Proposed Exemptions From Certain Prohibited Transaction Restrictions, 78481-78493 [2014-30526]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Notices]
[Pages 78481-78493]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30526]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employee Benefits Security Administration


Proposed Exemptions From Certain Prohibited Transaction 
Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemptions.

-----------------------------------------------------------------------

SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act) and/or the 
Internal Revenue Code of 1986 (the Code). This notice includes the 
following proposed exemptions: D-11770, Teamsters Union Local No. 727 
Pension Fund; L-11794, Local 268, Sheet Metal Workers International 
Association, AFL-CIO; and D-11821, EXCO Resources, Inc. 401(k) Plan.

DATES: All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice.

ADDRESSES: Comments and requests for a hearing should state: (1) The 
name, address, and telephone number of the person making the comment or 
request, and (2) the nature of the person's interest in the exemption 
and the manner in which the person would be adversely affected by the 
exemption. A request for a hearing must also state the issues to be 
addressed and include a general description of the evidence to be 
presented at the hearing.
    All written comments and requests for a hearing (at least three 
copies) should be sent to the Employee Benefits Security Administration 
(EBSA), Office of Exemption Determinations, Room N-5700, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210. 
Attention: Application No. ___, stated in each Notice of Proposed 
Exemption. Interested persons are also invited to submit comments and/
or hearing requests to EBSA via email or FAX. Any such comments or 
requests should be sent either by email to: moffitt.betty@dol.gov, or 
by FAX to (202) 219-0204 by the end of the scheduled comment period. 
The applications for exemption and the comments received will be 
available for public inspection in the Public Documents Room of the 
Employee Benefits Security Administration, U.S. Department of Labor, 
Room N-1513, 200 Constitution Avenue NW., Washington, DC 20210.
    Warning: All comments will be made available to the public. Do not 
include any personally identifiable information (such as Social 
Security number, name, address, or other contact information) or 
confidential business information that

[[Page 78482]]

you do not want publicly disclosed. All comments may be posted on the 
Internet and can be retrieved by most Internet search engines.

SUPPLEMENTARY INFORMATION:

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).
    The proposed exemptions were requested in applications filed 
pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the 
Code, and in accordance with procedures set forth in 29 CFR part 2570, 
subpart B (76 FR 66637, 66644, October 27, 2011).\1\ 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 requested to the Secretary of 
Labor. Therefore, these notices of proposed exemption are issued solely 
by the Department.
---------------------------------------------------------------------------

    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 
10, 1990).
---------------------------------------------------------------------------

    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Teamsters Union Local No. 727 Pension Fund (the Fund) Located in 
Chicago, Illinois

[Application No. D-11770]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA) and section 4975(c)(2) of the Internal 
Revenue Code of 1986, as amended (the Code), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 
32847, August 10, 1990).\2\
---------------------------------------------------------------------------

    \2\ For purposes of this proposed exemption, references to 
section 406 of ERISA should be read to refer to the corresponding 
provisions of section 4975 of the Code as well.
---------------------------------------------------------------------------

Section I. Covered Transactions

    If the proposed exemption is granted, the restrictions of sections 
406(a)(1)(A) and (D) of ERISA, and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (D) of the Code, shall not apply to: (1) The sale 
(the Sale) by the Fund of three separate 25 percent interests in 1300 
Higgins Road LLC (the LLC), a limited liability company of which the 
Fund is the sole member (each, an LLC Interest, and collectively, the 
LLC Interests), respectively, to each of Local 700, Teamsters Local 
Union No. 727 (Local 727), and the Teamsters Joint Council No. 25 (the 
Joint Council, and together with Local 700 and Local 727, the Unions); 
and (2) the subsequent Sale of the Fund's remaining 25 percent LLC 
interest (the Fund's LLC Interest) to the Unions due to exercise by the 
Fund of a put right to sell the Fund's LLC Interest to the Unions (the 
Put Right), provided that the conditions in Section II are satisfied.

Section II. Conditions for Relief

    (a) The Fund receives from each of the Unions, as consideration for 
the Sale of the LLC Interests, a cash amount equal to 25 percent of the 
greater of: (1) The original purchase price paid by the Fund, or (2) 
the fair market value of the O'Hare Corporate Center in Park Ridge, 
Illinois (the Property), determined on the date of the Sale by an 
Independent Appraiser;
    (b) The Fund, upon exercise of the Put Right, receives from the 
Unions a one-time aggregate cash amount equal to 25 percent of the 
greater of: (1) The original purchase price paid by the Fund, or (2) 
the fair market value of the Property on the date of exercise of the 
Put Right, as determined by an Independent Appraiser;
    (c) The Sale and the exercise of the Put Right are each one-time 
transactions for cash;
    (d) The Independent Fiduciary: (1) Analyzes and approves the terms 
of the Sale and Put Right; (2) ensures that the terms of the Sale and 
Put Right and the conditions of the exemption are met; (3) has sole 
responsibility for the exercise of the Put Right on behalf of the Fund; 
(4) has sole responsibility and authority for the management and 
operation of the LLC and the Property; and (5) selects the Independent 
Appraiser and verifies the methodology used by the Independent 
Appraiser in determining the fair market value of the Property for all 
purposes under this proposed exemption;
    (e) An Independent Appraiser, who is selected by the Independent 
Fiduciary, establishes the fair market value of the Property for 
purposes of the Sale and the Put Right, using a methodology approved by 
the Independent Fiduciary;
    (f) The Fund does not pay any commissions, costs or other expenses 
in connection with the Sale and Put Right, other than the legal fees of 
the Fund's counsel, the services of the Independent Fiduciary and the 
services of the Independent Appraiser;
    (g) Since its acquisition of the Property, the Fund's ownership 
interest in the Property has constituted five percent or less of the 
Fund's assets, and immediately after the Sale the Fund's ownership 
interest in the Property will be less than two percent of the Fund's 
assets;
    (h) No member of the LLC shall, directly or indirectly, without the 
approval of the Independent Fiduciary: (1) Act for or on behalf of the 
LLC; (2) transact any business in the name of the LLC; or (3) sign 
documents for or otherwise bind the LLC;
    (i) No LLC Interests shall be transferable by the Unions prior to 
the exercise of the Put Right by the Fund, without the approval of the 
Independent Fiduciary;
    (j) Any trustee of the Fund must recuse himself or herself from any 
vote regarding the termination or removal of the Independent Fiduciary 
for the Fund if he or she is an officer (or a relative of an officer as 
defined in Section III) of any of the Unions;
    (k) The terms and conditions of the Sale and the Put Right are at 
least as favorable to the Fund as those obtainable in an arm's-length 
transaction with an unrelated third party; and
    (l) The Sale or Put Right is not part of an arrangement, agreement, 
or understanding designed to benefit a party in interest with respect 
to the Fund.

Section III. Definitions

    (a) The term ``relative'' is a relative as that term is defined in 
section 3(15) of ERISA, and also includes a brother, sister, and a 
spouse of a brother or sister;
    (b) The term ``Independent Fiduciary'' means Intercontinental Real 
Estate Corporation (Intercontinental) or another fiduciary of the Plan 
who (1) is independent or unrelated to the Unions and their affiliates 
and has the appropriate training, experience, and facilities to act on 
behalf of the Plan regarding the covered transactions in accordance 
with the fiduciary duties and responsibilities prescribed by ERISA 
(including, if necessary, the responsibility to seek the counsel of 
knowledgeable advisors to assist in its

[[Page 78483]]

compliance with ERISA), and (2) if relevant, succeeds Intercontinental 
in its capacity as Fiduciary to the Plans in connection with the 
transactions described herein. The Independent Fiduciary will not be 
deemed to be independent of and unrelated to the Unions and their 
affiliates if: (i) Such Independent Fiduciary directly or indirectly 
controls, is controlled by or is under common control, with the Unions 
and their affiliates; (ii) such Independent Fiduciary directly or 
indirectly receives any compensation or other consideration in 
connection with any transaction described in this proposed exemption 
other than for acting as independent fiduciary in connection with the 
transactions described herein, provided that the amount or payment of 
such compensation is not contingent upon, or in any way affected by, 
the Independent Fiduciary's ultimate decision; and (iii) the annual 
gross revenue received by the Independent Fiduciary, during any year of 
its engagement, from the Unions and their affiliates, exceeds two 
percent (2%) of the Independent Fiduciary's annual gross revenue from 
all sources (for federal income tax purposes) for its prior tax year;
    (c) The term ``Independent Appraiser'' means an individual or 
entity meeting the definition of a ``Qualified Independent Appraiser'' 
under 29 CFR 2570.31(i) retained to determine, on behalf of the Plans, 
the fair market value of the Property as of the date of the Sale, and 
may be the Independent Fiduciary, provided it satisfies the definition 
of Independent Appraiser herein;
    (d) The term ``affiliate'' of a person includes:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with, the person;
    (2) Any officer, director, employee, relative, or partner of the 
person; or
    (3) Any corporation or partnership of which such person is an 
officer; and
    (e) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    Effective Dates: The proposed exemption, if granted, will be 
effective as of the date that a final notice of granted exemption is 
published in the Federal Register.

Summary of Facts and Representations 3
---------------------------------------------------------------------------

    \3\ The Summary of Facts and Representations is based on the 
Applicant's representations and does not reflect the views of the 
Department, unless otherwise indicated.
---------------------------------------------------------------------------

Background

    1. The Teamsters Union Local No. 727 Pension Fund (the Fund) is a 
defined benefit pension plan established under a Declaration of Trust 
between the International Brotherhood of Teamsters Union Local No. 727 
(Local 727) and several contributing employers. The Fund is established 
and administered pursuant to the provisions of section 302(c)(5) of the 
Labor Management Relations Act of 1947.
    The Fund is managed and administered by a Board of Trustees (the 
Trustees or the Applicant) that is comprised of four Trustees who are 
selected by employers who are parties to collective bargaining 
agreements with Local 727 and four Trustees who are selected by Local 
727. The Applicant states that the Fund covers eligible members of 
Local 727 and certain employees of Local 727, Teamsters Local Union No. 
700 (Local 700) and Teamsters Joint Council No. 25 (Joint Council) 
(collectively, the Unions). As of February 28, 2014, the Applicant 
notes, the Fund had total assets of approximately $239,677,146 and net 
assets of $238,141,734.\4\
---------------------------------------------------------------------------

    \4\ These amounts were reported on the Form 5500 for the Fund's 
plan year ending February 28, 2014.
---------------------------------------------------------------------------

    2. According to the Applicant, on February 26, 2010, the Fund 
completed its purchase of a building and a parcel of improved real 
estate located at 1300 Higgins Road in Park Ridge, Illinois (the 
Property) from Duke Realty, an unaffiliated third party, for a purchase 
price of $7,405,000.\5\ The Applicant represents that the Property 
comprises approximately two acres and the building contains 95,600 
square feet of net rentable area office space known as ``the O'Hare 
Corporate Center.''
---------------------------------------------------------------------------

    \5\ The current value of the Property, as reported in an 
appraisal performed by US Realty Consultants, Inc. on behalf of the 
Fund for Intercontinental, is $9,100,000 as of May 30, 2013.
---------------------------------------------------------------------------

    3. The Applicant represents that the purchase of the Property was 
based on a written recommendation from Intercontinental Real Estate 
Corporation (Intercontinental), a real estate consulting company based 
in Boston, Massachusetts. The Applicant states that Intercontinental is 
an SEC-registered investment adviser with $2.5 billion in assets under 
management, and that Intercontinental has developed, built, managed and 
owned $6 billion of commercial real estate. The recommendation was 
included in an investment management agreement prepared by 
Intercontinental for the Fund (the Management Agreement), dated 
February 2, 2010. The Management Agreement included a financial and 
strategic analysis of the Property and noted that the Property was 
well-maintained and could accommodate both small and mid-sized tenants, 
which make up the bulk of the demand in the O'Hare suburban submarket 
of Chicago where the Property is located. The Management Agreement also 
included a lease expiration schedule for the Property, a schedule of 
comparable sales and a schedule of comparable leases.
    4. The Applicant states that, in connection with the Fund's 
purchase of the Property, Intercontinental formed the 1300 Higgins Road 
LLC (the LLC) to hold the Property after its purchase by the Fund. 
Accordingly, upon completing its purchase, the Fund transferred 
ownership of the Property to the LLC and the Fund became the LLC's sole 
member (an LLC Member).
    5. The Applicant represents that Intercontinental has made leasing 
decisions on behalf of the LLC with respect to the Property since its 
acquisition. In its Management Agreement, Intercontinental concluded 
that leasing space to the Unions would, among other things, stabilize 
the building at the time of economic uncertainty.\6\ Accordingly, the 
Applicant represents that on July 1, 2010, the Fund entered into a 
second investment management agreement with Intercontinental (the AMA), 
with respect to the leasing of the property.
---------------------------------------------------------------------------

    \6\ As of February 2, 2010, 76 percent of the net rentable area 
of the Property was leased.
---------------------------------------------------------------------------

    6. According to the Applicant, Intercontinental executed leases 
with respect to the Property (the Leases) with: Local 700, effective 
May 1, 2010; Joint Council, effective April 1, 2010; and Local 727, 
effective May 1, 2011.\7\ The Applicant represents that 
Intercontinental has had ongoing responsibilities with respect to the 
Property since February 2010 including executing the Leases and making 
subsequent decisions with respect to the Leases on behalf of the LLC.
---------------------------------------------------------------------------

    \7\ The Applicant represents that it entered into the Leases 
with the belief that exemptive relief for such transactions is 
provided by PTE 76-1, 41 FR 12740, March 25, 1976, as corrected at 
41 FR 16620, April 20, 1976, and PTE 77-10, 42 FR 33918, July 1, 
1977. The Department is not expressing a view herein whether the 
Applicant has complied with the conditions of such class exemptions.
---------------------------------------------------------------------------

Request for Relief

    7. The Applicant represents that the Fund desires to sell a 25 
percent interest

[[Page 78484]]

in the LLC (an LLC Interest) to each of the Unions for an aggregate 
amount equal to 75 percent of the LLC in a one-time sale in exchange 
for cash (the Sale). The Applicant states that, in exchange for the LLC 
Interests, the Fund will receive an amount from each Union that is 
equal to 25 percent of the greater of: (1) The original purchase price 
paid by the Fund, or (2) the fair market value of the Property 
determined on the date of the Sale by an independent appraiser 
(Independent Appraiser). As discussed below, following any Sale, the 
Independent Fiduciary acting on behalf of the Fund will retain full and 
complete control over the management and operation of the LLC and the 
Property.
    8. The Applicant represents that the Fund wishes to engage in the 
Sale because the Fund desires to increase the diversity of its 
investments by reducing its investment in the O'Hare Corporate Center. 
Furthermore, the Fund believes that the Sale will be in the interest of 
its participants and beneficiaries because the Unions, as tenants, 
would be more likely to continue their occupancy if they also owned an 
interest in the Property (thus increasing the likelihood of the long-
term success of the Fund's investment in the Property), and will have a 
vested interest in preserving the value of the O'Hare Corporate Center.
    9. The Applicant represents that Intercontinental will act as the 
independent fiduciary (Independent Fiduciary) with respect to the Sale 
and will manage the operation of the LLC on behalf of the Fund, 
pursuant to the Amended and Restated Operating Agreement for the LLC 
(the Operating Agreement) following the Sale. The Applicant represents 
that no member of the LLC will, directly or indirectly, act for or on 
behalf of the LLC, transact any business in the name of the LLC or sign 
documents for or otherwise bind the LLC without the approval of the 
Independent Fiduciary. The Applicant represents that the Operating 
Agreementprovides that the Independent Fiduciary will have the sole 
authority to cause or permit the LLC to take certain actions that 
generally include (but are not limited to) borrowing money or amending 
the terms and conditions of any financing, granting any security 
interest affecting the Property, selling any portion of the Property 
(including any other sale of the Property in connection with the 
enforcement of the Fund's rights under the Operating Agreement), 
entering into or amending any contract for the design, construction, 
management or leasing of the Property, making alterations to the 
Property, dissolving the LLC, and entering into any merger, 
consolidation or restructuring of the LLC.
    10. The Operating Agreement also provides the Fund with the right 
to require each of the Unions to purchase the Fund's remaining LLC 
Interest (the Put Right) for an aggregate cash purchase price equal to 
25 percent of the greater of: (a) The price the Fund originally paid 
for the Property; or (b) the current fair market value of the Property. 
The Put Right will be exercisable at the sole election of the 
Independent Fiduciary upon delivery of notice of such election to each 
of the Unions. For purposes of determining the price of the Put Right, 
the Applicant represents that the Independent Fiduciary will retain an 
Independent Appraiser to value the Property within 10 days of 
delivering notice of election in order to prepare an appraisal report. 
In addition, the Applicant represents that the Independent Fiduciary 
will be responsible for ensuring that the methodology used by such 
independent appraiser is properly applied. The Applicant further 
represents that the exercise price of the Put Right will be determined 
without a minority ownership discount for any illiquidity of the Fund's 
LLC Interest. Pursuant to the terms of the Operating Agreement, the 
purchase of the Fund's LLC Interest by the Unions in connection with 
the exercise of the Put Right will close on the later of: (1) 30 
business days after delivery of notice; or (2) five business days after 
the Independent Appraiser determines the fair market value of the 
Property. The Applicant represents that, prior to the exercise of the 
Put Right, the LLC Interests held by the Unions will not be 
transferable, without the approval of the Independent Fiduciary.
    11. The Applicant states that the initial Sale and subsequent Sale 
upon exercise of the Put Right would violate sections 406(a)(1)(A) and 
406(a)(1)(D) of ERISA. Section 406(a)(1)(A) of ERISA prohibits a 
fiduciary of a plan from causing the plan to engage in a transaction, 
if he or she knows or should know that such transaction constitutes the 
sale or exchange or leasing of property between the plan and a party in 
interest with respect to the plan. Section 406(a)(1)(D) of ERISA 
prohibits a fiduciary of a plan from causing the plan to engage in a 
transaction, if he or she knows or should know that such transaction 
constitutes a transfer of assets of the plan to a party in interest. 
According to the Applicant, the Sale of the LLC Interests to the Unions 
and the exercise of the Put Right by the Independent Fiduciary on 
behalf of the Fund whereby the Unions would purchase the Fund's LLC 
Interest, would constitute violations of section 406(a)(1)(A) and (D) 
of ERISA, because the Unions are parties in interest with respect to 
the Fund under section 3(14)(D) of ERISA. Accordingly, the Applicant 
requests exemptive relief from sections 406(a)(1)(A) and 406(a)(1)(D) 
of ERISA for the initial Sale of the LLC Interests by the Fund to each 
of the Unions and for the subsequent Sale of the Fund's LLC Interest to 
the Unions upon the exercise of the Put Right.

The Independent Fiduciary

    12. The Applicant represents that Intercontinental has been 
continuously involved in representing the Fund as its Independent 
Fiduciary in connection with the Property. In this regard, 
Intercontinental represents that it meets the Department's definition 
of a ``qualified independent fiduciary'' for purposes of the covered 
transactions.\8\ Intercontinental explains that it has the training, 
experience, and facilities to act on behalf of the Fund regarding the 
Sale, the Put Right, and the management of the LLC and the Property. As 
described above, Intercontinental is a real estate consulting company 
and SEC-registered investment adviser with $2.5 billion in assets under 
management, that has developed, built, managed and owned approximately 
$6 billion of commercial real estate. Intercontinental also represents 
that it is not an affiliate of, or related to, the entities involved in 
the covered transactions, and that it has received during each federal 
tax year of Intercontinental's engagement with respect to the covered 
transactions less than 2 percent of Intercontinental's annual revenue, 
based on the prior tax year, from the parties in interest and their 
affiliates. Intercontinental represents that, with respect to the 
covered transactions, it acts solely for the Fund and the Fund pays 
Intercontinental's fees.
---------------------------------------------------------------------------

    \8\ See 29 CFR 2570.31(j).
---------------------------------------------------------------------------

    13. Intercontinental also represents that it understands it is 
required, as the Independent Fiduciary, to conform its conduct to the 
duties and responsibilities of a fiduciary under ERISA, and understands 
the liabilities imposed under ERISA for its failure to do so. 
Intercontinental represents that it will engage the law firms of Mayer 
Brown LLP and Bradley & Associates to provide advice during the course 
of the covered transactions.
    14. The Applicant represents that Intercontinental will analyze and 
approve the terms of the Sale and Put

[[Page 78485]]

Right; monitor and ensure that the terms of such covered transactions 
and the conditions of the exemption have been met; have the 
responsibility for the exercise of the Put Right on behalf of the Fund, 
in its sole discretion; and manage the operation of the LLC and the 
Property. Furthermore, the Applicant notes, Intercontinental will 
select the Independent Appraiser, and will verify the methodology used 
by the Independent Appraiser in establishing the fair market value of 
the Property.

The Independent Appraiser

    15. Intercontinental represents that it retained US Realty 
Consultants, Inc. (US Realty) to serve as the Independent Appraiser and 
to prepare a qualified appraisal report for use in determining the fair 
market value of the Property for all purposes of the Sale and Put 
Right. The Applicant represents that Intercontinental will ensure that 
the methodology used by the Independent Appraiser is properly applied 
in determining the fair market value of the Property.
    16. The Applicant represents that US Realty satisfies the 
Department's definition of a ``qualified independent appraiser'' for 
purposes of the covered transactions.\9\ US Realty represents that it 
had no prior relationship with the Unions or the Fund. Furthermore, US 
Realty states that its fee of $5,250, as paid by the LLC, represents 
1.4% of the gross billings of the Chicago office, which is responsible 
for performing the appraisal of the Property.
---------------------------------------------------------------------------

    \9\ See 29 CFR 2570.31(i).
---------------------------------------------------------------------------

    US Realty represents that Michael Maslanka and Noah McCloskey 
conducted the valuation of the Property. US Realty represents that Mr. 
Maslanka, Director for the Central Region, has 35 years of experience 
in real estate analysis, and has valued billions of dollars of real 
property, including commercial, residential, and special purpose 
properties such as theaters and railroad property. US Realty represents 
that Mr. Maslanka is a General Real Estate Appraiser certified in 
Illinois, Michigan, and Indiana and holds a ``Member of Appraisal 
Institute'' designation. US Realty represents that Mr. McCloskey has 
valued several billions of dollars of real property, including office, 
retail and industrial properties. US Realty represents that Mr. 
McCloskey is a General Real Estate Appraiser certified in Illinois, 
Indiana, Michigan, and Colorado.
    17. In its appraisal report (the Appraisal), US Realty concluded 
that the market value of the Property, as of May 30, 2013, is 
$9,100,000. US Realty employed an income capitalization approach and a 
sales comparison approach to derive this market value. Both income and 
expense estimates were based upon an analysis of historic data provided 
from the subject in addition to data from comparable office properties. 
As detailed in the Appraisal, the discount rate and capitalization rate 
for the Property were within the range of the investment criteria of 
investors as well as comparable sales. These rates best emulate 
investor decision-making in analyzing factors such as the present value 
of the anticipated lease-up of vacant space, the implicit present value 
of above-market contract rent, the Property's tenant rollover profile, 
and other factors affecting the income stream over a period of time. 
The sales comparisons approach reflects the value of the Property based 
on an analysis of recent sales of similarly improved properties. 
Because the Property represents an investment capable of attracting 
investment capital, US Realty relied primarily on the value produced by 
the income capitalization approach, with the sales comparison approach 
providing additional support for the conclusion.
    18. According to the Applicant, as of February 28, 2014, the Fund's 
interest in the LLC represented approximately 3.7 percent of the total 
Fund assets. After the Sale, the Fund's remaining interest in the LLC 
would represent approximately 0.9 percent of the Fund's total 
assets.\10\
---------------------------------------------------------------------------

    \10\ The calculations are based on the information reported on 
the Form 5500 for the plan year ending February 28, 2014.
---------------------------------------------------------------------------

Statutory Findings

    19. The Applicant represents that the proposed exemption for the 
Sale would be administratively feasible because it is a one-time 
transaction for cash. Furthermore, the Applicant represents that an 
Independent Fiduciary will act on behalf of the Fund in connection with 
the approval of the Sale, the exercise of the Put Right, and the 
management of the LLC and the Property, thereby mitigating potential 
conflicts of interest and obviating the need for continued Departmental 
oversight.
    20. The Applicant represents that the proposed exemption for the 
Sale is in the interest of the Fund and its participants and 
beneficiaries because the Sale will allow the Fund to diversify its 
investments by reducing its ownership stake in the LLC. Furthermore, 
the Applicant represents that the Unions, as owners of an interest in 
the Property, would be more likely to maintain their Leases, thus 
increasing the likelihood of long-term success of the Fund's investment 
in the Property. Also, due to the solvency of the Unions, the Applicant 
represents that the Fund has substantial assurance that the parties 
involved will be suitable company-owners with a vested interest in 
preserving the Property's value. Finally, the Applicant states that the 
Fund will not be responsible for paying any commissions, costs or other 
expenses in connection with the Sale, or the exercise of the Put Right, 
other than the legal fees of the Fund's counsel, the services of the 
Independent Fiduciary and the services of the Independent Appraiser.
    21. The Applicant represents that the proposed exemption for the 
Sale is protective of the rights of Fund participants and 
beneficiaries, because the conditions for the exemption require that 
Intercontinental, as the Independent Fiduciary for the Fund, will have 
the sole discretion to determine whether the Fund proceeds with the 
Sale and whether the Fund will exercise the Put Right. In such event, 
the Fund will receive the fair market value for its LLC Interest, 
determined by the Independent Appraiser in an appraisal and verified by 
the Independent Fiduciary.
    The Applicant states that the Independent Fiduciary will act as the 
manager of the LLC with the sole authority to manage its affairs, and 
will retain full and complete control over the management and operation 
of the Property. In this regard, the Applicant represents that no 
member of the LLC will, directly or indirectly, without the approval of 
the Independent Fiduciary: (1) Act for or on behalf of the LLC; (2) 
transact any business in the name of the LLC; or (3) sign documents for 
or otherwise bind the LLC. The Applicant represents that, prior to the 
exercise of the Put Right, the Unions must seek approval from the 
Independent Fiduciary prior to transferring the LLC Interests. The 
Applicant represents further that the Independent Fiduciary will 
enforce compliance with all conditions and obligations imposed on any 
party dealing with the Fund, ensure that the conditions of the proposed 
exemption, if granted, are met, and will ensure that the covered 
transactions remain in the interest of the Fund. Moreover, any Trustee 
of the Fund must recuse himself or herself from any vote regarding the 
termination or removal of the Independent Fiduciary for the Fund if he 
or she is an officer (or a relative of an officer) of any of the 
Unions.
    Finally, since its acquisition of the Property, the Applicant 
notes, the

[[Page 78486]]

Fund's ownership interest in the Property has constituted five percent 
or less of the Fund's assets, and immediately after the Sale the Fund's 
ownership interest in the Property will be less than two percent of the 
Fund's assets.

Summary

    22. In summary, the Applicant represents that the proposed 
exemption, if granted, satisfies the statutory criteria of section 
408(a) of ERISA, for the reasons described above, including the 
following:
    (a) The Fund will receive from each of the Unions as consideration 
for the Sale of the LLC Interests, a cash amount equal to 25 percent of 
the greater of: (1) The original purchase price paid by the Fund, or 
(2) the fair market value of the O'Hare Corporate Center in Park Ridge, 
Illinois (the Property), determined on the date of the Sale by an 
Independent Appraiser;
    (b) The Fund, upon exercise of the Put Right, will receive from the 
Unions a one-time aggregate cash amount equal to 25 percent of the 
greater of: (1) The original purchase price paid by the Fund, or (2) 
the fair market value of the Property on the date of exercise of the 
Put Right, as determined by an Independent Appraiser;
    (c) The Sale and the exercise of the Put Right will each be one-
time transactions for cash;
    (d) The Independent Fiduciary will: (1) Analyze and approve the 
terms of the Sale and Put Right; (2) ensure that the terms of the Sale 
and Put Right and the conditions of the exemption are met; (3) have 
sole responsibility for the exercise of the Put Right on behalf of the 
Fund; (4) have sole responsibility and authority for the management and 
the operation of the LLC and the Property; and (5) select the 
Independent Appraiser and verify the methodology used by the 
Independent Appraiser in determining the fair market value of the 
Property for all purposes under this proposed exemption;
    (e) An Independent Appraiser, who is selected by the Independent 
Fiduciary, will establish the fair market value of the Property for 
purposes of the Sale and the Put Right, using a methodology approved by 
the Independent Fiduciary;
    (f) The Fund will not pay any commissions, costs or other expenses 
in connection with the Sale and Put Right, other than the legal fees of 
the Fund's counsel, the services of the Independent Fiduciary and the 
services of the Independent Appraiser;
    (g) Since its acquisition of the Property, the Fund's ownership 
interest in the Property has constituted five percent or less of the 
Fund's assets, and immediately after the Sale the Fund's ownership 
interest in the Property will be less than two percent of the Fund's 
assets;
    (h) No member of the LLC will, directly or indirectly, without the 
approval of the Independent Fiduciary: (1) Act for or on behalf of the 
LLC; (2) transact any business in the name of the LLC; or (3) sign 
documents for or otherwise bind the LLC; and
    (i) No LLC Interests will be transferable by the Unions prior to 
the exercise of the Put Right by the Fund, without the approval of the 
Independent Fiduciary.

Notice to Interested Persons

    Notice of the proposed exemption will be provided to all interested 
persons within 15 days of the publication of the notice of proposed 
exemption in the Federal Register, by first class U.S. mail to the last 
known address of all such Participants. Such notice will contain a copy 
of the notice of proposed exemption, as published in the Federal 
Register, and a supplemental statement, as required pursuant to 29 CFR 
2570.43(b)(2).\11\ The supplemental statement will inform interested 
persons of their right to comment on and to request a hearing with 
respect to the pending exemption. Written comments and hearing requests 
are due within 45 days of the publication of the notice of proposed 
exemption in the Federal Register. All comments will be made available 
to the public.
---------------------------------------------------------------------------

    \11\ The Department considers exemption applications filed prior 
to December 27, 2011 under the Prohibited Transaction Procedures 
regulation set forth in 29 CFR part 2570, subpart B (55 FR 32836, 
32847, August 10, 1990).
---------------------------------------------------------------------------

    Warning: Do not include any personally identifiable information 
(such as name, address, or other contact information) or confidential 
business information that you do not want publicly disclosed. All 
comments may be posted on the Internet and can be retrieved by most 
Internet search engines.

FOR FURTHER INFORMATION CONTACT: Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

Local 268, Sheet Metal Workers International Association, AFL-CIO (the 
Union) Located in Caseyville, IL

[Application No. L-11794]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA or the Act), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (76 FR 66637, 
66644, October 27, 2011). If the proposed exemption is granted, the 
restrictions of sections 406(a)(1)(A), 406(a)(1)(D), 406(b)(1), and 
406(b)(2) of the Act, shall not apply to the sale by the Fund of 
certain improved real property located at 2727 N. 89th Street, 
Caseyville, IL 62232 (the Building), to the Union (the Sale), provided 
that the following conditions have been met:
    (a) The Sale is a one-time transaction for cash;
    (b) At the time of the Sale, the Fund receives the greater of 
either: (1) $110,226.48; or (2) the fair market value of the Building, 
as established by a qualified independent appraiser (the Appraiser), as 
described in condition (c), as of the date of Sale;
    (c) Before the date of Sale, an Appraiser who satisfies the 
Department's definition of ``qualified independent appraiser'' will be 
retained by the Independent Fiduciary on behalf of the Fund without any 
involvement of the Union or any other party to the covered transactions 
or any planned future transactions, and will conduct a full, 
independent Appraisal (the Appraisal) of the Building for purposes of 
the Sale that complies in all respects with applicable appraisal 
standards;
    (d) A qualified independent fiduciary (the Independent Fiduciary), 
acting on behalf of the Fund, represents the Fund's interests for all 
purposes with respect to the Sale, and: (1) Determines, among other 
things, that it is in the best interest of the Fund to proceed with the 
Sale; and (2) reviews and approves the purchase price and methodology 
used by the Appraiser in its Appraisal;
    (e) The Fund pays no fees, commissions or other expenses associated 
with the Sale; and
    (f) The terms and conditions of the Sale are at least as favorable 
to the Fund as those obtainable in an arm's-length transaction with an 
unrelated third party.

Summary of Facts and Representations

Background

    1. Local 268, Sheet Metal Workers International Association, AFL-
CIO (the Applicant or the Union) serves the Southern third of the State 
of Illinois. The Union was formed as an amalgamation of five smaller 
local unions on May 18, 1939. It is a local chapter of the Sheet Metal 
Workers International Association, an

[[Page 78487]]

organization representing workers in the United States, Canada, and 
Puerto Rico, who work in the construction, manufacturing, service, 
railroad and shipyard industries.
    2. The Local 268 Joint Apprenticeship and Training Fund (the Fund) 
is a jointly administered apprenticeship and training fund established 
under Section 302(c)(5) of the Taft Hartley Act by the Union and the 
Southern Illinois Chapter, Sheet Metal Contractors National Association 
(Association). The Fund was established for the purpose of supporting a 
program for the training and education of sheet metal apprentices, 
journeymen and other individuals designated by the Fund trustees (the 
Trustees). The Fund is used to defray the reasonable expenses of the 
apprenticeship and training programs, including the costs of the 
establishment and maintenance of apprenticeship and training programs, 
employment of sufficient personnel, and administration of salaries, 
supplies, facilities (including the leasing or acquisition of real 
property and improvements thereon), tools, equipment, textbooks, and 
other instructional materials.
    3. The Applicant represents that the current Trustees include 
employer-appointed Trustees, who are unaffiliated with the Union, and 
Union Trustees. The paid staff of the Fund includes the Fund 
coordinator (the Fund Coordinator), who is employed full time by the 
Fund, and two part-time instructors, who also work as hourly paid sheet 
metal workers and are employed by contributing employers. The Fund 
Coordinator and these instructors are not Trustees.\12\
---------------------------------------------------------------------------

    \12\ The Applicant states that the Fund Coordinator's duties 
include serving as an instructor for Fund participants and that he 
receives no additional compensation when he is instructing. 
Furthermore, the Applicant represents that the part-time instructors 
do not work for contributing employers at the same time that they 
are teaching classes for the Fund. The Applicant represents that it 
is relying on section 408(b)(2) of the Act in connection with the 
provision of services by employees of contributing employers to the 
Fund, and the payment by the Fund of compensation for such services. 
The Department is not expressing a view herein as to whether the 
Fund has satisfied the conditions of section 408(b)(2) of the Act 
with respect to the provision of services by such employees to the 
Fund and the payment of compensation by the Fund in connection with 
such services.
---------------------------------------------------------------------------

    4. The Applicant represents that the Fund's offices are located in 
the current union hall (the Union Hall), located at 2701 N. 89th 
Street, Caseyville, Illinois 62232 (Building U). The Applicant 
represents that the Union purchased Building U in 1984. In addition to 
the office space, beginning in 1986, the Fund maintained classrooms and 
a shop that were also located in Building U. Under its current leasing 
arrangement with the Union (the Old Lease), the Fund uses 3,800 square 
feet of Building U and pays rent of $312 per month to the Union.
    5. The Applicant represents that the Trustees expect to expand the 
Fund's training program to include service work, a computer lab for 
computer training, a larger welding lab, and additional equipment for 
training such as a press brake. In connection therewith, the training 
program staff has recently increased from two to three employees. The 
Applicant represents that the Trustees' plan for the Fund to increase 
training programs requires greater space than the current space being 
leased by the Fund from the Union in Building U.
The Sale
    6. The Applicant represents that in 2010, the Fund purchased the 
building and real property located at 2727 N. 89th Street (Building A), 
from an unrelated third party at a price of $65,000.00. The Applicant 
represents that Building A was purchased as a possible future site for 
the expansion of the Fund's training program. The Applicant represents 
further that Building A was originally constructed as a three bedroom 
residential home, but it was converted to commercial and industrial 
use, and has 1,776 square feet. The Applicant states that Building A 
borders the property of Building U and shares a parking lot with 
Building U. The Applicant represents that, since purchasing Building A, 
the Fund has spent $16,776.79 to maintain and improve Building A, 
including replacing wiring that did not comply with the applicable 
electrical regulations and comprised of exposed wires, replacing the 
heating and air conditioning system, and installing new security doors 
to secure Building A. The Fund has also paid $13,938.76 in real estate 
taxes, $4,027.93 in utilities, and $10,483.00 in insurance costs with 
respect to Building A. The Applicant states that the total in holding 
costs and capital improvement costs (the Holding Costs) incurred by the 
Fund is $45,226.48. Thus, the cost of the Fund's acquisition and 
holding of Building A has been $110,226.48.
    7. The Applicant represents that the Fund did not purchase Building 
A with the intent of eventually selling it to the Union. Nevertheless, 
the Applicant states that the sale of Building A to the Union (the 
Sale) will provide additional liquidity to the Fund and will dispose of 
real property which is no longer needed by the Fund. Moreover, the 
Applicant states that the Union would use Building A and the land that 
it sits on as a site for a new Union Hall. The Applicant represents 
that the proposed price for which the Union will purchase Building A 
from the Fund is equal to the greater of: (A) $110,226.48, representing 
the cost of acquisition and Holding Costs related to Building A that 
have been incurred by the Fund, or (B) the fair market value of 
Building A, as established by a qualified independent appraiser (the 
Appraiser), as of the date of Sale. As described in further detail 
below, an Appraiser selected by the qualified independent fiduciary 
(the Independent Fiduciary) without any assistance from a related party 
or a party to any current or planned future transactions with the 
Union, the Fund, or a related party will conduct the appraisal (the 
Appraisal) as of the date of Sale.
    8. The Applicant states that, because the Union is a party in 
interest to the Fund under section 3(14)(D) of the Act, the Sale would 
constitute a prohibited transaction under section 406(a)(1)(A) and (D) 
of the Act. Furthermore, because certain officers of the Union are also 
Trustees of the Fund and they may have an interest in causing the Fund 
to engage in the transaction with the Union, the Sale may also 
constitute a prohibited transaction under section 406(b)(1) and (2) of 
the Act. Therefore, the Applicant requests an exemption from sections 
406(a)(1)(A) and (D) and 406(b)(1) and (2) of the Act for the Sale.
The New Lease
    9. The Applicant represents that in 2012, the Union offered a new 
lease to the Fund for all of Building U, which would include a total of 
9,600 square feet (the New Lease). The Applicant represents that the 
Union offered a below market rental rate of $3 per square foot, or 
$2,400 per month. In 2012, the Applicant engaged Tade Appraisal Company 
(Tade) to conduct an appraisal of Building U (the Tade Appraisal). Tade 
represents that it has not had any business engagements with the Union 
or any of its affiliates other than the Tade Appraisal. Furthermore, 
Tade represents that the fee paid in connection with the Tade Appraisal 
represented less than 1% of its annual income. Tade represents that its 
Appraiser, Scott Tade, is an Illinois-certified General Real Estate 
Appraiser in Illinois with 30 years of experience in the real estate 
field. In his career, Mr. Tade has worked on valuations of residential, 
commercial and retail properties. The Tade Appraisal valued Building U 
at $425,000, and included an analysis of rental rates for comparable

[[Page 78488]]

properties. In this regard, Tade represents that, for comparable 
properties, rental rates were $2.21 to $5.14 per square foot for a 
triple net lease.
    10. The Applicant represents that the New Lease is the best option 
for expanding the training program within the Fund's projected budgets. 
The Applicant represents that Building U is already constructed with a 
shop and classroom space. Moreover, the Fund can expand the shop space 
and install a computer lab in Building U over time with equipment 
purchases. The Applicant represents that the leasing of Building U will 
thus permit the Fund to expand the training program incrementally, 
without expending large sums of money to purchase and renovate another 
building.
    11. Furthermore, the Applicant states that unless the Union can 
move its Union Hall to Building A, it will not be able to lease all of 
Building U to the Fund at the below market rent stated above. 
Therefore, according to the Applicant, the Fund would not be able to 
realize its best option to expand the training program.
    12. The Applicant represents that the New Lease would comply with 
PTE 78-6. In this regard, the Applicant represents that the New Lease 
between the Fund and the Union for use as classroom space would be 
based on terms at least as favorable to the Fund as an arm's-length 
transaction with an unrelated party would be. Furthermore, the 
Applicant represents that the New Lease would be appropriate and 
helpful in carrying out the Fund's purposes, and the Fund will maintain 
or cause to be maintained for a period of 6 years from the termination 
of any such transaction such records as are necessary to demonstrate 
continued compliance with the conditions of PTE 78-6. Finally, as 
described below, the Independent Fiduciary negotiated and approved the 
terms of the New Lease.
The Appraisal
    13. The Applicant represents that prior to the date of Sale, the 
Independent Fiduciary will engage an Appraiser who satisfies the 
Department's definition of ``qualified independent appraiser'' to 
perform an Appraisal of Building A on behalf of the Fund. The Applicant 
represents that the Appraiser will be selected by the Independent 
Fiduciary without any involvement of the Union or any other party to 
the covered transactions or any party to any planned future 
transactions. The Appraisal will establish the value of Building A as 
of the date of Sale and will be a full, independent appraisal that 
complies in all respects with applicable appraisal standards.
The Independent Fiduciary's Report
    14. The Applicant represents that the Trustees retained Rebecca 
Kling to serve both as the Independent Fiduciary and as legal counsel 
to the Fund. The Independent Fiduciary represents in her Statement of 
Independent Fiduciary that she was engaged by the Fund to represent its 
interests related to the Sale and the New Lease. The Independent 
Fiduciary represents that she is an experienced attorney with 28 years 
of experience specializing in commercial and residential real estate 
transactions, including acquisition, development and finance. The 
Independent Fiduciary represents that, prior to the Sale and the New 
Lease, she had no relationship with the Fund or the Union, and it is 
not anticipated that a relationship would continue following the 
consummation of the transactions. The Independent Fiduciary represents 
that she reviewed the terms of the Sale, and negotiated and approved 
the terms of the New Lease.
    15. The Independent Fiduciary represents that Building A is vacant 
and serves no purpose in the successful operation or financial well-
being of the Fund, except as dormant investment property. The 
Independent Fiduciary represents that the Sale for a price of 
$110,226.48, which takes into account the Holding Costs incurred by the 
Fund since purchasing the Property is fair, reasonable and beneficial 
to the Fund, its participants and beneficiaries.\13\ Furthermore, the 
Independent Fiduciary believes that, because the proposed agreement of 
Sale between the Fund and the Union contains minimal, limited 
representations and warranties on the part of the Fund, as seller; with 
the Sale being conducted primarily on an ``as-is, where-is'' basis; the 
Fund and its participants and beneficiaries are adequately protected 
from potential liability.
---------------------------------------------------------------------------

    \13\ In this regard, the Applicant has submitted two recent 
appraisals to the Department that set the price of Building A at 
approximately $72,500.
---------------------------------------------------------------------------

    16. The Independent Fiduciary represents that the Sale furthers the 
interest of the Fund and its participants and beneficiaries because the 
Fund will have no use for Building A after entering into the New Lease 
and because the purchase price for Building A offered by the Union 
includes the Fund's Holding Costs related to Building A. Furthermore, 
the Independent Fiduciary represents that Building U is the current 
site of the Fund's training programs and provides more space for 
expansion than Building A, and the New Lease reflects the Union's 
willingness to subsidize the Fund's rent at market to below-market 
pricing as indicated in the Tade Appraisal. Moreover, the Independent 
Fiduciary represents that, based on information contained in the June 
30, 2012, audit report of the Fund, the Sale will not significantly 
change or adversely impact the Fund's asset allocation.
    17. The Independent Fiduciary represents that she drafted the 
agreement for the New Lease to be entered into between the Fund as 
tenant and the Union as landlord. Based upon her review of the Tade 
Appraisal, she believes that the rent price of $3 per square foot, as 
reflected in the New Lease terms, is at least as favorable to the Fund 
as would be negotiated and agreed to in good faith by any disinterested 
third party tenant in an arms-length transaction.

Statutory Findings

    18. The Applicant represents that the requested exemption with 
respect to the Sale is administratively feasible because the Sale is a 
one-time transaction of real property for cash between the Union and 
the Fund, which will be easy to implement if approved by the 
Department. The Applicant represents that the Sale is in the interest 
of the Fund and its participants and beneficiaries because it will 
permit the expansion of the training program at a below market rent. 
Furthermore, the Applicant represents that the Fund will receive 
greater than fair-market value in the Sale, accounting for Holding 
Costs. The Applicant states further that the Sale is protective of the 
Fund and its participants and beneficiaries because the Independent 
Fiduciary, an experienced real estate attorney, was engaged by the Fund 
to represent its interests related to the Sale. In this capacity, the 
Independent Fiduciary represents that she reviewed the terms of the 
Sale, including the purchase price, and negotiated and approved the 
terms of the New Lease.

Summary

    19. In summary, the Applicant represents that the proposed 
exemption satisfies the statutory criteria for an exemption under 
section 408(a) of the Act for the reasons stated above and for the 
following reasons:
    a. The Sale is a one-time transaction for cash;
    b. At the time of the Sale, the Fund receives the greater of 
either: (1) $110,226.48; or (2) the fair market value

[[Page 78489]]

of Building A, as established by the Appraiser, as of the date of Sale;
    c. Before the date of Sale, the Appraiser will be retained by the 
Independent Fiduciary on behalf of the Fund without any involvement of 
the Union or any other party to the covered transactions or any planned 
future transactions;
    d. The Independent Fiduciary, acting on behalf of the Fund, 
represents the Fund's interests for all purposes with respect to the 
Sale, and: (1) Determines, among other things, that it is in the best 
interest of the Fund to proceed with the Sale; and (2) reviews and 
approves the purchase price and methodology used by the Appraiser in 
its Appraisal; and
    e. The Fund pays no fees, commissions or other expenses associated 
with the Sale.

Notice to Interested Persons

    Notice of the proposed exemption will be given to all Union members 
within 15 days of the publication of the notice of proposed exemption 
in the Federal Register, by first class U.S. mail to the last known 
address of all such individuals, and by posting in the Union hall in a 
prominent location. Such notice will contain a copy of the notice of 
proposed exemption, as published in the Federal Register, and a 
supplemental statement, as required pursuant to 29 CFR 2570.43(a)(2). 
The supplemental statement will inform interested persons of their 
right to comment on and to request a hearing with respect to the 
pending exemption. Written comments and hearing requests are due within 
45 days of the publication of the notice of proposed exemption in the 
Federal Register. All comments will be made available to the public.
    Warning: Do not include any personally identifiable information 
(such as name, address, or other contact information) or confidential 
business information that you do not want publicly disclosed. All 
comments may be posted on the Internet and can be retrieved by most 
Internet search engines.

FOR FURTHER INFORMATION CONTACT: Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

EXCO Resources, Inc. 401(k) Plan (the Plan) Located in Dallas, TX

[Application No. D-11821]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (76 FR 66637, 66644, October 27, 2011).

Section I: Transactions

    If the proposed exemption is granted, effective for the period 
beginning December 17, 2013, and ending January 9, 2014, the 
restrictions of sections 406(a)(1)(E), 406(a)(2), 406(b)(1), 406(b)(2), 
and 407(a)(1)(A) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(E) of the Code,\14\ shall not apply:
---------------------------------------------------------------------------

    \14\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) To the acquisition of certain transferable subscription 
right(s)(the Right or Rights) by the individually-directed account(s) 
(the Account or Accounts) of certain participant(s) (the Invested 
Participant(s)) in the Plan, in connection with an offering (the 
Offering) of shares of the common stock (the Common Stock) of EXCO 
Resources, Inc. (EXCO) by EXCO, the plan sponsor (the Plan Sponsor) and 
a party in interest with respect to the Plan; and
    (b) To the holding of the Rights received by the Accounts during 
the subscription period of the Offering; provided that the conditions 
set forth in Section II of this proposed exemption were satisfied for 
the duration of the acquisition and holding of such Rights.

Section II: Conditions

    (a) The acquisition of the Rights by the Accounts of Invested 
Participants occurred in connection with the Offering, and the Rights 
were made available by EXCO on the same material terms to all 
shareholders of the Common Stock of EXCO, including the Accounts of 
Invested Participants;
    (b) The acquisition of the Rights by the Accounts of Invested 
Participants resulted from an independent corporate act of EXCO;
    (c) Each shareholder of the Common Stock of EXCO, including each of 
the Accounts of Invested Participants, received the same proportionate 
number of Rights, and this proportionate number of Rights was based on 
the number of shares of Common Stock held by each such shareholder, as 
of 5:00 p.m. New York City time, on December 19, 2013 (the Record 
Date);
    (d) The Rights were acquired pursuant to, and in accordance with, 
provisions under the Plan for individually-directed investment of the 
Accounts by the Invested Participants, all of whose Accounts in the 
Plan held the Common Stock;
    (e) The decision with regard to the holding and disposition of the 
Rights by an Account was made by the Invested Participant whose Account 
received the Rights;
    (f) If any of the Invested Participants failed to give instructions 
as to the exercise of the Rights received in the Offering, or gave 
instructions to the Plan trustee (the Trustee) to sell such Rights, 
such Rights were automatically sold in blind transactions on the New 
York Stock Exchange (NYSE), and the proceeds from such sales were 
distributed pro-rata to the Accounts of such Invested Participants 
whose Rights were sold;
    (g) No brokerage fees, no commissions, no subscription fees, and no 
other charges were paid by the Plan or by the Accounts of Invested 
Participants with respect to the acquisition and holding of the Rights, 
and no commissions, no fees, and no expenses were paid by the Plan or 
by the Accounts of Invested Participants to any related broker in 
connection with the sale or exercise of any of the Rights, or with 
regard to the acquisition of the Common Stock through the exercise of 
such Rights;
    (h) EXCO did not influence any Invested Participant's election with 
respect to the Rights; and
    (i) The terms of the Offering were described to the Invested 
Participants in clearly written communications, including, but not 
limited to, the prospectus for the Rights Offering.
    Effective Date: This proposed exemption, if granted, will be 
effective for the period beginning on December 17, 2013, the 
commencement date of the Offering, and ending on January 9, 2014, the 
expiration date of the Offering.

Summary of Facts and Representations

Background

    1. The Plan, which was adopted, effective as of January 1, 1999, is 
a defined contribution, 401(k) retirement saving plan that provides for 
a cash and deferred arrangement. The Plan is a participant directed 
account plan designed to comply with the requirements of 404(c) of the 
Act. As of December 31, 2013, there were 863 participants in the Plan. 
Also, as of December 31, 2013, the Plan had total net assets of 
$100,335,599.
    Prudential Retirement Insurance and Annuity Company is the third-
party administrator and record-keeper for the Plan. Prudential Bank and 
Trust Company is the Trustee. The Plan is administered by a committee 
(the

[[Page 78490]]

Committee), composed of certain appointed employees of EXCO. The 
Committee has the responsibility of selecting the investment options 
into which Plan participants can direct their contributions.
    2. EXCO (the Applicant) is the Plan Sponsor. A Texas corporation 
incorporated in October 1955, EXCO is an independent oil and natural 
gas company engaged in the exploitation, exploration, acquisition, and 
development of onshore oil and natural gas properties, with a focus on 
shale resource plays. EXCO's principal operations are conducted in 
certain key U.S. oil and natural gas areas, including Texas, Louisiana, 
and the Appalachia region. EXCO's principal office is located in 
Dallas, Texas. According to EXCO's Annual Report on Form 10-K for the 
year ended December 31, 2013, on a consolidated basis, EXCO and its 
consolidated subsidiaries had total assets of $2,408,628,000, total 
liabilities of $2,260,723,000, and total shareholders' equity of 
$147,905,000.
    3. Among the investment options offered to Plan participants are 
various types of securities, including shares of EXCO Common Stock. 
Investment by Plan participants in the Common Stock is entirely 
voluntary. The Accounts in the Plan acquire the Common Stock only as a 
result of participant-directed investment decisions. The Invested 
Participants whose Accounts in the Plan are invested in the Common 
Stock are employees, former employees, or beneficiaries of employees of 
EXCO. As of the Record Date (December 19, 2013), the Accounts of 
Invested Participants held 704,396 shares of the Common Stock.
    4. The Common Stock is publicly-traded on the NYSE under the symbol 
``XCO.'' The Common Stock has a par value $0.001 per share. The Common 
Stock held by the Accounts of Invested Participants is the same type 
and class of shares as those held by other the Common Stock 
shareholders of EXCO. The Common Stock is a ``qualifying employer 
security,'' as defined under section 407(d)(5) of the Act.

EXCO's Considerations

    5. In connection with its regular review of EXCO's liquidity and 
financial condition, the Board of Directors of EXCO (the Board) 
considered various alternatives in both debt and equity markets in 
order to strengthen EXCO's liquidity and financial ability following 
several significant acquisitions and dispositions during 2013. The 
alternatives considered by the Board included a rights offering and an 
underwritten public offering of additional shares of Common Stock. 
After assessing these alternatives, a decision was made to conduct the 
Offering.
    In this regard, on November 22, 2013, the directors on the Board 
(the Disinterested Directors) who are not affiliated with certain 
investors (the Investors) \15\ in the Common Stock by unanimous vote 
approved: (a) The basic terms of the Offering; and (b) the subscription 
price of $5.00 per share of the Common Stock. Furthermore, on the same 
date, the Investors agreed to the basic terms of their commitments 
under agreements (the Agreements) to purchase certain amount of shares 
of Common Stock in the Offering, and the Disinterested Directors 
approved these commitments with the Investors.
---------------------------------------------------------------------------

    \15\ The Investors referred to above are WL Ross & Co. LLC and 
its affiliates and Hamblin Watsa Investment Counsel Ltd. and its 
affiliates.
---------------------------------------------------------------------------

The Offering

    6. The Offering commenced on December 17, 2013.\16\ The Offering 
permitted shareholders of record, as of the Record Date, who received 
the Rights, to purchase up to an aggregate of 44,995,665 shares of 
Common Stock at a price of $5.00 per share, for an aggregate Offering 
price of $224,978,325. All shareholders also had the right to acquire 
additional Rights by purchasing additional shares of Common Stock on 
the open market (or through their Plan Accounts) prior to the Record 
Date. Further, all shareholders holding the Rights were entitled to an 
over-subscription privilege. However, the ability of any shareholder, 
including the Accounts, to exercise their over-subscription privilege 
was limited by the number of shares such shareholder owned as of the 
Record Date. Thus, all shareholders had the ability to increase or 
decrease their shares of Common Stock from the commencement of the 
Offering through the Record Date. The Offering expired on January 9, 
2014.
---------------------------------------------------------------------------

    \16\ The Applicant notes that the Record Date occurred on 
December 19, 2013. It is represented that there was no material 
impact to the Accounts of Invested Participants as a result of the 
Record Date being set two (2) days after the commencement of the 
Offering. In this regard, the number of Rights that each 
shareholder, including the Accounts, was entitled to receive was 
based on the number of shares each shareholder owned, as of the 
Record Date, and was not fully determined until the Record Date.
---------------------------------------------------------------------------

    7. With respect to the trading prices of the Common Stock during 
the Offering period, it is represented that at the close of business on 
December 16, 2013, the Common Stock was trading on the NYSE at $5.01 
per share, and on December 17, 2013, the commencement date of the 
Offering, the Common Stock was trading on the NYSE at $4.83 per share. 
On the Record Date, the Common Stock was trading on the NYSE at $4.99 
per share. On December 24, 2013, the Common Stock traded at $5.41 per 
share. The closing price of the Common Stock on the expiration date of 
the Offering (January 9, 2014), was $4.99 per share. Thus, during the 
subscription period of the Offering, the closing price of the Common 
Stock fluctuated between $4.83 and $5.41 per share.
    Accordingly, exemptive relief has been requested from December 17, 
2013, the commencement date of the Offering, to January 9, 2014, the 
expiration date of the Offering.

The Rights

    8. The Invested Participants were notified of the issuance of the 
Rights in a news release and in a posting on the EXCO's Web site during 
the month of December 2013. In addition, each Invested Participant was 
provided detailed written information regarding the Rights Offering, 
which included: (a) A prospectus describing the Offering, (b) 
frequently asked questions and answers regarding the Offering, (c) an 
election form, (d) a return envelope addressed to Continental Stock 
Transfer & Trust Company (Continental), the subscription agent, and (e) 
a subscription form.
    The Rights entitled the holders thereof to basic subscription 
rights as well as to an over-subscription privilege. Under the basic 
subscription rights, each holder of a Right was entitled to purchase, 
through the exercise of such Right, 0.25 of one (1) share of Common 
Stock for each whole share of Common Stock held by the shareholder, at 
a subscription price of $5.00 per share of Common Stock. Under the 
over-subscription privilege, each holder was entitled to subscribe for 
additional shares of Common Stock, subject to certain limitations and 
allocation procedures, up to the number of shares of Common Stock that 
were not subscribed for by the other holders of the Rights, pursuant to 
their basic subscription rights.
    It is represented that there were valid exercises to purchase an 
aggregate of 28,248,049 shares of Common Stock, pursuant to directions 
from holders of the Rights. The exercise of the Rights resulted in 
gross proceeds for EXCO of approximately $141.2 million. Together with 
the shares of Common Stock issued to the Investors pursuant to the 
Agreements, the Offering resulted in EXCO receiving gross proceeds of 
approximately $272.9 million.

[[Page 78491]]

Shareholder Elections

    9. The election form provided an Invested Participant with three 
(3) choices with respect to the Rights. In this regard, the Invested 
Participant could direct Continental: (a) To not exercise the Rights, 
with the express understanding that the Trustee would attempt to sell 
the Rights on the NYSE; (b) to neither exercise the Rights nor attempt 
to sell the Rights, with the understanding that the Rights would expire 
at the end of the Offering; or (c) to exercise the number of Rights 
elected by the Invested Participant, with the express understanding 
that if the Invested Participant did not elect to exercise all of the 
Rights, the Trustee would attempt to sell the remaining Rights on the 
NYSE. Each Right was transferable and was traded on the NYSE under the 
symbol ``XCO-RT'' from December 23, 2013 until 4:00 p.m. New York City 
time on January 8, 2014.
    As noted in the prospectus and on the election form, in order for 
the Invested Participant to exercise the Rights, there must have been 
sufficient funds in the Guaranteed Income Fund under the Invested 
Participant's Account to cover the total subscription payment. If the 
value of the investments in the Guaranteed Income Fund did not equal or 
exceed the total subscription payment required, the Rights held by the 
Invested Participant's Account were exercised for shares of Common 
Stock to the fullest extent possible based on the liquidated value of 
the Account invested in the Guaranteed Income Fund, to the nearest 
whole share.
    Following receipt of the election form by Continental, the Trustee 
and Continental confirmed and reconciled the identity of the Invested 
Participants who had made an election to sell their Rights, to exercise 
their Rights, or to allow all of their Rights to expire. The Trustee 
placed the order with Continental to purchase the Common Stock on 
behalf of the Accounts of the Invested Participants who elected to sell 
or to exercise the Rights, and liquidated the appropriate investments 
held in the Guaranteed Income Fund of such Accounts to purchase the 
Common Stock. Following the closing of the Offering, the shares of 
Common Stock purchased and the proceeds of the sale of the Rights were 
then credited to the Accounts of the Invested Participants.
    10. As of the Record Date, 307 Accounts of Invested Participants 
held 704,396 shares of Common Stock. As of the Record Date, the total 
fair market value of the Common Stock held by the Plan in all Accounts 
was $3,519,025, and the approximate percentage of the fair market value 
of the total assets of the Plan invested in the Common Stock was 3.49%. 
Also, as of the Record Date, the shares of Common Stock held in the 
Accounts of Invested Participants constituted approximately 0.3 percent 
(0.3%) of the shares of Common Stock outstanding.
    11. As a result of the Common Stock held by the Accounts of 
Invested Participants on the Record Date, the Plan acquired 704,396 
Rights to acquire up to 176,099 shares of Common Stock during the 
Offering. Of the Rights acquired by the Plan on behalf of the Accounts, 
all such Rights were either exercised or sold, except for the Rights 
held by two (2) Accounts of Invested Participants who elected to allow 
a total of 25,961 combined Rights to expire. Of the 9,954 Rights 
acquired by the Accounts of three (3) Invested Participants as a result 
of the Offering, it is represented that 9,952 Rights held by these 
Accounts were exercised \17\ for a total of 2,488 shares of Common 
Stock, which shares were eligible for trading on the NYSE by the 
Accounts.
---------------------------------------------------------------------------

    \17\ It is represented that the Accounts relied on the relief 
provided by the statutory exemption, pursuant to section 408(e) of 
the Act for the exercise of the Rights. Accordingly, the Department 
is not providing any relief herein from such prohibited transaction 
provisions with respect to the exercise of the Rights. In addition, 
the Department is offering no view on whether the requirements of 
the statutory exemption provided in section 408(e) of the Act and 
the Department's regulations, pursuant to 29 CFR 2550.408(e) were 
satisfied or whether the statutory exemption is applicable to the 
exercise of the Rights.
---------------------------------------------------------------------------

    The exercise of the Rights held in the Accounts of the Invested 
Participants was subject to the requirement that on the date of the 
exercise of the Rights, the prevailing market price on the NYSE for a 
share of Common Stock (the Prevailing Price), was required to equal or 
exceed the per share subscription price of the Rights. Accordingly, the 
Invested Participants could instruct the Trustee to exercise the Rights 
and acquire shares only if the Prevailing Price of a share of Common 
Stock equaled or exceeded $5.00 per share.
    Notwithstanding the fact that the price per share of Common Stock 
on the expiration date of the Offering was $4.99 per share, it is 
represented that the Prevailing Price of a share of Common Stock 
exceeded the subscription price of $5.00 per share at the time the 
three (3) Invested Participants exercised the Rights on behalf of their 
Accounts. In this regard, the Rights held by these Accounts were all 
exercised on January 7, 2014, at an exercise price of $5.07 per share. 
The three (3) Invested Participants, respectively, exercised the 
following number of Rights, 7,944, 1,044, and 964.
    It is also represented that the three (3) Invested Participants had 
an over-subscription privilege. One of these Invested Participants 
exercised her over-subscription privilege and acquired an additional 
482 shares of Common Stock.
    The Trustee was also able to sell the Rights on the NYSE. In this 
regard, the Trustee, on behalf of the Accounts of 302 Invested 
Participants, sold approximately 668,481 Rights held in such Accounts 
for total sales proceeds of $8,235.25. The sale proceeds were allocated 
pro-rata to the Accounts of the Invested Participants whose Rights were 
sold.
    12. No brokerage fees, no commissions, no subscription fees, and no 
other charges were paid by the Plan or by any of the Accounts of 
Invested Participants with respect to the acquisition and holding of 
the Rights, and no commissions, no fees, and no expenses were paid by 
the Plan or by any of the Accounts of Invested Participants to any 
related broker in connection with the sale or the exercise of any of 
the Rights, or with regard to the acquisition of the Common Stock 
through the exercise of such Rights.

Requested Relief

    13. EXCO has requested an exemption for: (a) The acquisition of the 
Rights by the Accounts of Invested Participants in connection with the 
Offering of the Common Stock by EXCO; and (b) the holding of the Rights 
by the Accounts of Invested Participants during the subscription period 
of the Offering. EXCO initially requested relief for the sale of the 
Rights by the Trustee, but subsequently withdrew its request for such 
relief, as the sale of the Rights occurred in blind transactions on the 
NYSE.
    Section 406(a)(1)(E) of the Act prohibits the acquisition on behalf 
of the plan of any ``employer security'' in violation of section 
407(a). Section 406(a)(2) of the Act prohibits a fiduciary who has 
authority or discretion to control or manage the assets of the plan to 
permit such plan to hold any ``employer security'' if he knows or 
should know that the holding of such security violates section 407(a) 
of the Act. Section 407(a) of the Act prohibits a plan from acquiring 
or holding employer securities that are not ``qualifying employer 
securities.''
    It is represented that the Rights acquired by the Accounts of 
Invested Participants satisfy the definition of ``employer 
securities,'' pursuant to section 407(d)(1) of the Act. However, as the 
Rights were not stock or marketable

[[Page 78492]]

obligations, such Rights do not meet the definition of ``qualifying 
employer securities,'' as set forth in section 407(d)(5) of the Act. 
Accordingly, the subject transactions constitute an acquisition and 
holding on behalf of the Accounts of Invested Participants, of employer 
securities which are not qualifying employer securities, in violation 
of sections 406(a)(1)(E), 406(a)(2), and 407(a)(1)(A) of the Act.
    EXCO has also requested relief from the prohibitions of section 
406(b)(1) and 406(b)(2) of the Act. Section 406(b)(1) of the Act 
prohibits a fiduciary from dealing with the assets of a plan in his own 
interest or for his own account. Section 406(b)(2) of the Act prohibits 
a fiduciary from engaging in his individual or any other capacity to 
act in any transaction involving the plan on behalf of a party (or 
represent a party) whose interest are adverse to the interest of the 
plan or the interests of its participants or beneficiaries.
    As the employer any of whose employees are covered by the Plan, 
EXCO is a party in interest with respect to the Plan, pursuant to 
section 3(14)(C) of the Act. Accordingly, the acquisition and holding 
by the Accounts of Invested Participants of the Rights issued by EXCO, 
a party in interest with respect to the Plan, would involve self-
dealing and conflicts of interest for which relief is needed.
    14. It is represented that the subject transactions have already 
been consummated. In this regard, the Applicant represents that there 
was insufficient time between the dates when the Accounts of Invested 
Participants acquired the Rights and when such Rights were exercised, 
sold, or expired, to apply for and be granted an exemption. EXCO 
therefore is seeking a retroactive exemption to be granted, effective 
from December 17, 2013, the commencement date of the Rights Offering, 
to January 9, 2014, the expiration date of the Offering.
    15. EXCO represents that the proposed exemption is administratively 
feasible. In this regard, the acquisition and holding of the Rights by 
the Accounts of Invested Participants was a one-time transaction that 
involved an automatic distribution of the Rights to all shareholders 
that resulted from an independent corporate act of EXCO. It is 
represented that corporations often make a rights offering available to 
all shareholders.
    16. EXCO represents that the transactions which are the subject of 
this proposed exemption are in the interest of the Accounts of Invested 
Participants, because the subject transactions represented a valuable 
opportunity to such Accounts to buy the Common Stock at a potential 
discount or to sell the Rights and receive the proceeds from such sale. 
The Rights Offering also provided all of EXCO's shareholders, including 
the Accounts of Invested Participants, with the opportunity to 
participate in the subject transactions on a pro-rata basis.

Safeguards of Exemption

    17. EXCO represents that the proposed exemption provides sufficient 
safeguards for the protection of the Accounts of Invested Participants 
and the beneficiaries of such Accounts. In this regard, the Applicant 
states that participation in the Offering protected the Accounts of the 
Invested Participants from having their interests in EXCO diluted as a 
result of the Offering. Further, under the terms of the Offering, all 
shareholders, including the Accounts of Invested Participants acquired 
and held the Rights automatically, at no charge.
    In addition, the Applicant explains that EXCO made the Rights 
available on the same terms to all shareholders of the Common Stock, 
including the Accounts. In this regard, each shareholder of EXCO, 
including each of the Accounts, received the same proportionate number 
of Rights, and this proportionate number of Rights was based on the 
number of shares of Common Stock held by such shareholder, as of the 
Record Date. Under the terms of the Offering, one (1) Right was issued 
for each whole share of the Common Stock held by each shareholder on 
the Record Date. Each of the Rights entitled the shareholders, 
including the Accounts, to purchase, through the exercise of such 
Rights, the Common Stock issued by EXCO in connection with the 
Offering.
    Further, the Applicant states that the Accounts of Invested 
Participants were protected against economic loss by exercising the 
Rights or by selling the Rights. If the Invested Participants 
affirmatively elected to sell the Rights or did not make an election 
with respect to the Rights, then the Trustee automatically sold the 
rights on the NYSE. If the Invested Participants elected to exercise 
their Rights, such Rights were exercised in accordance with their 
instructions, provided that the Prevailing Price on the date of the 
exercise equaled or exceeded the subscription price per share, thereby 
further protecting the Invested Participants.

Summary

    18. In summary, EXCO represents that the subject transactions 
satisfy the statutory criteria of section 408(a) of the Act because:
    (a) The acquisition of the Rights by the Accounts of Invested 
Participants occurred in connection with the Offering, and the Rights 
were made available by EXCO to all shareholders of EXCO, including the 
Accounts of Invested Participants;
    (b) The acquisition of the Rights by the Accounts of Invested 
Participants resulted from an independent corporate act of EXCO;
    (c) Each shareholder of the Common Stock of EXCO, including each of 
the Accounts of Invested Participants, received the same proportionate 
number of Rights, and this proportionate number of Rights was based on 
the number of shares of EXCO Common Stock held by each such 
shareholder, as of the Record Date;
    (d) The Rights were acquired pursuant to, and in accordance with, 
provisions under the Plan for individually-directed investment of the 
Accounts by the Invested Participants all of whose Accounts in the Plan 
held the Common Stock;
    (e) The decision with regard to the holding and disposition of the 
Rights by an Account was made by the Invested Participant whose Account 
received the Rights;
    (f) If any of the Invested Participants failed to give instructions 
as to the exercise of the Rights received in the Offering, or gave 
instructions to the Trustee to sell such Rights, such Rights were 
automatically sold in blind transactions on the NYSE, and the proceeds 
from such sales were distributed pro-rata to the Accounts of such 
Invested Participants whose Rights were sold;
    (g) No brokerage fees, no commissions, no subscription fees, and no 
other charges were paid by the Plan or by the Accounts with respect to 
the acquisition and holding of the Rights, and no commissions, no fees, 
and no expenses were paid by the Plan or by the Accounts of Invested 
Participants to any related broker in connection with the sale or 
exercise of any of the Rights, or with regard to the acquisition of 
Common Stock through the exercise of such Rights;
    (h) EXCO did not influence any Invested Participant's election with 
respect to the Rights; and
    (i) The terms of the Offering were described to the Invested 
Participants in clearly written communications, including, but not 
limited to, the prospectus for the Rights Offering.

[[Page 78493]]

Notice to Interested Persons

    The persons who may be interested in the publication in the Federal 
Register of the Notice of Proposed Exemption (the Notice) include all 
of the Invested Participants whose Accounts were invested in shares of 
Common Stock on the Record Date and received the Rights pursuant to the 
Offering.
    It is represented that all such interested persons will be notified 
of the publication of the Notice by first class mail, to each such 
interested person's last known address within fifteen (15) days of 
publication of the Notice in the Federal Register. Such mailing will 
contain a copy of the Notice, as it appears in the Federal Register on 
the date of publication, plus a copy of the Supplemental Statement, as 
required, pursuant to 29 CFR 2570.43(a)(2), which will advise all 
interested persons of their right to comment and to request a hearing. 
All written comments and/or requests for a hearing must be received by 
the Department from interested persons within forty-five (45) days of 
the publication of this proposed exemption in the Federal Register.
    All comments will be made available to the public. Warning: Do not 
include any personally identifiable information (such as name, social 
security number, address, or other contact information) or confidential 
business information that you do not want publicly disclosed. All 
comments may be posted on the Internet and can be retrieved by most 
Internet search engines.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc 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 of the Act and/or the Code, 
including any prohibited transaction 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) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
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
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

    Signed at Washington, DC, this 23rd day of December 2014.
 Lyssa E. Hall,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2014-30526 Filed 12-29-14; 8:45 am]
BILLING CODE 4510-29-P