Exemption From Certain Prohibited Transaction Restrictions Involving the Electrical Insurance Trustees Insurance Fund and the Electrical Joint Apprenticeship and Training Trust (the Plans or the Applicants) Located in Alsip, Illinois, 34054-34056 [2021-13680]

Agencies

• Employee Benefits Security Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 86, Number 121 (Monday, June 28, 2021)]
[Notices]
[Pages 34054-34056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13680]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2021-03; Exemption Application Nos. 
L-12000 & L-12001]


Exemption From Certain Prohibited Transaction Restrictions 
Involving the Electrical Insurance Trustees Insurance Fund and the 
Electrical Joint Apprenticeship and Training Trust (the Plans or the 
Applicants) Located in Alsip, Illinois

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of Exemption.

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SUMMARY: This document contains a notice of an exemption issued by the 
Department of Labor (the Department) from certain of the prohibited 
transaction restrictions of the Employee Retirement Income Security Act 
of 1974 (ERISA or the Act). The exemption permits: (a) The sale (the 
Sale) by the Electrical Joint Apprenticeship and Training Trust (the 
EJAT Trust) of 5.11 acres of unimproved real property (the Property) to 
the Electrical Insurance Trustees Insurance Fund (the EIT Fund), a 
party in interest with respect to the EJAT Trust; and (b) the EIT 
Fund's granting of a right of first offer (the Right of First Offer) to 
the EJAT Trust to purchase the Property back from the EIT Fund, 
provided all of the conditions described below are satisfied.

DATES: This exemption will be in effect on the date that this grant 
notice is published in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department 
at (202) 693-8456. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On March 22, 2021, the Department published 
a notice of proposed exemption in the Federal Register at 86 FR 15258, 
permitting: (a) The Sale by the EJAT Trust of the Property to the EIT 
Fund, a party in interest with respect to the EJAT Trust; and (b) the 
EIT Fund's granting of the Right of First Offer to the EJAT Trust to 
purchase the Property back from the EIT Fund.
    This exemption provides only the relief specified in the text of 
the exemption. It provides no relief from violations of any law other 
than the prohibited transaction provisions of ERISA.
    The Department makes the requisite findings under ERISA section 
408(a) based on adherence to all of the conditions of the exemption. 
Accordingly, affected parties should be aware that the conditions 
incorporated in this exemption are, taken as a whole, necessary for the 
Department to grant the relief requested by the Applicants. Absent 
these or similar conditions, the Department would not have granted this 
exemption.
    The Applicants requested an individual exemption pursuant to ERISA 
section 408(a) in accordance with the procedures set forth in 29 CFR 
part 2570, subpart B (76 FR 66637, 66644, October 27, 2011). Effective 
December 31, 1978, section 102 of the Reorganization Plan No. 4 of 
1978, 5 U.S.C. App. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue administrative exemptions under 
section 4975(c)(2) of the Code to the Secretary of Labor. Accordingly, 
the Department grants this exemption under its sole authority.

Written Comments

    In the proposed exemption, the Department invited all interested 
persons to submit written comments and/or requests for a public hearing 
with respect to the notice of proposed exemption. All comments and 
requests for a hearing were due to the Department by May 6, 2021. The 
Department received one written comment and one request for a public 
hearing. The commenter raised no substantive issues regarding the 
proposed transactions, and the hearing requestor provided no reasons 
for requesting the hearing.\1\ Accordingly, after considering the 
entire record developed in connection with the Applicants' exemption 
requests, the Department has determined to grant the exemption 
described below. The exemption contains minor clarifications to the 
proposal.
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    \1\ The Department made several attempts to contact the 
requestor for further information. However, no response was 
received.
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    The complete application files (L-12000 & L-12001) are available 
for public inspection in the Public Disclosure Room of the Employee 
Benefits Security Administration, Room N-1515, U.S. Department of 
Labor, 200 Constitution Avenue NW, Washington, DC 20210. For a more 
complete statement of the facts and representations supporting the 
Department's decision to grant this exemption, refer to the notice of 
proposed exemption published on March 22, 2021, at 86 FR 15258.

General Information

    The attention of interested persons is directed to the following:

[[Page 34055]]

    (1) The fact that a transaction is the subject of an exemption 
under ERISA section 408(a) does not relieve a fiduciary or other party 
in interest from certain requirements of other ERISA provisions, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
ERISA section 404, which, among other things, require a fiduciary to 
discharge his or her duties respecting the plan solely in the interest 
of the plan's participants and beneficiaries and in a prudent fashion 
in accordance with ERISA section 404(a)(1)(B).
    (2) As required by ERISA section 408(a), the Department hereby 
finds that the exemption is (1) administratively feasible, (2) in the 
interests of affected plans and of their participants and 
beneficiaries, and (3) protective of the rights of participants and 
beneficiaries of such plans;
    (3) The exemption is supplemental to, and not in derogation of, any 
other ERISA provisions, 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 determining whether the transaction is in fact a 
prohibited transaction; and
    (4) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describe all material terms of the transaction 
that are the subject of the exemption.
    Accordingly, the following exemption is granted under the authority 
of ERISA section 408(a)and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011):

Exemption

Section I. Covered Transactions

    The restrictions of ERISA sections 406(a)(1)(A), 406(a)(1)(D), 
406(b)(1), and 406(b)(2) shall not apply to: (a) EJAT Trust's sale of 
the Property to the EIT Fund, which is a party in interest with respect 
to the EJAT Trust; \2\ and (b) the EIT Fund's grant of the Right of 
First Offer to the EJAT Trust to purchase the Property back from the 
EIT Fund, provided conditions set forth in (a) through (l) below are 
satisfied:
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    \2\ The EIT Fund is a party in interest with respect to the EJAT 
Trust under section 3(14)(C) of the Act because it is an employer 
whose employees participate in the EJAT Fund.
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    (a) The Sale is a one-time transaction for cash;
    (b) The terms and conditions of the Sale are at least as favorable 
to the EJAT Trust and the EIT Fund as an arm's-length transaction 
between unrelated and independent parties each of whom have full 
knowledge of the relevant facts and are not under any compulsion to buy 
or sell;
    (c) The EJAT Trust Independent Fiduciary has not and will not enter 
into any agreement or instrument that violates section 410 of ERISA, 
and prudently:
    (1) Represents the EJAT Trust's interests for all purposes with 
respect to the Sale;
    (2) Determines that the Sale is in the interest and protective of 
the EJAT Trust and the EJAT Trust participants based on, among other 
things, an updated appraisal report described in (c)(5) below;
    (3) Reviews and approves the terms and conditions of the Sale;
    (4) Engages the EJAT Trust Independent Appraiser, ensures the 
Appraiser's independence, and ensures that the Appraiser bases its 
opinions upon complete, current, and accurate information;
    (5) Ensures that the EJAT Trust's Independent Appraiser renders an 
updated fair market valuation of the Property, which is current as of 
the date of the Sale;
    (6) Reviews the EJAT Independent Appraisal Report and the updated 
appraisal described in (c)(5), confirms that the underlying 
methodologies are reasonable and accurate, and prudently concludes that 
the appraisals can reasonably be relied upon; and
    (7) Determines whether it is appropriate for the EJAT Trust to 
proceed with the Sale and whether the Sale is consistent with each 
condition of this exemption;
    (d) The EIT Fund Independent Fiduciary has not and will not enter 
into any agreement or instrument that violates section 410 of ERISA, 
and prudently:
    (1) Represents the EIT Fund's interests for all purposes with 
respect to the Sale;
    (2) Determines that the Sale is in the interest and protective of 
the EIT Fund and the EIT Fund participants based on, among other 
things, an updated appraisal report described in (d)(5) below;
    (3) Reviews and approves the terms and conditions of the Sale;
    (4) Engages the EIT Fund Independent Appraiser for the Sale, 
ensures the Appraiser's Independence, and ensures that the Appraiser 
bases its opinions upon complete, current, and accurate information;
    (5) Ensures that the EIT Fund's Independent Appraiser renders an 
updated fair market valuation of the Property, which is current as of 
the date of the Sale;
    (6) Reviews the EIT Fund Independent Appraisal Report and the 
updated appraisal described in (d)(5), confirms that the underlying 
methodologies are reasonable and accurate, and prudently concludes that 
the appraisals can reasonably be relied upon; and
    (7) Determines whether it is appropriate for the EIT Fund to 
proceed with the Sale consistent with each condition of this exemption;
    (e) The Sale is not part of an agreement, arrangement, or 
understanding designed to benefit any party other than the EJAT Trust 
and the EIT Fund;
    (f) Any use of the Property by the EIT Fund and the Related Plans 
that is described in PTEs 76-1 and 77-10 complies with the conditions 
of those exemptions;
    (g) No later than 90 days after the Sale is completed, the EJAT 
Trust and the EIT Fund Independent Fiduciaries each will submit a 
written statement to the Department documenting that the Sale has met 
all of the exemption requirements;
    (h) The EIT Fund Independent Fiduciary may not enter, and has not 
entered, into any agreement, arrangement or understanding regarding the 
Sale that indemnifies the EIT Fund Independent Fiduciary, in whole or 
in part, or waives any liability for negligence or for violation of 
state or federal law by the EIT Fund Independent Fiduciary;
    (i) The Independent Appraiser selected by the EIT Fund Independent 
Fiduciary may not enter, and has not entered, into any agreement, 
arrangement or understanding regarding the Sale that indemnifies the 
EIT Fund Independent Appraiser, in whole or in part, or waives any 
liability for negligence or for any violation of state or federal law 
by the Independent Appraiser;
    (j) The EJAT Trust Independent Fiduciary may not enter, and has not 
entered, into any agreement, arrangement or understanding regarding the 
Sale that indemnifies the EJAT Trust Independent Fiduciary, in whole or 
in part, or waives any liability for negligence or for any violation of 
state or federal law by the EJAT Trust Independent Fiduciary;
    (k) The Independent Appraiser selected by the EJAT Trust 
Independent Fiduciary may not enter, and has not entered, into any 
agreement,

[[Page 34056]]

arrangement or understanding regarding the Sale that indemnifies the 
Independent Appraiser, in whole or in part, for negligence or for any 
violation of state or federal law by the Independent Appraiser; and
    (l) The EJAT Trust may not re-purchase the Property from the EIT 
Fund absent an individual exemption granted by the Department.
    Effective Date: This exemption will become effective on the date 
that this grant notice is published in the Federal Register.

    Signed at Washington, DC, this 22nd day of June, 2021.
Christopher Motta,
Chief, Division of Individual Exemptions, Office of Exemption 
Determinations, Employee Benefits Security Administration, U.S. 
Department of Labor.
[FR Doc. 2021-13680 Filed 6-25-21; 8:45 am]
BILLING CODE 4510-29-P