited under ERISA, the Code, or FERSA, provided that 
the applicant satisfies all of the conditions of the EXPRO exemption. 
Among other things, PTE 96-62 stipulates that the transaction for which 
an applicant seeks authorization must be substantially similar in all 
material respects to at least two other transactions for which the 
Department recently granted administrative relief from the same 
restriction.\3\ Under PTE 96-62, authorization may be available in as 
few as 78 days from the acknowledgement of the receipt by the 
Department of a written submission filed in accordance with the class 
exemption. From 1996 to 2009, more than 400 applicants obtained 
expedited relief from the Department pursuant to the requirements of 
PTE 96-62.
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    \3\ Additional information concerning the requirements for 
obtaining administrative relief under PTE 96-62 (as amended) may be 
obtained by accessing the complete text of the class exemption at 
the Department's Web site: https://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: https://www.dol.gov/ebsa/Regs/expro_exemptions.html.
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    In the years since the current exemption procedure was adopted in 
1990, the accelerated development and expanded usage of various 
electronic media for the transmission of information--including the 
Internet, electronic mail (e-mail), and facsimile machines--has 
provided the Department with more technologically advanced means for 
discharging its responsibilities to the public. This rapid 
transformation has also altered the manner in which the Department 
ordinarily processes and disseminates prohibited transaction 
exemptions. In 1996, the Department established a Web site, https://www.dol.gov, which featured the electronic posting of notices of 
proposed and final prohibited transaction exemptions as published in 
the Federal Register.\4\ Shortly thereafter, the Department established 
a public e-mail portal on its Web site for ERISA-related questions and 
created individual e-mail accounts for its employees; these 
developments enabled exemption applicants and others to transmit 
exemption-related messages and documents to the Department on a 
virtually instantaneous basis.
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    \4\ In addition, the texts of all Federal Register notices 
relating to prohibited transaction exemptions published since 1995 
are available in electronic format at the following Web site 
maintained by the U.S. Government Printing Office: https://www.gpoaccess.gov/fr.
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    In 2002, Congress enacted the E-Government Act (Pub. L. 107-347, 
116 Stat. 2915) to facilitate Internet-based public access to, and 
participation in, the Federal rulemaking process; to implement the 
requirements of this statute, the Office of Management and Budget (OMB) 
launched a Web site, https://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 (Sec.  2570.30 through Sec.  
2570.52), arranged by topic and generally reflecting the chronological 
order of steps involved in processing an exemption application. This 
proposed revision to the exemption procedure retains the section-by-
section topical structure of the existing regulation, along with most 
of the operative language. However, the Department also proposes 
several important substantive amendments; these changes are summarized 
below on a section-by-section basis.

Section 2570.30 Scope of the Regulation

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

Section 2570.31 Definitions

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

Section 2570.33 Applications the Department Will Not Ordinarily 
Consider

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

Section 2570.34 Information To Be Included in Every Exemption 
Application

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

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

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

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

    \5\ See 49 FR 9494 (March 13, 1984), as amended by 70 FR 49305 
(August 23, 2005).
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    Disclosure of payment of civil monetary penalties and excise taxes 
assessed by the Treasury and Labor Departments in connection with prior 
prohibited transactions--The current version of Sec.  2570.35(a)(14)(v) 
requires

[[Page 53177]]

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

Section 2570.36 Where To File an Application

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

Section 2570.37 Duty To Amend and Supplement Exemption Application

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

Section 2570.39 Opportunities To Submit Additional Information

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

[[Page 53178]]

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

Section 2570.40 Conferences

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

Section 2570.42 Notice of Proposed Exemption

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

Section 2570.43 Notification of Interested Persons by Applicant

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

[[Page 53179]]

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

Sections 2570.44 Withdrawal of Exemption Application

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

Sections 2570.46 and 2570.47 Hearings

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

Section 2570.48 Grant of Exemption

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

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

Section 2570.49 Limits to the Effect of Exemptions

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

C. Request for Comments

    The Department invites comments from interested persons on all 
aspects of the proposed regulation. Comments should be addressed to the 
Office of Exemption Determinations, Employee Benefits Security 
Administration, Room N-5700, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, Attention: Prohibited Transaction 
Exemption Procedures Proposed Regulation. Commenters are encouraged to 
submit their comments electronically to e-OED@dol.gov or https://www.regulations.gov (follow instructions for submission of comments). 
All written responses will be available to the public, without charge, 
online at https://www.regulations.gov and https://www.dol.gov/ebsa, and 
at the Public Disclosure Room, Room N-1513, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.
    Comments on this proposal should be submitted to the Department on 
or before October 14, 2010.

D. Regulatory Impact Analysis

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735), the Department must 
determine whether a regulatory action is ``significant'' and therefore 
subject to review by the Office of Management and Budget (OMB). Section 
3(f) of the

[[Page 53180]]

Executive Order defines a ``significant regulatory action'' as an 
action that is likely to result in a rule (1) having an annual effect 
on the economy of $100 million or more, or adversely and materially 
affecting a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local or tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order. Pursuant to the terms of the Executive Order, 
it has been determined that this action is not ``significant'' within 
the meaning of section 3(f) of the Executive Order and therefore is not 
subject to review by OMB.

Paperwork Reduction Act

    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department of Labor conducts a preclearance consultation 
program to provide the general public and Federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the Paperwork Reduction Act of 1995 (PRA 
95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that the public 
understands the Department's collection instructions, respondents can 
provide the requested data in the desired format, the reporting burden 
(time and financial resources) is minimized, and the Department can 
properly assess the impact of collection requirements on respondents.
    Currently, the Department is soliciting comments concerning the 
information collection request (ICR) included in the Proposed Rule for 
the Prohibited Transaction Exemption Procedures. A copy of the ICR may 
be obtained by contacting the person listed in the PRA Addressee 
section below.
    The Department has submitted a copy of the proposed rule to OMB in 
accordance with 44 U.S.C. 3507(d) for review of its information 
collections. The Depar