Proposed Exemption From Certain Prohibited Transaction Restrictions Involving Boilermakers Western States Apprenticeship Fund Located in Page, Arizona, 87600-87608 [2024-25583]
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review and approval in accordance with
the Paperwork Reduction Act of 1995.
DATES: Comments are encouraged and
will be accepted for 30 days until
December 4, 2024.
FOR FURTHER INFORMATION CONTACT: If
you have comments especially on the
estimated public burden or associated
response time, suggestions, or need a
copy of the proposed information
collection instrument with instructions
or additional information, please
contact: Niki Wiltshire, Personnel
Security Division, by email at
Niki.Wiltshire@atf.gov, or telephone at
202–648–9260.
SUPPLEMENTARY INFORMATION: The
proposed information collection was
previously published in the Federal
Register, 89 FR 67105, on Monday,
August 19, 2024, allowing a 60-day
comment period. Written comments and
suggestions from the public and affected
agencies concerning the proposed
collection of information are
encouraged. Your comments should
address one or more of the following
four points:
—Evaluate whether the proposed
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for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
—Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
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clarity of the information to be
collected; and/or
—Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
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technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Written comments and
recommendations for this information
collection should be submitted within
30 days of the publication of this notice
on the following website
www.reginfo.gov/public/do/PRAMain.
Find this particular information
collection by selecting ‘‘Currently under
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Comments’’ or by using the search
function and entering either the title of
the information collection or the OMB
Control Number 1140–0119. This
information collection request may be
viewed at www.reginfo.gov. Follow the
instructions to view Department of
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Justice, information collections
currently under review by OMB.
DOJ seeks PRA authorization for this
information collection for three (3)
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cannot be for more than three (3) years
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information collection requirements
submitted to the OMB for existing ICRs
receive a month-to-month extension
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Overview of this information
collection:
1. Type of Information Collection:
Revision of a previously approved
collection.
2. Title of the Form/Collection:
Request for Interim Security Clearance.
3. Agency form number, if any, and
the applicable component of the
Department of Justice sponsoring the
collection: ATF Form 8620.70.
Component: Bureau of Alcohol,
Tobacco, Firearms and Explosives, U.S.
Department of Justice.
4. Affected public who will be asked
or required to respond, as well as a brief
abstract: Affected Public: Individuals or
households. The obligation to respond
is voluntary. Abstract: The Request for
Interim Security Clearance (ATF F
8620.70) is used to request approval for
a candidate for Federal or Contractor
employment at the Bureau of Alcohol,
Tobacco, Firearms and Explosives to be
granted an interim security clearance
prior to the completion and
adjudication of the individual’s
background investigation. The proposed
information collection (IC) OMB #
1140–0119 is being revised to remove
the option for one to delay an interim
security clearance and to replace it with
the option for one to decline the risk
associated with an interim security
clearance. Additionally, a minor
revision to the Paperwork Reduction
Act Notice has been included.
5. Obligation to Respond: Voluntary.
6. Total Estimated Number of
Respondents: 2,000 respondents.
7. Estimated Time per Respondent: 5
minutes.
8. Frequency: Once annually.
9. Total Estimated Annual Time
Burden: 167 hrs.
10. Total Estimated Annual Other
Costs Burden: $0.
If additional information is required,
contact: Darwin Arceo, Department
Clearance Officer, Policy and Planning
Staff, Justice Management Division,
United States Department of Justice,
Two Constitution Square, 145 N Street
NE, 4W–218 Washington, DC 20530.
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Dated: October 29, 2024.
Darwin Arceo,
Department Clearance Officer for PRA, U.S.
Department of Justice.
[FR Doc. 2024–25519 Filed 11–1–24; 8:45 am]
BILLING CODE 4410–FY–P
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
[Exemption Application No. L–12069]
Proposed Exemption From Certain
Prohibited Transaction Restrictions
Involving Boilermakers Western States
Apprenticeship Fund Located in Page,
Arizona
Employee Benefits Security
Administration, Labor.
ACTION: Notice of proposed exemption.
AGENCY:
This document provides
notice of the pendency before the
Department of Labor (the Department) of
a proposed individual exemption from
certain of the prohibited transaction
restrictions of the Employee Retirement
Income Security Act of 1974 (ERISA).
This proposed exemption would permit
the purchase of a parcel of improved
real property by the Boilermakers
Western States Apprenticeship Fund
(the Plan or Applicant) from a local
union lodge whose members may be
participants in the Plan. The Plan
requests the exemption in order to
continue to utilize the property to carry
out its training program and its
administrative duties.
DATES:
Exemption date: If granted, the
exemption will be effective as of the
date the grant notice is published in the
Federal Register.
Comments due: Written comments
and requests for a public hearing on the
proposed exemption should be
submitted to the Department by
December 19, 2024.
ADDRESSES: All written comments and
requests for a hearing should be
submitted to the Employee Benefits
Security Administration (EBSA), Office
of Exemption Determinations,
Attention: Application No. L–12069, via
email to e-OED@dol.gov or online
through https://www.regulations.gov.
Any such comments or requests should
be sent by the end of the scheduled
comment period. The application for
exemption and the comments received
will be available for public inspection in
the Public Disclosure Room of the
Employee Benefits Security
Administration, U.S. Department of
SUMMARY:
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Labor, Room N–1515, 200 Constitution
Avenue NW, Washington, DC 20210,
reachable by telephone at (202) 693–
8673. See SUPPLEMENTARY INFORMATION
below for additional information
regarding comments.
FOR FURTHER INFORMATION CONTACT: Mr.
Frank Gonzalez of the Department at
(202) 693–8553. (This is not a toll-free
number).
SUPPLEMENTARY INFORMATION:
Comments: Persons are encouraged to
submit all comments electronically and
not to follow with paper copies.
Comments should state the nature of the
person’s interest in the proposed
exemption and how the person would
be adversely affected by the exemption,
if granted. Any person who may be
adversely affected by an exemption can
request a hearing on the exemption. A
request for a hearing must state: (1) the
name, address, telephone number, and
email address of the person making the
request; (2) the nature of the person’s
interest in the exemption and the
manner in which the person would be
adversely affected by the exemption;
and (3) a statement of the issues to be
addressed and a general description of
the evidence to be presented at the
hearing. The Department will grant a
request for a hearing made in
accordance with the requirements above
where a hearing is necessary to fully
explore material factual issues
identified by the requestor, and a notice
of such hearing will be published by the
Department in the Federal Register. The
Department may decline to hold a
hearing if: (1) the request for the hearing
does not meet the requirements stated
above; (2) the only issues identified for
exploration at the hearing are matters of
law; or (3) the factual issues identified
in the request can be fully explored
through the submission of evidence in
written (including electronic) form.
Warning: All comments received will
be included in the public record
without change and may be made
available online at https://
www.regulations.gov, including any
personal information provided, unless
the comment includes information
claimed to be confidential or
information whose disclosure is
restricted by statute. If you submit a
comment, EBSA recommends that you
include your name and other contact
information in the body of your
comment, but DO NOT submit
information that you consider to be
confidential, or otherwise protected
(such as a Social Security number or an
unlisted phone number) or confidential
business information that you do not
want publicly disclosed. If EBSA cannot
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read your comment due to technical
difficulties and cannot contact you for
clarification, EBSA might not be able to
consider your comment.
Additionally, the https://
www.regulations.gov website is an
‘‘anonymous access’’ system, which
means EBSA will not know your
identity or contact information unless
you provide it in the body of your
comment. If you send an email directly
to EBSA without going through https://
www.regulations.gov, your email
address will be automatically captured
and included as part of the comment
that is placed in the public record and
made available on the internet.
Proposed Exemption
The Department is considering
granting an exemption under the
authority of ERISA Section 408(a) and
in accordance with the Department’s
exemption procedures regulation.1 If the
proposed exemption is granted, the Plan
would be permitted to purchase an
improved real estate property parcel
(the Property) from the ‘‘Navajo Nation’’
Lodge 4 of the International
Brotherhood of Boilermakers, Iron Ship
Builders, Blacksmith, Forgers, and
Helpers (Lodge 4), provided that the
Plan meets the conditions set forth in
section III.
This proposed exemption would
provide relief from certain restrictions
set forth in ERISA sections 406(a)(1)(A)
and (D), and 406(b)(1) and (2). However,
this proposed exemption would not
provide relief from any other violation
of law.
Benefits of the Exemption: As
described in more detail below, the
Department is proposing relief based, in
part, on the Applicant’s representations
that purchase of the property would
avoid significant time and cost of
relocating the Plan’s training program to
an alternative location (as the property
has already been modified at the Plan’s
own expense for its particular training
purposes).
Summary of Facts and
Representations 2
1. The Plan is an apprenticeship
program trust fund created to provide
1 29 CFR part 2570, subpart B (75 FR 66637,
66644, October 27, 2011).
2 The Summary of Facts and Representations is
based on the Applicant’s representations provided
in its exemption application and does not reflect
factual findings or opinion of the Department,
unless indicated otherwise. The Department notes
that availability of this exemption is subject to the
express condition that the material facts and
representations made by the Applicant in
Application L–12069 are true, complete, and
accurately describe all material terms of the
transaction(s) covered by the exemption. If there is
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training benefits to individuals engaged
in the boilermaker construction trade.
2. The Plan is a multiemployer plan
created pursuant to collective
bargaining agreements (under the TaftHartley Act of 1947) 3 between signatory
contractors/employers (the Employers)
and the International Brotherhood of
Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers, and Helpers (the
Boilermakers Union). As of December
31, 2023, the approximate aggregate fair
market value of the Plan’s total assets
was $12,611,589. As of May 17, 2024,
there are 369 apprentices currently
active in the Plan’s apprenticeship
program. The program graduated 84
apprentices in 2022, 65 in 2023, and 51
as of May 17, 2024. The Plan admits
apprentices on a rolling basis. There
have been 1,233 apprentices
participating in the Plan’s training from
May 13, 2019, through May 13, 2024.
3. The Plan provides training and
education to eligible participants
located in the following states: Alaska,
Arizona, California, Colorado, Hawaii,
Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, and
Wyoming (the Western States Area).
4. The Plan is sponsored by the
Boilermakers National Apprenticeship
Program (the BNAP).4 The BNAP also is
known as the National Joint
Apprenticeship and Training Program,
sponsors apprenticeship programs in
four different geographical areas,
including the Western States Area.
5. A board of trustees—the
Boilermakers National Apprenticeship
Board—administers the Plan (the Board
of Trustees). The Board of Trustees
consists of equal representation from
locals of the Boilermakers Union (the
Union Trustees) and signatory
contractors/employers (the Employer
Trustees). The Board of Trustees has
discretion over the Plan’s assets,
including over the investment of such
assets.
6. The Plan receives funding through
collectively bargained contributions
from contributing employers and grants,
any material change in a transaction covered by the
exemption, or in a material fact or representation
described in the application, the exemption will
cease to apply as of the date of the change.
3 The Department notes that the Taft-Hartley Act
is commonly known as the Labor Management
Relations Act of 1947; see 29 U.S.C. 141.
4 ERISA section 3(16)(B) defines the term Plan
Sponsor to mean in pertinent part . . . (ii) the
employee organization in the case of a plan
established or maintained by an employee
organization, (iii) in the case of a plan established
or maintained by two or more employers or jointly
by one or more employers and one or more
employee organizations, the association, committee,
joint board of trustees, or other similar group of
representatives of the parties who establish or
maintain the plan. . . .’’
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among other income sources provided
under the Plan’s governing documents.
According to the Plan’s governing
documents, the Plan’s assets may be
used to provide apprenticeship and
training benefits and to finance the
operation and administration of such
apprenticeship and training benefits
within the Western States Area. The
Plan provides benefits in two ways:
through a regional training center, the
JG Cooksey Training Center in Salt Lake
City, Utah; and through subsidizing
apprenticeship and training programs
maintained by locals of the
Boilermakers Union within the Western
States Area. As further explained below
with respect to the reimbursement
policy, the Plan subsidizes
apprenticeship and training programs of
local Boilermakers Union lodges by
annually allocating funds to such lodges
based on the number of apprentices and
journeypersons in each lodge and/or
reimbursing the lodges’ training
expenses, including equipment and
supplies, student expenses (tuition/
lodging/meals/mileage), instructor
expenses (wages/benefits/mileage), and
tuition costs for apprentices or
journeypersons to attend regional or
national training centers, or other
approved training facilities.
7. During a five-year period ending on
February 11, 2022, the Plan nearly
doubled its apprentice numbers, and the
participation rate continued to increase
as of May 17, 2024, as the demand for
boilermakers in the Western States Area
continues to rise. Accordingly, the Plan
is interested in opening a new regional
training center and is seeking to
purchase an improved real estate
property parcel (the Property) from
Lodge 4, a labor union, located in Page,
Arizona, that is affiliated with the
Boilermakers Union. Lodge 4 is a
separate legal entity from both the
Boilermakers Union and the other
lodges of the Boilermakers Union. The
Board of Trustees does not currently
have any Union Trustees who were
appointed by Lodge 4. Rather, the Union
Trustees serving on the Plan’s Board of
Trustees are appointed either by the
Boilermakers Union or other lodges of
the Boilermakers Union (e.g.,
Boilermakers Lodge 502).
8. The Property. The Property is an
improved real estate parcel located at
294 Cowboy Ray Road, Page, Arizona.
The Property’s site is 1.678 acres, with
two office/warehouse buildings. The
smaller of the two buildings has 1,365
square feet of office area and 975 square
feet of warehouse area, for a total of
2,340 square feet. The larger of the two
buildings has 1,626 square feet of office/
classroom area and 3,374 square feet of
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warehouse area, for a total of 5,000
square feet.
9. As discussed further below, the
Plan’s apprentices currently use the
Property’s buildings as training facilities
(the Training Facility). The Applicant
represents that this use of the Training
Facility is essential for the Plan to fulfill
its purpose of providing education and
training opportunities to its apprentices.
10. The Applicant represents that the
Property has been modified to carry out
the purposes of the Plan. According to
the Applicant, the Property is ideally
situated to be a regional training facility
for boilermaker apprentices and
journeypersons, and the Facility is
ideally suited for the Plan’s purposes.
The Property also has administrative
space for the Plan’s headquarters.5
11. Lodge 4 has decided to move and
no longer desires to operate the Training
Facility. The Union Trustees recused
themselves from voting with respect to
the Plan’s decision to enter into the
Proposed Transaction, and the Plan’s
Employer Trustees 6 determined it
would be in the interest of the Plan to
purchase the Property because: (a) the
Training Facility is already suited for
the needs of the Plan; (b) the purchase
of the Property would allow the Plan to
maintain the Training Program at the
Training Facility notwithstanding Lodge
4’s decision to terminate operating the
Training Facility; (c) using the Property
to create a regional training facility
would meet the increasing demand for
the training of participants, including
apprentices within the Western States
Area; (d) the purchase of the Property
from Lodge 4 would allow the Plan to
pay the Property’s fair market value
without incurring any commission costs
or other expenses in connection with
the purchase; and (e) the Plan’s
continued use of the Property for
training purposes would provide
additional benefits to participants and
provide other financial benefits to the
Plan.7
5 The Plan maintains an administrative office in
Page, Arizona, three miles away from the Property,
that it began leasing from Marquis Realty LLC, an
unrelated party to the Plan, on July 1, 2014 (the
Leased Office).
6 The Applicant represents that the Union
Trustees recused themselves from the vote to enter
into the Proposed Transaction with Lodge 4 on
behalf of the Plan. The recusal is described in more
detail below.
7 The Department understands that the Plan
would financially benefit from the Proposed
Transaction (and indirectly benefit the Plan’s
participants and beneficiaries), because it (1) would
not need to pay for the removal of the Plan’s
specialized air venting system from the Training
Facility (the venting system is explained further
below) and (2) could relocate its administrative
office within the Property instead of paying for the
Leased Office. The Applicant also stated that
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12. On January 20, 2022, the
Employer Trustees gave their approval
for the Plan to proceed with the
purchase of the Property (the Proposed
Transaction), subject to the
Department’s grant of this proposed
exemption. The Plan intends to
purchase the Property from Lodge 4
within ninety (90) days following the
Department’s grant of a final exemption,
should such an exemption be granted.
The Applicant represents that the Plan
considered other possible locations and
properties for a regional center, but after
consulting with various service
providers, it ultimately determined that
purchasing the Property owned by
Lodge 4 was the most appropriate given
the Plan’s goals, as explained below.
13. In connection with the Proposed
Transaction, the Plan would pay the
lesser of: (i) the fair market value of
$920,000 identified in the appraisal
conducted on April 1, 2021; and (ii) the
updated appraised fair market value of
the Property as determined by the
qualified independent appraiser on the
purchase date.
14. Lodge 4 and the Plan will each
pay half of the costs associated with the
proposed exemption, including but not
limited to fees for qualified independent
fiduciary services, qualified
independent appraiser services, and
legal fees for preparing the Plan’s
application to the Department
requesting this proposed exemption.8
15. The Plan intends to make a
$460,000 cash down payment to Lodge
4 (approximately 4.7 percent of the
Plan’s total assets) and will finance the
remaining $460,000 of the purchase
price through a third-party bank (as
further described below). The Plan’s
estimates that the total cost to purchase
the Property will represent
approximately 9.4 percent of the Plan’s
total assets.
16. On November 1, 2021, the Plan
executed a Term Loan Commitment
Letter with the Bank of Labor, a bank
located in Kansas City, Kansas, for
$600,000 (approximately 6.1 percent of
the Plan’s total assets).9 The Department
understands that the Bank of Labor may
be partly owned by the Boilermakers
Union. In order to ensure that the Plan
participants would benefit by having the ability to
visit the Plan’s administration office and training
facilities at the same location after the office is
moved from the Leased Office to the Property.
8 Matters pertaining to services being provided by
the independent fiduciary and independent
appraiser with respect to the Proposed Transaction,
including their qualifications and independence,
are explained further below.
9 As explained further below, a qualified
independent fiduciary notes that the Plan intends
to finance the additional $460,000 but has received
a larger commitment as a precaution.
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will obtain financing for the Proposed
Transaction, if any, on arms’ length
terms, the proposed exemption
prohibits the Plan from financing the
acquisition of the Property with any
bank that has any pecuniary interest in,
or is owned, managed, or controlled in
any manner by a party in interest with
respect to the Plan as defined in ERISA
section 3(14).
17. ERISA Prohibited Transaction
Analysis. Lodge 4 is an employee
organization whose members are
covered by the Plan; therefore, it is a
party in interest to the Plan pursuant to
ERISA section 3(14)(D).10
18. ERISA section 406(a)(1)(A)
prohibits a plan fiduciary from causing
the sale or exchange, or leasing, of
property between a plan and a party in
interest. ERISA section 406(a)(1)(D)
provides that a plan fiduciary shall not
cause the plan to engage in a transaction
if (1) that fiduciary knows or should
know that such transaction constitutes a
direct or indirect transfer of any of the
plan’s assets to a party in interest or (2)
would result in the plan’s assets being
used by or for the benefit of a party in
interest.
19. The Plan’s purchase of the
Property from Lodge 4 in exchange for
the Plan’s funds would constitute a
prohibited sale and transfer of Plan
assets in violation of ERISA sections
406(a)(1)(A) and (D), respectively.
20. Additionally, ERISA section
406(b)(1) prohibits a plan fiduciary from
dealing with a plan’s assets ‘‘. . . in his
own interest or for his own account.’’
ERISA section 406(b)(2) prohibits a plan
fiduciary ‘‘in his individual or in any
other capacity [from acting] in any
transaction involving the plan on behalf
of a party (or represent a party) whose
interests are adverse to the interests of
the plan or the interests of its
participants or beneficiaries.’’
21. The Union Trustees may have an
interest in benefitting Lodge 4, a party
in interest to the Plan, because Lodge 4
is also a Boilermakers Union lodge, and
as such, it is affiliated with the
Boilermakers Union. Although the
Applicant represents that the Union
Trustees ‘‘recused’’ themselves from
voting on the Plan’s decision to enter
into the Proposed Transaction, whether
the Union Trustees’ recusal from any
aspects of the Proposed Transaction
negates a violation of ERISA section
406(b)(1) or (2), involves an inherently
factual determination that is beyond the
scope of this proposed exemption.
10 ERISA section 3(14)(D) defines, in part, the
term party in interest to an employee benefit plan
as ‘‘an employee organization any of whose
members are covered by such plan.’’
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Therefore, the Department cannot
determine from the record whether the
Union Trustees sufficiently recused
themselves from engaging in the
deliberations regarding of the Proposed
Transaction or using their positions to
influence the Employer Trustees’
decision to approve the Proposed
Transaction in order to determine
definitively that there was no violation
of ERISA section 406(b)(1) or (b)(2). To
the extent the Union Trustees exercised
any authority, control, or responsibility
that make them a fiduciary to cause the
Plan to engage in the Proposed
Transaction, they would have violated
ERISA section 406(b)(1) and (b)(2),
because the Proposed Transaction
would benefit Lodge 4, an entity in
which the Union Trustees have an
interest and involve Union Trustees
acting on behalf of both the Plan and
Lodge 4.11
22. Applicant’s Representations
Regarding the Merits of the Proposed
Exemption. The Applicant represents
that the Proposed Transaction would
benefit the Plan because the Training
Facility is currently operated by Lodge
4 to conduct trainings and the Plan
would not have to make any
improvements or modifications for the
Plan to continue using it. The Applicant
explains that Lodge 4 currently provides
training to Plan participants at the
Training Facility in accordance with a
reimbursement policy between the Plan
and Lodge 4, whereby the Plan
reimburses Lodge 4 only for the direct
costs that Lodge 4 incurs in conducting
training (the Reimbursement Policy).12
According to the Applicant, the Plan
relies on ERISA Section 408(b)(2) to
operate its Reimbursement Policy. The
Plan may terminate this arrangement
with Lodge 4 at any time with no
penalty to the Plan and without notice
to Lodge 4.13
11 The Department notes that ‘‘the prohibitions of
section 406(b) supplement the other prohibitions of
section 406(a) of [ERISA] by imposing on parties in
interest who are fiduciaries a duty of undivided
loyalty to the plans for which they act. These
prohibitions are imposed upon fiduciaries to deter
them from exercising the authority, control, or
responsibility which makes such persons
fiduciaries when they have interests which may
conflict with the interests of the plans for which
they act. In such cases, the fiduciaries have interests
in the transaction which may affect the exercise of
their best judgment as fiduciaries.’’ See 29 CFR
2550.408b–2(e)(1).
12 The Applicant notes that the Reimbursement
Policy also covers Lodge 4’s expense of sending its
affiliated apprentices to off-site locations for
training purposes.
13 Whether the Reimbursement Policy complies
with the requirements of ERISA section 408(b)(2) is
an inherently factual inquiry that is beyond the
scope of this proposed exemption and with respect
to which the Department offers no opinion.
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23. The Applicant represents that the
Plan has also invested nearly $600,000
in equipment at the Training Facility to
equip 24 welding stations, including
installing a $250,000 custom ventilation
system designed to remove noxious
fumes that are produced by the welding
machines. The Applicant states that the
Plan still owns this equipment, which is
only used in connection with the
training of participants by Lodge 4 in
connection with the provision of
services to the Plan, described in more
detail below.14
24. The Applicant represents that the
Proposed Transaction would benefit the
Plan because Lodge 4 intends to
terminate its involvement with the
Training Facility. If Lodge 4 no longer
runs the Training Facility, the Plan can
longer provide training there.
Furthermore, the Training Facility is
currently equipped with Plan-purchased
equipment that is used to provide
training for participants. If Lodge 4
terminates its involvement with the
Training Facility and/or sells the
Property, the Plan would need to
remove and relocate the equipment at
significant time and expense.
25. The Applicant represents that the
Proposed Transaction would benefit the
Plan because of the Property’s location.
The Property is centrally located in the
Southern portion of the Western States
Area with convenient access from New
Mexico, Arizona, Southern Nevada, and
Southern California. The Property also
is located on the edge of the Navajo
Nation reservation, which has
traditionally been a large source of
apprenticeship participants in that area,
making the Property a convenient
location to a segment of current and
future apprenticeship participants.
26. The Applicant represents further
that the Plan wants to create a regional
training center on the Property due to
the transient nature of the boilermaker
trade and industry. The Applicant
explains that journeypersons and
apprentices travel based on where the
projects are located, including traveling
outside the boundary of their home
lodge of the Boilermakers Union. As
such, the location of the Boilermakers
Union lodges and employers are less
important than the location of the
projects. Larger projects may involve
journeymen and apprentices from
multiple Boilermakers Union lodges.
The Training Facility will be available
to all apprentices in the Western States
Area, regardless of their Boilermakers
Union lodge affiliation. While there are
other training facilities across the 1314 The costs for these pieces of equipment are not
included as part of the Property’s value appraisal.
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state region that the Plan covers, there
is a continued need to have training
facilities accessible across the region.
27. The Applicant represents further
that the Proposed Transaction would
benefit the Plan, because the Property
will become the site for the Plan’s
administrative headquarters. If the Plan
moves its administrative headquarters to
the Property, it will no longer need the
Leased Office and will avoid incurring
the rental cost for that office.
Additionally, combining the Training
Facility with the Plan’s administrative
offices will provide closer access for the
staff to monitor the Training Facility
and for the Plan’s apprenticeship and
journeyperson participants to interact
with the Plan’s administrative staff.
28. The Applicant represents that the
Plan would also benefit from the
Proposed Transaction because the
Property provides flexibility for
expansion as the number of Boilermaker
apprentices continues to grow and
significant space for: (a) large training
sessions where there are numerous
vehicles and recreational vehicles
utilized by participants; (b) outdoor
training components such as training
involving a rigging tower; and (c)
expansion of training facilities and/or
demonstrations.
29. The Property’s Appraisal. The
Plan retained the services of Accurity
Valuation—Morley & McConkie L.C.
(AVMM) to appraise the Property
(Qualified Independent Appraiser). Mr.
Garrett Hanning (Hanning) of AVMM
authored an appraisal report dated May
17, 2021 (Appraisal Report). Hanning is
a licensed Certified General Appraiser
specializing in commercial appraisals in
the states of Arizona and Utah. Hanning
represents that the Appraisal Report is
being submitted to the Department as
part of the Applicant’s request for the
proposed exemption and that he has no
bias with respect to the Property, the
Plan, or Lodge 4, which may influence
the Property’s appraisal. AVMM’s
current revenue that is derived from any
party in interest involved in the
proposed transaction or its affiliates is
0.04%, and his engagement letter
contains no provisions providing for his
reimbursement or indemnification by
any party for violations of applicable
law or of his contractual obligations
related to his work, or waivers of rights,
claims or remedies of the Plan or its
participants and beneficiaries under
applicable laws against Hanning or
AVMM with respect to their work on
the Proposed Transaction, and the terms
of the proposed exemption prohibit any
such arrangements, as described in more
detail below.
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30. In determining the Property’s fair
market value, Hanning utilized two
methods: (a) the cost approach; and (b)
the sales comparison approach, and he
applied primary weight to the sales
comparison approach given the owneroccupied nature of the Property. Based
on his analysis, Hanning concluded that
the Property’s fair market value was
$920,000 as of April 1, 2021.
31. During the pendency of the
Applicant’s request for this proposed
exemption, the Applicant submitted to
the Department an updated report from
the Qualified Independent Appraiser,
dated July 28, 2022, indicating that no
changes to the Property’s structures
have taken place that would change the
Property’s value reflected in the
Appraisal Report dated April 1, 2021.
32. The Applicant states that the fees
for the April 1, 2021 Appraisal Report,
which are shared equally between the
Plan and Lodge 4, totaled $3,750.
Furthermore, in the event this proposed
exemption is granted, the conditions for
relief require the appraisal to be
updated by the Qualified Independent
Appraiser to reflect the fair market value
of the Property on the Transaction’s
closing date. The Plan does not expect
that the cost to update the appraisal will
exceed $3,750.
33. The Independent Fiduciary. The
Plan retained the services of the Wagner
Law Group to serve as the Plan’s
independent fiduciary (Wagner or the
Independent Fiduciary) with respect to
the Proposed Transaction, pursuant to
Wagner’s engagement letter dated
November 3, 2020 (Wagner’s
Engagement Letter). Wagner represents
that it has significant experience with
serving as the appointed independent
fiduciary at the request of the
Department, federal courts, bankruptcy
trustees, and ERISA plan fiduciaries.
34. Wagner acknowledged that it
understands its duties and
responsibilities under ERISA in acting
as the Independent Fiduciary, and will
determine whether, with the assistance
of one or more independent appraisals,
the proposed real estate purchase
transaction would be in the interests of
the Plan and the Plan’s participants and
beneficiaries and protective of their
rights. Wagner’s Engagement Letter
contains no provisions that indemnify
Wagner for any failure to adhere to its
contractual obligations or to state or
Federal laws applicable to its work
including ERISA or that waives any of
the Plan’s rights, claims, or remedies of
the Plan under ERISA, State, or Federal
law against Wagner with respect to the
proposed transaction.
35. Wagner represents that the
percentage of its current revenue that is
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derived from any party in interest
involved in the Proposed Transaction is
0.13%. Furthermore, Wagner represents
that it has no current or future interest
in the outcome of the Proposed
Transaction. Its sole financial interest in
the transaction is the receipt of its fees
for acting as the Independent Fiduciary.
36. Wagner states that the Proposed
Transaction will be implemented only
after the Department grants a final
exemption and the relevant conditions
are satisfied, and Wagner determines
that the Proposed Transaction would be
in the interests of the Plan and of its
participants and beneficiaries. In this
regard, Wagner will prepare a statement
of the reasons on which its ‘‘best
interest’’ determination is based and
will submit the statement to the
Department (the Statement). Before the
closing of the Proposed Transaction,
Wagner will ensure that all of the
preconditions to the real estate purchase
are completed and will monitor the
transaction until and coincident with
the transaction’s closing. The conditions
for relief in the proposed exemption
require Wagner to have the authority to
take all appropriate actions to safeguard
the Plan’s interests and the interests of
the Plan’s participants and beneficiaries
and to:
(i) Monitor the Proposed Transaction
on the Plan’s behalf on a continuing
basis until the earlier of the closing or
the date that the Proposed Transaction
is terminated;
(ii) Ensure that the Proposed
Transaction remains in the interests of
the Plan and of the Plan’s participants
and their beneficiaries and, if not, take
any appropriate actions available under
the particular circumstances; and
(iii) Ensure compliance with all of the
exemption conditions and obligations
imposed on any party dealing with the
Plan with respect to the Proposed
Transaction.
37. The Independent Fiduciary’s
Opinion. On February 10, 2022, Wagner
issued its report to the Plan regarding
the Proposed Transaction (the IF
Report). The IF Report provided
Wagner’s opinion that the Plan’s
proposed purchase of the Property for a
price of the lesser of $920,000 or the
Property’s appraised value on the date
of sale, under the terms and conditions
described herein, would be in the best
interest and protective of the rights of
the Plan’s participants and beneficiaries.
38. According to the IF Report, the
Independent Fiduciary reviewed all the
particulars of the Property and existing
Training Facility, including the
Independent Appraisal, the terms of the
Real Estate Purchase and Sale
Agreement between the Plan and Lodge
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4 to buy the Property (the Purchase
Contract) and determined that the
Property’s $920,000 purchase price is
appropriate.
39. The Independent Fiduciary
determined that the Property’s location
is convenient for the Plan’s participants
as well as the Plan’s staff who will
benefit from affordable housing in close
proximity to the Property. As described
in the IF Report, the purchase of the
Property will further the Plan’s longterm goals to stabilize the Plan’s
expenses with a regional center in this
area. The IF Report provides that the
Property’s overall size appears to
present the opportunity for expansion
with minimal difficulty or hardship for
the Plan and its participants as the
number of Boilermakers Union members
increase. The IF Report notes further
that the Property has existing buildings
with considerable life expectancy that
are particularly suited to the Plan’s
intended use.
40. The IF Report provides that the
Plan already owns the training
equipment currently housed at the
Training Facility, and removing and
relocating this equipment to another
location would be extremely costly. The
equipment on the site will provide the
Plan with significant start-up costs
savings as compared to purchasing a
comparable facility and having to pay to
relocate this equipment or purchase
new equipment to furnish the new
facility. Wagner opines that the Property
provides a turn-key facility, ready
immediate occupancy, and use for the
Plan’s intended purposes.
41. The Independent Fiduciary notes
that the Plan will save money by using
the Property to house its administrative
office instead of paying rent for the
Leased Office and will benefit the Plan
by locating its administrative offices on
the Property where administrative staff
will be able to monitor the Training
Facility and interact with participants in
connection with administrative matters.
42. The IF Report describes the
Independent Fiduciary’s review and
approval of the methodology used by
the Independent Appraiser. Wagner
opined that, based on the intended use
of the Property, it would be prudent for
the Plan to rely on the appraised value
as of April 1, 2021, subject to change
pending the updated appraisal at date of
purchase.
43. Finally, the Independent
Fiduciary examined the Plan’s ability to
buy and finance the purchase of the
Property, including the percent of the
purchase price to total plan assets, any
prospective earnings or savings from the
proposed purchase, including the
difference between the current lease
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arrangement and the proposed purchase
of the Property, and the Plan’s potential
liabilities. The Independent Fiduciary
determined that the Plan’s use of its
assets for the proposed real estate
purchase of the Property will not
negatively impact the overall financial
health of the Plan and its programs. In
this regard, the IF Report notes that the
Plan receives continual stable funding
through collectively bargained
contributions from contributing
employers to provide the benefits of its
programs and subsidize training for the
local Boilermaker lodges in the Western
Region. According to the Plan, the
monthly mortgage payments on the
$460,000 loan will be less than $10,000.
The Plan’s average monthly income is
above $200,000. Therefore, the
Independent Fiduciary determined that
the mortgage for the amount of $460,000
will not negatively affect the Plan’s
operating budget. In addition, the Plan
will be relieved of incurring the
additional rental expense to maintain its
existing office space.
44. Protective Conditions. In addition
to the conditions mentioned above, the
exemption, if granted, requires the
parties’ adherence to the protective
conditions that are summarized
below.15
45. The Proposed Transaction is a
one-time transaction in which the Plan
would make a $460,000 cash down
payment and obtain a loan for the
remaining balance of the purchase price
that could not exceed $920,000. The
loan’s monthly payments could not
exceed $10,000 and its collateral would
be a first mortgage lien and assignment
of the lease on the Property. The Plan
must pay the lesser of the Property’s fair
market value of $920,000 as appraised
on April 1, 2021, and an updated
appraised value to be determined on the
date of purchase, subject to cost sharing
allocations regarding the cost for this
exemption. The updated appraisal must
be provided to the Department and will
be made a part of the administrative
record for this exemption application.
46. The terms and conditions of the
Proposed Transaction must be at least as
favorable to the Plan as the terms and
conditions the Plan would have
received in an arm’s length transaction
between unrelated and independent
parties.
47. The Proposed Transaction must
not be part of an agreement,
arrangement, or understanding designed
to benefit Lodge 4.
15 The Department notes that this is a summary
of the conditions intended for the convenience of
a reader; however, the governing conditions for the
Proposed Transaction are those reflected in section
III of the proposed exemption.
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87605
48. No later than 30 days after the
Transaction is completed, the
Independent Fiduciary must submit to
the Department a written certification
that all of the conditions of the final
exemption have been met and must
submit the Statement to the Department.
49. The Independent Fiduciary must:
(a) Determine that the Proposed
Transaction is in the interest of and
protective of the rights of the Plan and
its participants and beneficiaries;
(b) Determine whether it is prudent
for the Plan to proceed with the
Proposed Transaction;
(c) Review, negotiate, and approve the
terms and conditions of the Proposed
Transaction;
(d) Represent the Plan’s interests in
connection with the Proposed
Transaction, including monitoring the
parties’ compliance with terms of the
contract of sale and the closing contract,
enforcing the Plan’s rights under the
contract of sale and the closing contract,
and ensuring the satisfaction of all
preconditions for the Plan’s purchase of
the Property, including the terms of the
proposed financing from an unrelated
third-party bank;
(e) Monitoring to ensure that all
exemption conditions are met and take
whatever actions are necessary to
protect the rights of the Plan and its
participants and beneficiaries in the
Proposed Transaction;
(f) Review the Appraisal Report and
confirm that the underlying
methodology is reasonable and accurate
such that the valuation of the Property
was reasonably derived;
(g) Ensure that the Appraisal Report is
based on complete, current, and
accurate information; the appraiser was
prudently selected; the methodology
used by the Qualified Independent
Appraiser is consistent with sound
valuation principles; and that it is
reasonable under the circumstances to
rely upon the Appraisal Report, as
updated, to determine the fair market
value of the Property as of the date of
the transaction; and
(h) Not have entered into, or must not
enter into, any agreement or instrument
that violates either ERISA Section 410,
or the Department’s Regulations
codified at 29 CFR 2509.75–4; 16
50. Furthermore, the Independent
Fiduciary must not have entered into,
and must not enter into, any agreement,
16 ERISA section 410 provides, in part, that
‘‘except as provided in ERISA Sections 405(b)(1)
and 405(d), any provision in an agreement or
instrument which purports to relieve a fiduciary
from responsibility or liability for any
responsibility, obligation, or duty under this part
[meaning part 4 of ERISA] shall be void as against
public policy.’’
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arrangement, or understanding that
includes any provision that provides for
the direct or indirect indemnification or
reimbursement of the Independent
Fiduciary by the Plan or other party for
any failure to adhere to its contractual
obligations or to state or Federal laws
applicable to the Independent
Fiduciary’s work; or waives any rights,
claims, or remedies of the Plan under
ERISA, state, or Federal law against the
Independent Fiduciary with respect to
the Proposed Transaction;
51. The Qualified Independent
Appraiser must not have entered into,
and must not enter into, any agreement,
arrangement, or understanding that
includes any provision that provides for
the direct or indirect indemnification or
reimbursement of the Qualified
Independent Appraiser by the Plan or
any other party for any failure to adhere
to its contractual obligations or to state
or Federal laws applicable to the
Qualified Independent Appraiser’s
work. The Plan also must not waive any
rights, claims or remedies of the Plan or
its participants and beneficiaries under
ERISA, the Code, or other Federal and
state laws against the Qualified
Independent Appraiser with respect to
the Proposed Transaction.
52. The Employer Trustees but not the
Union Trustees must determine that the
Proposed Transaction is prudent and in
the Plan’s interest to proceed with the
Transaction; the Union Trustees cannot
participate or in any way influence the
Employer Trustees’ determination.
Lastly, all the material facts and
representations set forth in the
Summary of Facts and Representations
must be true and accurate at all times.
Statutory Findings
53. ‘‘Administratively Feasible.’’ The
Department has tentatively determined
that the proposed exemption is
administratively feasible for the
Department because it is a one-time
transaction requiring strict adherence to
fiduciary conduct that is subject to
conditions designed to safeguard the
Plan, as overseen by an Independent
Fiduciary responsible for ensuring that
all of the conditions of the exemption
have been met.
54. ‘‘In the interests of.’’ The
Department has tentatively determined
that the proposed exemption is in the
Plan’s and participants’ and
beneficiaries’ interest because Lodge 4
intends to terminate operating the
Training Facility and doing so would
require the Plan to move its training
programs and equipment at great
expense, and the Plan would need to
find new suitable property to conduct
its apprenticeship training goals. The
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Proposed Transaction, however, would
permit the Plan to acquire the Property,
thereby continuing utilizing the
Training Facility to provide adequate
training, and avoid moving its
specialized training equipment and air
filtration system. The Proposed
Transaction would also permit the Plan
to terminate its Leased Office space,
thereby saving additional expenses and
use the Property to expand its Training
Program to create a regional training
center.
55. ‘‘Protective of.’’ The Department
has tentatively determined that the
proposed exemption is protective of the
Plan’s participants and beneficiaries
because the Independent Fiduciary has
reviewed the terms of the Proposed
Transaction and determined that the
purchase of the Property under the
given terms and conditions is prudent
and in the best interest of the Plan and
its participants and beneficiaries.
Among other things, the Independent
Fiduciary will monitor the Proposed
Transaction to ensure that the Plan will
acquire the Property at a price that will
not be greater than the fair market value
as determined by the Qualified
Independent Appraiser. Additionally,
the Independent Fiduciary will
continue to oversee the Proposed
Transaction, including the services to be
provided by the Qualified Independent
Appraiser, and the Proposed
Transaction will be subject to specific
conditions aimed at protecting the rights
of Plan participants and beneficiaries.
Notice to Interested Persons
Those persons who may be interested
in the publication in the Federal
Register of the notice of proposed
exemption (the Notice) include
participants and beneficiaries of the
Plan and participants and beneficiaries
of the Plan. The Applicants will provide
notification to interested persons by
electronic mail, and first-class mail
within fifteen (15) calendar days of the
date of the publication of the Notice in
the Federal Register. The 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 the interested persons of
their right to comment and to request a
hearing.
The Department must receive all
written comments and requests for a
hearing no later than forty-five (45) days
from the date of the publication of the
Notice in the Federal Register.
All comments will be made available
to the public.
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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.
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 ERISA
section 408(a) and/or Code section
4975(c)(2) does not relieve a fiduciary or
other party in interest or disqualified
person from certain other provisions of
ERISA and/or the Code, 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 their duties respecting the
plan solely in the interest of the plan
and its participants and beneficiaries
and in a prudent manner in accordance
with ERISA section 404(a)(1)(B); nor
does it affect the requirement of Code
section 401(a) 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 ERISA section 408(a)
and/or Code section 4975(c)(2), 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 exemption, if
granted, would be supplemental to, and
not in derogation of, any other
provisions of ERISA 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 exemption, if
granted, would be subject to the express
condition that the material facts and
representations contained in the
application are true and complete at all
times and that the application
accurately describes all material terms
of the transactions which are the subject
of the exemption.
Proposed Exemption
Section I. Definitions
(a) The term ‘‘Qualified Independent
Fiduciary’’ means the Wagner Law
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Group, and any of its employees that
provide any fiduciary service to the Plan
in respect to this proposed exemption;
or such other ‘‘qualified independent
fiduciary’’ as defined under 29 CFR part
2570, subpart B, as updated from time
to time.
(b) The term ‘‘Qualified Independent
Appraiser’’ means Accurity Morley &
McConkie, LC, and any of its employees
that provide any appraisal related
service to the Plan in connection with
this proposed exemption.
(c) The term ‘‘Mortgage Loan’’ means
a mortgage loan from an independent,
third-party bank consisting of a five-year
term with payments based on 20-year
amortization, ballooning at maturity, or
such other mortgage loan prudently
entered into by the Independent
Fiduciary on behalf of the Plan.
Section II. Transactions
The restrictions of ERISA Sections
406(a)(1)(A), (D), and 406(b)(1) and (2)
shall not apply to the purchase of the
improved real property located at 294
Cowboy Ray Road, Page, Arizona (the
Property), by the Boilermakers Western
States Apprenticeship Fund’s (the Plan)
from the ‘‘Navajo Nation’’ Lodge 4 of the
International Brotherhood of
Boilermakers, Iron Ship Builders,
Blacksmith, Forgers, and Helpers (Lodge
4), a party in interest with respect to the
Plan (the Purchase); provided that the
conditions in Section III are satisfied.
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Section III. Conditions
(a) The Purchase is a one-time
transaction for the lesser of $920,000 in
cash or an updated appraised value to
be determined by the Qualified
Independent Appraiser as of the
Purchase’s closing date (the Price). The
updated report from the Qualified
Independent Appraiser must be
submitted to the Department within 30
days before the date the Purchase is
completed for inclusion in the record
for this exemption application;
(b) Approval of the Purchase must be
made solely by Plan trustees that are
not, and were not, appointed by a labor
union that is affiliated with the
International Brotherhood of
Boilermakers, and such Plan trustees
must prudently determine in a writing
that the Purchase is in the Plan’s best
interest. Such non-union appointed
Plan trustees must have considered
other possible locations and properties
that were unrelated to Lodge 4 prior to
determining that the Purchase is the
most appropriate given the Plan’s goals.
Any trustee appointed by a labor union
that is affiliated with the International
Brotherhood of Boilermakers cannot
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participate or in any way influence a
non-union appointed Plan trustee;
(c) The Plan must retain the services
of a Qualified Independent Fiduciary
and the Qualified Independent
Fiduciary must prudently:
(1) Determine that the Purchase is in
the interest of, and protective of, the
Plan and the Plan’s participants;
(2) Determine whether it is prudent
for the Plan to proceed with the
Purchase;
(3) Review, negotiate, and approve the
terms and conditions of the Purchase;
(4) Represent the Plan’s interests in
connection with the Purchase, including
monitoring the parties’ compliance with
terms of the sales contract and the
closing contract, enforcing the Plan’s
rights under the sale contract and
closing contract, and ensuring the
satisfaction of all conditions precedent
to complete the Purchase, including the
terms of the Mortgage Loan;
(5) Monitor to ensure that all of the
exemption conditions are met and take
whatever actions are necessary to
protect the rights of the Plan and its
participants and beneficiaries with
respect to the Purchase;
(6) Review the Qualified Independent
Appraisal Report and confirm that the
underlying methodology is reasonable
and accurate and that the valuation of
the Property was reasonably derived;
(7) Ensure that the Qualified
Independent Appraisal Report is based
on complete, current, and accurate
information; the Qualified Independent
Appraiser was prudently selected; the
methodology used by the Qualified
Independent Appraiser is consistent
with sound valuation principles; and
that it is reasonable under the
circumstances to rely upon the
Qualified Independent Appraisal’s
report to determine the fair market value
of the Property as of the date of the
Purchase; and
(8) Not have entered into, and must
not enter into, any agreement or
instrument that violates either ERISA
section 410, or the Department’s
Regulations codified at 29 CFR 2509.75–
4;
(d) The terms and conditions of the
Purchase must be at least as favorable to
the Plan as the terms and conditions the
Plan would have received in an arm’s
length transaction with an unrelated
and independent party, each of which
had full knowledge of the relevant facts,
and neither of which were under any
compulsion to buy or sell;
(e) The Purchase must not be part of
an agreement, arrangement, or
understanding designed to benefit
Lodge 4 or the International
Brotherhood of Boilermakers;
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87607
(f) In the event the Purchase is
financed with a Mortgage Loan, then the
Mortgage Loan must be approved by the
Qualified Independent Fiduciary, and
its monthly payments must not exceed
$10,000;
(g) The Mortgage Loan collateral is
limited to a first mortgage lien and
assignment of lease and rents on the
Property. The Plan may not obtain a
Mortgage Loan from a bank that has any
pecuniary interest in, or is owned,
managed, or controlled in any degree by
any party in interest with respect to the
Plan as defined in ERISA section 3(14);
(h) The Plan must not pay any
commissions, costs, or other expenses in
connection with the Purchase subject to
the cost sharing allocations regarding
the cost for this exemption as provided
below in paragraph (i);
(i) Lodge 4 and the Plan must each
pay half of the costs associated with the
proposed exemption including but not
limited to fees for Qualified
Independent Fiduciary services, fees for
Qualified Independent Appraiser
services, and fees for preparing the
Plan’s application to the Department
requesting this proposed exemption, but
not including the Price;
(j) The Qualified Independent
Fiduciary must not have entered into,
and must not enter into, any agreement,
arrangement, or understanding that
includes any provision that provides for
the direct or indirect indemnification or
reimbursement of the Qualified
Independent Fiduciary by the Plan or
other party for any failure to adhere to
its contractual obligations or to state or
Federal laws applicable to the Qualified
Independent Fiduciary’s work; or that
waives any rights, claims, or remedies of
the Plan under ERISA, state, or Federal
law against the Qualified Independent
Fiduciary with respect to the Purchase;
(k) The Qualified Independent
Appraiser must not have entered into,
and must not enter into, any agreement,
arrangement, or understanding that
includes any provision that provides for
the direct or indirect indemnification or
reimbursement of the Qualified
Independent Appraiser by the Plan or
any other party for any failure to adhere
to its contractual obligations or to state
or Federal laws applicable to the
Qualified Independent Appraiser’s
work; or that waives any rights, claims
or remedies of the Plan or its
participants and beneficiaries under
ERISA, the Code, or other Federal and
state laws against the Qualified
Independent Appraiser with respect to
the Purchase;
(l) The Plan’s trustees and the
Qualified Independent Fiduciary
maintain for a period of six (6) years
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87608
Federal Register / Vol. 89, No. 213 / Monday, November 4, 2024 / Notices
from the date of any transaction related
to the Purchase, in a manner that is
convenient and accessible for audit and
examination, the records necessary to
enable the persons described in
paragraph (m)(1) below to determine
whether conditions of this exemption
have been met, except that (i) a
prohibited transaction will not be
considered to have occurred if, due to
circumstances beyond the control of the
Plan’s trustees and/or the Qualified
Independent Fiduciary, the records are
lost or destroyed prior to the end of the
six-year period, and (ii) no party in
interest other than the Plan’s trustees or
the Qualified Independent Fiduciary
shall be subject to the civil penalty that
may be assessed under ERISA section
502(i) if the records are not maintained,
or are not available for examination as
required by paragraph (n) below; and
(m)(1) Except as provided in section
(2) of this paragraph and not
withstanding any provisions of
subsections (a)(2) and (b) of ERISA
Section 504, the records referred to in
paragraph (l) above shall be
unconditionally available at their
customary location during normal
business hours to:
(i) any duly authorized employee or
representative of the Department or the
Internal Revenue Service;
(ii) the Plan’s trustees or any duly
authorized representative of the Plan’s
trustees;
(iii) the Qualified Independent
Fiduciary or any duly authorized
representative of the Qualified
Independent Fiduciary;
(iv) any participant or beneficiary of
the Plan, or any duly authorized
representative of such participant or
beneficiary;
(2) Should Lodge 4 or any party refuse
to disclose information to a person on
the basis that such information is
exempt from disclosure, such party
shall provide a written notice advising
that person of the reasons for the refusal
and that the Department may request
such information by the close of the
thirtieth (30th) day following the
request;
(n) Within 30 calendar days after the
Property is purchased, the Qualified
Independent Fiduciary must provide to
the Department a written certification
that all of the exemption conditions
have been met and must provide to the
Department the Statement documenting
its conclusion that the Proposed
Transaction is in the Plan’s best interest;
and
(o) All the material facts and
representations set forth in the
Summary of Facts and Representations
are true and accurate at all times.
VerDate Sep<11>2014
17:28 Nov 01, 2024
Jkt 265001
Exemption Date: If granted, the
exemption will be in effect as of the date
the grant notice is published in the
Federal Register.
Signed at Washington, DC, this 30th day of
October 2024.
George Christopher Cosby,
Director, Office of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2024–25583 Filed 11–1–24; 8:45 am]
BILLING CODE 4510–29–P
NATIONAL CREDIT UNION
ADMINISTRATION
[NCUA–2024–0135]
The NCUA Staff Draft 2025–2026
Budget Justification
National Credit Union
Administration (NCUA).
ACTION: Notice.
AGENCY:
The NCUA’s staff draft
‘‘detailed business-type budget’’ is being
made available for public review as
required by Federal statute. The
proposed resources will finance the
agency’s annual operations and capital
projects, both of which are necessary for
the agency to accomplish its mission of
protecting the system of cooperative
credit and its member-owners through
effective chartering, supervision,
regulation, and insurance. The briefing
schedule and comment instructions are
included in the supplementary
information section.
DATES: Requests to deliver an in-person
statement at the November 22, 2024,
budget briefing must be received on or
before November 13, 2024. Written
statements and presentations for those
scheduled to appear at the budget
briefing must be received on or before
1 p.m. Eastern, November 18, 2024.
Written comments may be submitted
by November 27, 2024.
ADDRESSES: You may submit comments
by any of the following methods (please
send comments by one method only):
• In-person presentation at public
budget briefing: submit requests to
deliver a statement at the briefing to
BudgetBriefing@ncua.gov by November
13, 2024. Include your name, title,
affiliation, mailing address, email
address, and telephone number. The
NCUA Board Secretary will inform you
by November 14, 2024, if you have been
approved to make a presentation. In
order to present at the public meeting,
you must submit a statement. Your
statement must be submitted to
BudgetBriefing@ncua.gov by 1 p.m.
Eastern, November 18, 2024. Your
SUMMARY:
PO 00000
Frm 00072
Fmt 4703
Sfmt 4703
presentation must be delivered in
person at the public budget briefing.
You will be allotted five minutes during
the budget briefing to deliver your
remarks.
• Written comments without an inperson presentation: submit written
comments by November 27, 2024,
through the Federal eRulemaking Portal:
https://www.regulations.gov. The docket
number is NCUA–2024–0135. Follow
the instructions for submitting
comments.
• Copies of the NCUA Draft 2025–
2026 Budget Justification and associated
materials are also available on the
NCUA website at https://www.ncua.gov/
About/Pages/budget-strategic-planning/
supplementary-materials.aspx.
FOR FURTHER INFORMATION CONTACT:
Eugene H. Schied, Chief Financial
Officer, National Credit Union
Administration, 1775 Duke Street,
Alexandria, Virginia 22314–3428, or
telephone: (703) 518–6571.
SUPPLEMENTARY INFORMATION: The
following itemized list details the
sections in this Notice made available
for public review:
I. Introduction and Strategic Context
II. The NCUA Budget in Brief
III. Key Themes of the Proposed 2025–2026
Budget
IV. Operating Budget
V. Capital Budget
VI. Share Insurance Fund Administrative
Budget
VII. Financing the NCUA’s Programs
VIII. Appendix A: Supplemental Budget
Information
IX. Appendix B: Capital Projects
X. Appendix C: Glossary of Terms and
Acronyms
Section 212 of the Economic Growth,
Regulatory Relief, and Consumer
Protection Act amended 12 U.S.C.
1789(b)(1)(A) to require the NCUA
Board (Board) to ‘‘on an annual basis
and prior to the submission of the
detailed business-type budget make
publicly available and publish in the
Federal Register a draft of the detailed
business-type budget.’’ Although 12
U.S.C. 1789(b)(1)(A) requires
publication of a ‘‘business-type budget’’
only for the agency operations arising
under the Federal Credit Union Act’s
subchapter on insurance activities, in
the interest of transparency the Board is
providing the NCUA’s entire staff draft
budget for 2025–2026 in this Notice.
The staff draft budget details the
resources required to support NCUA’s
mission. The staff draft budget includes
personnel and dollar estimates for three
major budget components: (1) the
Operating Budget; (2) the Capital
Budget; and (3) the Share Insurance
Fund Administrative Budget. The
E:\FR\FM\04NON1.SGM
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Agencies
[Federal Register Volume 89, Number 213 (Monday, November 4, 2024)]
[Notices]
[Pages 87600-87608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25583]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Exemption Application No. L-12069]
Proposed Exemption From Certain Prohibited Transaction
Restrictions Involving Boilermakers Western States Apprenticeship Fund
Located in Page, Arizona
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of proposed exemption.
-----------------------------------------------------------------------
SUMMARY: This document provides notice of the pendency before the
Department of Labor (the Department) of a proposed individual exemption
from certain of the prohibited transaction restrictions of the Employee
Retirement Income Security Act of 1974 (ERISA). This proposed exemption
would permit the purchase of a parcel of improved real property by the
Boilermakers Western States Apprenticeship Fund (the Plan or Applicant)
from a local union lodge whose members may be participants in the Plan.
The Plan requests the exemption in order to continue to utilize the
property to carry out its training program and its administrative
duties.
DATES:
Exemption date: If granted, the exemption will be effective as of
the date the grant notice is published in the Federal Register.
Comments due: Written comments and requests for a public hearing on
the proposed exemption should be submitted to the Department by
December 19, 2024.
ADDRESSES: All written comments and requests for a hearing should be
submitted to the Employee Benefits Security Administration (EBSA),
Office of Exemption Determinations, Attention: Application No. L-12069,
via email to [email protected] or online through https://www.regulations.gov. Any such comments or requests should be sent by
the end of the scheduled comment period. The application for exemption
and the comments received will be available for public inspection in
the Public Disclosure Room of the Employee Benefits Security
Administration, U.S. Department of
[[Page 87601]]
Labor, Room N-1515, 200 Constitution Avenue NW, Washington, DC 20210,
reachable by telephone at (202) 693-8673. See SUPPLEMENTARY INFORMATION
below for additional information regarding comments.
FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez of the Department
at (202) 693-8553. (This is not a toll-free number).
SUPPLEMENTARY INFORMATION:
Comments: Persons are encouraged to submit all comments
electronically and not to follow with paper copies. Comments should
state the nature of the person's interest in the proposed exemption and
how the person would be adversely affected by the exemption, if
granted. Any person who may be adversely affected by an exemption can
request a hearing on the exemption. A request for a hearing must state:
(1) the name, address, telephone number, and email address of the
person making the request; (2) the nature of the person's interest in
the exemption and the manner in which the person would be adversely
affected by the exemption; and (3) a statement of the issues to be
addressed and a general description of the evidence to be presented at
the hearing. The Department will grant a request for a hearing made in
accordance with the requirements above where a hearing is necessary to
fully explore material factual issues identified by the requestor, and
a notice of such hearing will be published by the Department in the
Federal Register. The Department may decline to hold a hearing if: (1)
the request for the hearing does not meet the requirements stated
above; (2) the only issues identified for exploration at the hearing
are matters of law; or (3) the factual issues identified in the request
can be fully explored through the submission of evidence in written
(including electronic) form.
Warning: All comments received will be included in the public
record without change and may be made available online at https://www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be confidential or
information whose disclosure is restricted by statute. If you submit a
comment, EBSA recommends that you include your name and other contact
information in the body of your comment, but DO NOT submit information
that you consider to be confidential, or otherwise protected (such as a
Social Security number or an unlisted phone number) or confidential
business information that you do not want publicly disclosed. If EBSA
cannot read your comment due to technical difficulties and cannot
contact you for clarification, EBSA might not be able to consider your
comment.
Additionally, the https://www.regulations.gov website is an
``anonymous access'' system, which means EBSA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an email directly to EBSA without going
through https://www.regulations.gov, your email address will be
automatically captured and included as part of the comment that is
placed in the public record and made available on the internet.
Proposed Exemption
The Department is considering granting an exemption under the
authority of ERISA Section 408(a) and in accordance with the
Department's exemption procedures regulation.\1\ If the proposed
exemption is granted, the Plan would be permitted to purchase an
improved real estate property parcel (the Property) from the ``Navajo
Nation'' Lodge 4 of the International Brotherhood of Boilermakers, Iron
Ship Builders, Blacksmith, Forgers, and Helpers (Lodge 4), provided
that the Plan meets the conditions set forth in section III.
---------------------------------------------------------------------------
\1\ 29 CFR part 2570, subpart B (75 FR 66637, 66644, October 27,
2011).
---------------------------------------------------------------------------
This proposed exemption would provide relief from certain
restrictions set forth in ERISA sections 406(a)(1)(A) and (D), and
406(b)(1) and (2). However, this proposed exemption would not provide
relief from any other violation of law.
Benefits of the Exemption: As described in more detail below, the
Department is proposing relief based, in part, on the Applicant's
representations that purchase of the property would avoid significant
time and cost of relocating the Plan's training program to an
alternative location (as the property has already been modified at the
Plan's own expense for its particular training purposes).
Summary of Facts and Representations 2
---------------------------------------------------------------------------
\2\ The Summary of Facts and Representations is based on the
Applicant's representations provided in its exemption application
and does not reflect factual findings or opinion of the Department,
unless indicated otherwise. The Department notes that availability
of this exemption is subject to the express condition that the
material facts and representations made by the Applicant in
Application L-12069 are true, complete, and accurately describe all
material terms of the transaction(s) covered by the exemption. If
there is any material change in a transaction covered by the
exemption, or in a material fact or representation described in the
application, the exemption will cease to apply as of the date of the
change.
---------------------------------------------------------------------------
1. The Plan is an apprenticeship program trust fund created to
provide training benefits to individuals engaged in the boilermaker
construction trade.
2. The Plan is a multiemployer plan created pursuant to collective
bargaining agreements (under the Taft-Hartley Act of 1947) \3\ between
signatory contractors/employers (the Employers) and the International
Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers,
and Helpers (the Boilermakers Union). As of December 31, 2023, the
approximate aggregate fair market value of the Plan's total assets was
$12,611,589. As of May 17, 2024, there are 369 apprentices currently
active in the Plan's apprenticeship program. The program graduated 84
apprentices in 2022, 65 in 2023, and 51 as of May 17, 2024. The Plan
admits apprentices on a rolling basis. There have been 1,233
apprentices participating in the Plan's training from May 13, 2019,
through May 13, 2024.
---------------------------------------------------------------------------
\3\ The Department notes that the Taft-Hartley Act is commonly
known as the Labor Management Relations Act of 1947; see 29 U.S.C.
141.
---------------------------------------------------------------------------
3. The Plan provides training and education to eligible
participants located in the following states: Alaska, Arizona,
California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, and Wyoming (the Western States Area).
4. The Plan is sponsored by the Boilermakers National
Apprenticeship Program (the BNAP).\4\ The BNAP also is known as the
National Joint Apprenticeship and Training Program, sponsors
apprenticeship programs in four different geographical areas, including
the Western States Area.
---------------------------------------------------------------------------
\4\ ERISA section 3(16)(B) defines the term Plan Sponsor to mean
in pertinent part . . . (ii) the employee organization in the case
of a plan established or maintained by an employee organization,
(iii) in the case of a plan established or maintained by two or more
employers or jointly by one or more employers and one or more
employee organizations, the association, committee, joint board of
trustees, or other similar group of representatives of the parties
who establish or maintain the plan. . . .''
---------------------------------------------------------------------------
5. A board of trustees--the Boilermakers National Apprenticeship
Board--administers the Plan (the Board of Trustees). The Board of
Trustees consists of equal representation from locals of the
Boilermakers Union (the Union Trustees) and signatory contractors/
employers (the Employer Trustees). The Board of Trustees has discretion
over the Plan's assets, including over the investment of such assets.
6. The Plan receives funding through collectively bargained
contributions from contributing employers and grants,
[[Page 87602]]
among other income sources provided under the Plan's governing
documents. According to the Plan's governing documents, the Plan's
assets may be used to provide apprenticeship and training benefits and
to finance the operation and administration of such apprenticeship and
training benefits within the Western States Area. The Plan provides
benefits in two ways: through a regional training center, the JG
Cooksey Training Center in Salt Lake City, Utah; and through
subsidizing apprenticeship and training programs maintained by locals
of the Boilermakers Union within the Western States Area. As further
explained below with respect to the reimbursement policy, the Plan
subsidizes apprenticeship and training programs of local Boilermakers
Union lodges by annually allocating funds to such lodges based on the
number of apprentices and journeypersons in each lodge and/or
reimbursing the lodges' training expenses, including equipment and
supplies, student expenses (tuition/lodging/meals/mileage), instructor
expenses (wages/benefits/mileage), and tuition costs for apprentices or
journeypersons to attend regional or national training centers, or
other approved training facilities.
7. During a five-year period ending on February 11, 2022, the Plan
nearly doubled its apprentice numbers, and the participation rate
continued to increase as of May 17, 2024, as the demand for
boilermakers in the Western States Area continues to rise. Accordingly,
the Plan is interested in opening a new regional training center and is
seeking to purchase an improved real estate property parcel (the
Property) from Lodge 4, a labor union, located in Page, Arizona, that
is affiliated with the Boilermakers Union. Lodge 4 is a separate legal
entity from both the Boilermakers Union and the other lodges of the
Boilermakers Union. The Board of Trustees does not currently have any
Union Trustees who were appointed by Lodge 4. Rather, the Union
Trustees serving on the Plan's Board of Trustees are appointed either
by the Boilermakers Union or other lodges of the Boilermakers Union
(e.g., Boilermakers Lodge 502).
8. The Property. The Property is an improved real estate parcel
located at 294 Cowboy Ray Road, Page, Arizona. The Property's site is
1.678 acres, with two office/warehouse buildings. The smaller of the
two buildings has 1,365 square feet of office area and 975 square feet
of warehouse area, for a total of 2,340 square feet. The larger of the
two buildings has 1,626 square feet of office/classroom area and 3,374
square feet of warehouse area, for a total of 5,000 square feet.
9. As discussed further below, the Plan's apprentices currently use
the Property's buildings as training facilities (the Training
Facility). The Applicant represents that this use of the Training
Facility is essential for the Plan to fulfill its purpose of providing
education and training opportunities to its apprentices.
10. The Applicant represents that the Property has been modified to
carry out the purposes of the Plan. According to the Applicant, the
Property is ideally situated to be a regional training facility for
boilermaker apprentices and journeypersons, and the Facility is ideally
suited for the Plan's purposes. The Property also has administrative
space for the Plan's headquarters.\5\
---------------------------------------------------------------------------
\5\ The Plan maintains an administrative office in Page,
Arizona, three miles away from the Property, that it began leasing
from Marquis Realty LLC, an unrelated party to the Plan, on July 1,
2014 (the Leased Office).
---------------------------------------------------------------------------
11. Lodge 4 has decided to move and no longer desires to operate
the Training Facility. The Union Trustees recused themselves from
voting with respect to the Plan's decision to enter into the Proposed
Transaction, and the Plan's Employer Trustees \6\ determined it would
be in the interest of the Plan to purchase the Property because: (a)
the Training Facility is already suited for the needs of the Plan; (b)
the purchase of the Property would allow the Plan to maintain the
Training Program at the Training Facility notwithstanding Lodge 4's
decision to terminate operating the Training Facility; (c) using the
Property to create a regional training facility would meet the
increasing demand for the training of participants, including
apprentices within the Western States Area; (d) the purchase of the
Property from Lodge 4 would allow the Plan to pay the Property's fair
market value without incurring any commission costs or other expenses
in connection with the purchase; and (e) the Plan's continued use of
the Property for training purposes would provide additional benefits to
participants and provide other financial benefits to the Plan.\7\
---------------------------------------------------------------------------
\6\ The Applicant represents that the Union Trustees recused
themselves from the vote to enter into the Proposed Transaction with
Lodge 4 on behalf of the Plan. The recusal is described in more
detail below.
\7\ The Department understands that the Plan would financially
benefit from the Proposed Transaction (and indirectly benefit the
Plan's participants and beneficiaries), because it (1) would not
need to pay for the removal of the Plan's specialized air venting
system from the Training Facility (the venting system is explained
further below) and (2) could relocate its administrative office
within the Property instead of paying for the Leased Office. The
Applicant also stated that participants would benefit by having the
ability to visit the Plan's administration office and training
facilities at the same location after the office is moved from the
Leased Office to the Property.
---------------------------------------------------------------------------
12. On January 20, 2022, the Employer Trustees gave their approval
for the Plan to proceed with the purchase of the Property (the Proposed
Transaction), subject to the Department's grant of this proposed
exemption. The Plan intends to purchase the Property from Lodge 4
within ninety (90) days following the Department's grant of a final
exemption, should such an exemption be granted. The Applicant
represents that the Plan considered other possible locations and
properties for a regional center, but after consulting with various
service providers, it ultimately determined that purchasing the
Property owned by Lodge 4 was the most appropriate given the Plan's
goals, as explained below.
13. In connection with the Proposed Transaction, the Plan would pay
the lesser of: (i) the fair market value of $920,000 identified in the
appraisal conducted on April 1, 2021; and (ii) the updated appraised
fair market value of the Property as determined by the qualified
independent appraiser on the purchase date.
14. Lodge 4 and the Plan will each pay half of the costs associated
with the proposed exemption, including but not limited to fees for
qualified independent fiduciary services, qualified independent
appraiser services, and legal fees for preparing the Plan's application
to the Department requesting this proposed exemption.\8\
---------------------------------------------------------------------------
\8\ Matters pertaining to services being provided by the
independent fiduciary and independent appraiser with respect to the
Proposed Transaction, including their qualifications and
independence, are explained further below.
---------------------------------------------------------------------------
15. The Plan intends to make a $460,000 cash down payment to Lodge
4 (approximately 4.7 percent of the Plan's total assets) and will
finance the remaining $460,000 of the purchase price through a third-
party bank (as further described below). The Plan's estimates that the
total cost to purchase the Property will represent approximately 9.4
percent of the Plan's total assets.
16. On November 1, 2021, the Plan executed a Term Loan Commitment
Letter with the Bank of Labor, a bank located in Kansas City, Kansas,
for $600,000 (approximately 6.1 percent of the Plan's total assets).\9\
The Department understands that the Bank of Labor may be partly owned
by the Boilermakers Union. In order to ensure that the Plan
[[Page 87603]]
will obtain financing for the Proposed Transaction, if any, on arms'
length terms, the proposed exemption prohibits the Plan from financing
the acquisition of the Property with any bank that has any pecuniary
interest in, or is owned, managed, or controlled in any manner by a
party in interest with respect to the Plan as defined in ERISA section
3(14).
---------------------------------------------------------------------------
\9\ As explained further below, a qualified independent
fiduciary notes that the Plan intends to finance the additional
$460,000 but has received a larger commitment as a precaution.
---------------------------------------------------------------------------
17. ERISA Prohibited Transaction Analysis. Lodge 4 is an employee
organization whose members are covered by the Plan; therefore, it is a
party in interest to the Plan pursuant to ERISA section 3(14)(D).\10\
---------------------------------------------------------------------------
\10\ ERISA section 3(14)(D) defines, in part, the term party in
interest to an employee benefit plan as ``an employee organization
any of whose members are covered by such plan.''
---------------------------------------------------------------------------
18. ERISA section 406(a)(1)(A) prohibits a plan fiduciary from
causing the sale or exchange, or leasing, of property between a plan
and a party in interest. ERISA section 406(a)(1)(D) provides that a
plan fiduciary shall not cause the plan to engage in a transaction if
(1) that fiduciary knows or should know that such transaction
constitutes a direct or indirect transfer of any of the plan's assets
to a party in interest or (2) would result in the plan's assets being
used by or for the benefit of a party in interest.
19. The Plan's purchase of the Property from Lodge 4 in exchange
for the Plan's funds would constitute a prohibited sale and transfer of
Plan assets in violation of ERISA sections 406(a)(1)(A) and (D),
respectively.
20. Additionally, ERISA section 406(b)(1) prohibits a plan
fiduciary from dealing with a plan's assets ``. . . in his own interest
or for his own account.'' ERISA section 406(b)(2) prohibits a plan
fiduciary ``in his individual or in any other capacity [from acting] in
any transaction involving the plan on behalf of a party (or represent a
party) whose interests are adverse to the interests of the plan or the
interests of its participants or beneficiaries.''
21. The Union Trustees may have an interest in benefitting Lodge 4,
a party in interest to the Plan, because Lodge 4 is also a Boilermakers
Union lodge, and as such, it is affiliated with the Boilermakers Union.
Although the Applicant represents that the Union Trustees ``recused''
themselves from voting on the Plan's decision to enter into the
Proposed Transaction, whether the Union Trustees' recusal from any
aspects of the Proposed Transaction negates a violation of ERISA
section 406(b)(1) or (2), involves an inherently factual determination
that is beyond the scope of this proposed exemption. Therefore, the
Department cannot determine from the record whether the Union Trustees
sufficiently recused themselves from engaging in the deliberations
regarding of the Proposed Transaction or using their positions to
influence the Employer Trustees' decision to approve the Proposed
Transaction in order to determine definitively that there was no
violation of ERISA section 406(b)(1) or (b)(2). To the extent the Union
Trustees exercised any authority, control, or responsibility that make
them a fiduciary to cause the Plan to engage in the Proposed
Transaction, they would have violated ERISA section 406(b)(1) and
(b)(2), because the Proposed Transaction would benefit Lodge 4, an
entity in which the Union Trustees have an interest and involve Union
Trustees acting on behalf of both the Plan and Lodge 4.\11\
---------------------------------------------------------------------------
\11\ The Department notes that ``the prohibitions of section
406(b) supplement the other prohibitions of section 406(a) of
[ERISA] by imposing on parties in interest who are fiduciaries a
duty of undivided loyalty to the plans for which they act. These
prohibitions are imposed upon fiduciaries to deter them from
exercising the authority, control, or responsibility which makes
such persons fiduciaries when they have interests which may conflict
with the interests of the plans for which they act. In such cases,
the fiduciaries have interests in the transaction which may affect
the exercise of their best judgment as fiduciaries.'' See 29 CFR
2550.408b-2(e)(1).
---------------------------------------------------------------------------
22. Applicant's Representations Regarding the Merits of the
Proposed Exemption. The Applicant represents that the Proposed
Transaction would benefit the Plan because the Training Facility is
currently operated by Lodge 4 to conduct trainings and the Plan would
not have to make any improvements or modifications for the Plan to
continue using it. The Applicant explains that Lodge 4 currently
provides training to Plan participants at the Training Facility in
accordance with a reimbursement policy between the Plan and Lodge 4,
whereby the Plan reimburses Lodge 4 only for the direct costs that
Lodge 4 incurs in conducting training (the Reimbursement Policy).\12\
According to the Applicant, the Plan relies on ERISA Section 408(b)(2)
to operate its Reimbursement Policy. The Plan may terminate this
arrangement with Lodge 4 at any time with no penalty to the Plan and
without notice to Lodge 4.\13\
---------------------------------------------------------------------------
\12\ The Applicant notes that the Reimbursement Policy also
covers Lodge 4's expense of sending its affiliated apprentices to
off-site locations for training purposes.
\13\ Whether the Reimbursement Policy complies with the
requirements of ERISA section 408(b)(2) is an inherently factual
inquiry that is beyond the scope of this proposed exemption and with
respect to which the Department offers no opinion.
---------------------------------------------------------------------------
23. The Applicant represents that the Plan has also invested nearly
$600,000 in equipment at the Training Facility to equip 24 welding
stations, including installing a $250,000 custom ventilation system
designed to remove noxious fumes that are produced by the welding
machines. The Applicant states that the Plan still owns this equipment,
which is only used in connection with the training of participants by
Lodge 4 in connection with the provision of services to the Plan,
described in more detail below.\14\
---------------------------------------------------------------------------
\14\ The costs for these pieces of equipment are not included as
part of the Property's value appraisal.
---------------------------------------------------------------------------
24. The Applicant represents that the Proposed Transaction would
benefit the Plan because Lodge 4 intends to terminate its involvement
with the Training Facility. If Lodge 4 no longer runs the Training
Facility, the Plan can longer provide training there. Furthermore, the
Training Facility is currently equipped with Plan-purchased equipment
that is used to provide training for participants. If Lodge 4
terminates its involvement with the Training Facility and/or sells the
Property, the Plan would need to remove and relocate the equipment at
significant time and expense.
25. The Applicant represents that the Proposed Transaction would
benefit the Plan because of the Property's location. The Property is
centrally located in the Southern portion of the Western States Area
with convenient access from New Mexico, Arizona, Southern Nevada, and
Southern California. The Property also is located on the edge of the
Navajo Nation reservation, which has traditionally been a large source
of apprenticeship participants in that area, making the Property a
convenient location to a segment of current and future apprenticeship
participants.
26. The Applicant represents further that the Plan wants to create
a regional training center on the Property due to the transient nature
of the boilermaker trade and industry. The Applicant explains that
journeypersons and apprentices travel based on where the projects are
located, including traveling outside the boundary of their home lodge
of the Boilermakers Union. As such, the location of the Boilermakers
Union lodges and employers are less important than the location of the
projects. Larger projects may involve journeymen and apprentices from
multiple Boilermakers Union lodges. The Training Facility will be
available to all apprentices in the Western States Area, regardless of
their Boilermakers Union lodge affiliation. While there are other
training facilities across the 13-
[[Page 87604]]
state region that the Plan covers, there is a continued need to have
training facilities accessible across the region.
27. The Applicant represents further that the Proposed Transaction
would benefit the Plan, because the Property will become the site for
the Plan's administrative headquarters. If the Plan moves its
administrative headquarters to the Property, it will no longer need the
Leased Office and will avoid incurring the rental cost for that office.
Additionally, combining the Training Facility with the Plan's
administrative offices will provide closer access for the staff to
monitor the Training Facility and for the Plan's apprenticeship and
journeyperson participants to interact with the Plan's administrative
staff.
28. The Applicant represents that the Plan would also benefit from
the Proposed Transaction because the Property provides flexibility for
expansion as the number of Boilermaker apprentices continues to grow
and significant space for: (a) large training sessions where there are
numerous vehicles and recreational vehicles utilized by participants;
(b) outdoor training components such as training involving a rigging
tower; and (c) expansion of training facilities and/or demonstrations.
29. The Property's Appraisal. The Plan retained the services of
Accurity Valuation--Morley & McConkie L.C. (AVMM) to appraise the
Property (Qualified Independent Appraiser). Mr. Garrett Hanning
(Hanning) of AVMM authored an appraisal report dated May 17, 2021
(Appraisal Report). Hanning is a licensed Certified General Appraiser
specializing in commercial appraisals in the states of Arizona and
Utah. Hanning represents that the Appraisal Report is being submitted
to the Department as part of the Applicant's request for the proposed
exemption and that he has no bias with respect to the Property, the
Plan, or Lodge 4, which may influence the Property's appraisal. AVMM's
current revenue that is derived from any party in interest involved in
the proposed transaction or its affiliates is 0.04%, and his engagement
letter contains no provisions providing for his reimbursement or
indemnification by any party for violations of applicable law or of his
contractual obligations related to his work, or waivers of rights,
claims or remedies of the Plan or its participants and beneficiaries
under applicable laws against Hanning or AVMM with respect to their
work on the Proposed Transaction, and the terms of the proposed
exemption prohibit any such arrangements, as described in more detail
below.
30. In determining the Property's fair market value, Hanning
utilized two methods: (a) the cost approach; and (b) the sales
comparison approach, and he applied primary weight to the sales
comparison approach given the owner-occupied nature of the Property.
Based on his analysis, Hanning concluded that the Property's fair
market value was $920,000 as of April 1, 2021.
31. During the pendency of the Applicant's request for this
proposed exemption, the Applicant submitted to the Department an
updated report from the Qualified Independent Appraiser, dated July 28,
2022, indicating that no changes to the Property's structures have
taken place that would change the Property's value reflected in the
Appraisal Report dated April 1, 2021.
32. The Applicant states that the fees for the April 1, 2021
Appraisal Report, which are shared equally between the Plan and Lodge
4, totaled $3,750. Furthermore, in the event this proposed exemption is
granted, the conditions for relief require the appraisal to be updated
by the Qualified Independent Appraiser to reflect the fair market value
of the Property on the Transaction's closing date. The Plan does not
expect that the cost to update the appraisal will exceed $3,750.
33. The Independent Fiduciary. The Plan retained the services of
the Wagner Law Group to serve as the Plan's independent fiduciary
(Wagner or the Independent Fiduciary) with respect to the Proposed
Transaction, pursuant to Wagner's engagement letter dated November 3,
2020 (Wagner's Engagement Letter). Wagner represents that it has
significant experience with serving as the appointed independent
fiduciary at the request of the Department, federal courts, bankruptcy
trustees, and ERISA plan fiduciaries.
34. Wagner acknowledged that it understands its duties and
responsibilities under ERISA in acting as the Independent Fiduciary,
and will determine whether, with the assistance of one or more
independent appraisals, the proposed real estate purchase transaction
would be in the interests of the Plan and the Plan's participants and
beneficiaries and protective of their rights. Wagner's Engagement
Letter contains no provisions that indemnify Wagner for any failure to
adhere to its contractual obligations or to state or Federal laws
applicable to its work including ERISA or that waives any of the Plan's
rights, claims, or remedies of the Plan under ERISA, State, or Federal
law against Wagner with respect to the proposed transaction.
35. Wagner represents that the percentage of its current revenue
that is derived from any party in interest involved in the Proposed
Transaction is 0.13%. Furthermore, Wagner represents that it has no
current or future interest in the outcome of the Proposed Transaction.
Its sole financial interest in the transaction is the receipt of its
fees for acting as the Independent Fiduciary.
36. Wagner states that the Proposed Transaction will be implemented
only after the Department grants a final exemption and the relevant
conditions are satisfied, and Wagner determines that the Proposed
Transaction would be in the interests of the Plan and of its
participants and beneficiaries. In this regard, Wagner will prepare a
statement of the reasons on which its ``best interest'' determination
is based and will submit the statement to the Department (the
Statement). Before the closing of the Proposed Transaction, Wagner will
ensure that all of the preconditions to the real estate purchase are
completed and will monitor the transaction until and coincident with
the transaction's closing. The conditions for relief in the proposed
exemption require Wagner to have the authority to take all appropriate
actions to safeguard the Plan's interests and the interests of the
Plan's participants and beneficiaries and to:
(i) Monitor the Proposed Transaction on the Plan's behalf on a
continuing basis until the earlier of the closing or the date that the
Proposed Transaction is terminated;
(ii) Ensure that the Proposed Transaction remains in the interests
of the Plan and of the Plan's participants and their beneficiaries and,
if not, take any appropriate actions available under the particular
circumstances; and
(iii) Ensure compliance with all of the exemption conditions and
obligations imposed on any party dealing with the Plan with respect to
the Proposed Transaction.
37. The Independent Fiduciary's Opinion. On February 10, 2022,
Wagner issued its report to the Plan regarding the Proposed Transaction
(the IF Report). The IF Report provided Wagner's opinion that the
Plan's proposed purchase of the Property for a price of the lesser of
$920,000 or the Property's appraised value on the date of sale, under
the terms and conditions described herein, would be in the best
interest and protective of the rights of the Plan's participants and
beneficiaries.
38. According to the IF Report, the Independent Fiduciary reviewed
all the particulars of the Property and existing Training Facility,
including the Independent Appraisal, the terms of the Real Estate
Purchase and Sale Agreement between the Plan and Lodge
[[Page 87605]]
4 to buy the Property (the Purchase Contract) and determined that the
Property's $920,000 purchase price is appropriate.
39. The Independent Fiduciary determined that the Property's
location is convenient for the Plan's participants as well as the
Plan's staff who will benefit from affordable housing in close
proximity to the Property. As described in the IF Report, the purchase
of the Property will further the Plan's long-term goals to stabilize
the Plan's expenses with a regional center in this area. The IF Report
provides that the Property's overall size appears to present the
opportunity for expansion with minimal difficulty or hardship for the
Plan and its participants as the number of Boilermakers Union members
increase. The IF Report notes further that the Property has existing
buildings with considerable life expectancy that are particularly
suited to the Plan's intended use.
40. The IF Report provides that the Plan already owns the training
equipment currently housed at the Training Facility, and removing and
relocating this equipment to another location would be extremely
costly. The equipment on the site will provide the Plan with
significant start-up costs savings as compared to purchasing a
comparable facility and having to pay to relocate this equipment or
purchase new equipment to furnish the new facility. Wagner opines that
the Property provides a turn-key facility, ready immediate occupancy,
and use for the Plan's intended purposes.
41. The Independent Fiduciary notes that the Plan will save money
by using the Property to house its administrative office instead of
paying rent for the Leased Office and will benefit the Plan by locating
its administrative offices on the Property where administrative staff
will be able to monitor the Training Facility and interact with
participants in connection with administrative matters.
42. The IF Report describes the Independent Fiduciary's review and
approval of the methodology used by the Independent Appraiser. Wagner
opined that, based on the intended use of the Property, it would be
prudent for the Plan to rely on the appraised value as of April 1,
2021, subject to change pending the updated appraisal at date of
purchase.
43. Finally, the Independent Fiduciary examined the Plan's ability
to buy and finance the purchase of the Property, including the percent
of the purchase price to total plan assets, any prospective earnings or
savings from the proposed purchase, including the difference between
the current lease arrangement and the proposed purchase of the
Property, and the Plan's potential liabilities. The Independent
Fiduciary determined that the Plan's use of its assets for the proposed
real estate purchase of the Property will not negatively impact the
overall financial health of the Plan and its programs. In this regard,
the IF Report notes that the Plan receives continual stable funding
through collectively bargained contributions from contributing
employers to provide the benefits of its programs and subsidize
training for the local Boilermaker lodges in the Western Region.
According to the Plan, the monthly mortgage payments on the $460,000
loan will be less than $10,000. The Plan's average monthly income is
above $200,000. Therefore, the Independent Fiduciary determined that
the mortgage for the amount of $460,000 will not negatively affect the
Plan's operating budget. In addition, the Plan will be relieved of
incurring the additional rental expense to maintain its existing office
space.
44. Protective Conditions. In addition to the conditions mentioned
above, the exemption, if granted, requires the parties' adherence to
the protective conditions that are summarized below.\15\
---------------------------------------------------------------------------
\15\ The Department notes that this is a summary of the
conditions intended for the convenience of a reader; however, the
governing conditions for the Proposed Transaction are those
reflected in section III of the proposed exemption.
---------------------------------------------------------------------------
45. The Proposed Transaction is a one-time transaction in which the
Plan would make a $460,000 cash down payment and obtain a loan for the
remaining balance of the purchase price that could not exceed $920,000.
The loan's monthly payments could not exceed $10,000 and its collateral
would be a first mortgage lien and assignment of the lease on the
Property. The Plan must pay the lesser of the Property's fair market
value of $920,000 as appraised on April 1, 2021, and an updated
appraised value to be determined on the date of purchase, subject to
cost sharing allocations regarding the cost for this exemption. The
updated appraisal must be provided to the Department and will be made a
part of the administrative record for this exemption application.
46. The terms and conditions of the Proposed Transaction must be at
least as favorable to the Plan as the terms and conditions the Plan
would have received in an arm's length transaction between unrelated
and independent parties.
47. The Proposed Transaction must not be part of an agreement,
arrangement, or understanding designed to benefit Lodge 4.
48. No later than 30 days after the Transaction is completed, the
Independent Fiduciary must submit to the Department a written
certification that all of the conditions of the final exemption have
been met and must submit the Statement to the Department.
49. The Independent Fiduciary must:
(a) Determine that the Proposed Transaction is in the interest of
and protective of the rights of the Plan and its participants and
beneficiaries;
(b) Determine whether it is prudent for the Plan to proceed with
the Proposed Transaction;
(c) Review, negotiate, and approve the terms and conditions of the
Proposed Transaction;
(d) Represent the Plan's interests in connection with the Proposed
Transaction, including monitoring the parties' compliance with terms of
the contract of sale and the closing contract, enforcing the Plan's
rights under the contract of sale and the closing contract, and
ensuring the satisfaction of all preconditions for the Plan's purchase
of the Property, including the terms of the proposed financing from an
unrelated third-party bank;
(e) Monitoring to ensure that all exemption conditions are met and
take whatever actions are necessary to protect the rights of the Plan
and its participants and beneficiaries in the Proposed Transaction;
(f) Review the Appraisal Report and confirm that the underlying
methodology is reasonable and accurate such that the valuation of the
Property was reasonably derived;
(g) Ensure that the Appraisal Report is based on complete, current,
and accurate information; the appraiser was prudently selected; the
methodology used by the Qualified Independent Appraiser is consistent
with sound valuation principles; and that it is reasonable under the
circumstances to rely upon the Appraisal Report, as updated, to
determine the fair market value of the Property as of the date of the
transaction; and
(h) Not have entered into, or must not enter into, any agreement or
instrument that violates either ERISA Section 410, or the Department's
Regulations codified at 29 CFR 2509.75-4; \16\
---------------------------------------------------------------------------
\16\ ERISA section 410 provides, in part, that ``except as
provided in ERISA Sections 405(b)(1) and 405(d), any provision in an
agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or
duty under this part [meaning part 4 of ERISA] shall be void as
against public policy.''
---------------------------------------------------------------------------
50. Furthermore, the Independent Fiduciary must not have entered
into, and must not enter into, any agreement,
[[Page 87606]]
arrangement, or understanding that includes any provision that provides
for the direct or indirect indemnification or reimbursement of the
Independent Fiduciary by the Plan or other party for any failure to
adhere to its contractual obligations or to state or Federal laws
applicable to the Independent Fiduciary's work; or waives any rights,
claims, or remedies of the Plan under ERISA, state, or Federal law
against the Independent Fiduciary with respect to the Proposed
Transaction;
51. The Qualified Independent Appraiser must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Appraiser
by the Plan or any other party for any failure to adhere to its
contractual obligations or to state or Federal laws applicable to the
Qualified Independent Appraiser's work. The Plan also must not waive
any rights, claims or remedies of the Plan or its participants and
beneficiaries under ERISA, the Code, or other Federal and state laws
against the Qualified Independent Appraiser with respect to the
Proposed Transaction.
52. The Employer Trustees but not the Union Trustees must determine
that the Proposed Transaction is prudent and in the Plan's interest to
proceed with the Transaction; the Union Trustees cannot participate or
in any way influence the Employer Trustees' determination. Lastly, all
the material facts and representations set forth in the Summary of
Facts and Representations must be true and accurate at all times.
Statutory Findings
53. ``Administratively Feasible.'' The Department has tentatively
determined that the proposed exemption is administratively feasible for
the Department because it is a one-time transaction requiring strict
adherence to fiduciary conduct that is subject to conditions designed
to safeguard the Plan, as overseen by an Independent Fiduciary
responsible for ensuring that all of the conditions of the exemption
have been met.
54. ``In the interests of.'' The Department has tentatively
determined that the proposed exemption is in the Plan's and
participants' and beneficiaries' interest because Lodge 4 intends to
terminate operating the Training Facility and doing so would require
the Plan to move its training programs and equipment at great expense,
and the Plan would need to find new suitable property to conduct its
apprenticeship training goals. The Proposed Transaction, however, would
permit the Plan to acquire the Property, thereby continuing utilizing
the Training Facility to provide adequate training, and avoid moving
its specialized training equipment and air filtration system. The
Proposed Transaction would also permit the Plan to terminate its Leased
Office space, thereby saving additional expenses and use the Property
to expand its Training Program to create a regional training center.
55. ``Protective of.'' The Department has tentatively determined
that the proposed exemption is protective of the Plan's participants
and beneficiaries because the Independent Fiduciary has reviewed the
terms of the Proposed Transaction and determined that the purchase of
the Property under the given terms and conditions is prudent and in the
best interest of the Plan and its participants and beneficiaries. Among
other things, the Independent Fiduciary will monitor the Proposed
Transaction to ensure that the Plan will acquire the Property at a
price that will not be greater than the fair market value as determined
by the Qualified Independent Appraiser. Additionally, the Independent
Fiduciary will continue to oversee the Proposed Transaction, including
the services to be provided by the Qualified Independent Appraiser, and
the Proposed Transaction will be subject to specific conditions aimed
at protecting the rights of Plan participants and beneficiaries.
Notice to Interested Persons
Those persons who may be interested in the publication in the
Federal Register of the notice of proposed exemption (the Notice)
include participants and beneficiaries of the Plan and participants and
beneficiaries of the Plan. The Applicants will provide notification to
interested persons by electronic mail, and first-class mail within
fifteen (15) calendar days of the date of the publication of the Notice
in the Federal Register. The 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 the interested persons of their right
to comment and to request a hearing.
The Department must receive all written comments and requests for a
hearing no later than forty-five (45) days from the date of the
publication of the Notice 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.
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 ERISA section 408(a) and/or Code section 4975(c)(2) does not
relieve a fiduciary or other party in interest or disqualified person
from certain other provisions of ERISA and/or the Code, 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 their
duties respecting the plan solely in the interest of the plan and its
participants and beneficiaries and in a prudent manner in accordance
with ERISA section 404(a)(1)(B); nor does it affect the requirement of
Code section 401(a) 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 ERISA section 408(a)
and/or Code section 4975(c)(2), 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 exemption, if granted, would be supplemental to,
and not in derogation of, any other provisions of ERISA 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 exemption, if granted, would be subject to the
express condition that the material facts and representations contained
in the application are true and complete at all times and that the
application accurately describes all material terms of the transactions
which are the subject of the exemption.
Proposed Exemption
Section I. Definitions
(a) The term ``Qualified Independent Fiduciary'' means the Wagner
Law
[[Page 87607]]
Group, and any of its employees that provide any fiduciary service to
the Plan in respect to this proposed exemption; or such other
``qualified independent fiduciary'' as defined under 29 CFR part 2570,
subpart B, as updated from time to time.
(b) The term ``Qualified Independent Appraiser'' means Accurity
Morley & McConkie, LC, and any of its employees that provide any
appraisal related service to the Plan in connection with this proposed
exemption.
(c) The term ``Mortgage Loan'' means a mortgage loan from an
independent, third-party bank consisting of a five-year term with
payments based on 20-year amortization, ballooning at maturity, or such
other mortgage loan prudently entered into by the Independent Fiduciary
on behalf of the Plan.
Section II. Transactions
The restrictions of ERISA Sections 406(a)(1)(A), (D), and 406(b)(1)
and (2) shall not apply to the purchase of the improved real property
located at 294 Cowboy Ray Road, Page, Arizona (the Property), by the
Boilermakers Western States Apprenticeship Fund's (the Plan) from the
``Navajo Nation'' Lodge 4 of the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmith, Forgers, and Helpers
(Lodge 4), a party in interest with respect to the Plan (the Purchase);
provided that the conditions in Section III are satisfied.
Section III. Conditions
(a) The Purchase is a one-time transaction for the lesser of
$920,000 in cash or an updated appraised value to be determined by the
Qualified Independent Appraiser as of the Purchase's closing date (the
Price). The updated report from the Qualified Independent Appraiser
must be submitted to the Department within 30 days before the date the
Purchase is completed for inclusion in the record for this exemption
application;
(b) Approval of the Purchase must be made solely by Plan trustees
that are not, and were not, appointed by a labor union that is
affiliated with the International Brotherhood of Boilermakers, and such
Plan trustees must prudently determine in a writing that the Purchase
is in the Plan's best interest. Such non-union appointed Plan trustees
must have considered other possible locations and properties that were
unrelated to Lodge 4 prior to determining that the Purchase is the most
appropriate given the Plan's goals. Any trustee appointed by a labor
union that is affiliated with the International Brotherhood of
Boilermakers cannot participate or in any way influence a non-union
appointed Plan trustee;
(c) The Plan must retain the services of a Qualified Independent
Fiduciary and the Qualified Independent Fiduciary must prudently:
(1) Determine that the Purchase is in the interest of, and
protective of, the Plan and the Plan's participants;
(2) Determine whether it is prudent for the Plan to proceed with
the Purchase;
(3) Review, negotiate, and approve the terms and conditions of the
Purchase;
(4) Represent the Plan's interests in connection with the Purchase,
including monitoring the parties' compliance with terms of the sales
contract and the closing contract, enforcing the Plan's rights under
the sale contract and closing contract, and ensuring the satisfaction
of all conditions precedent to complete the Purchase, including the
terms of the Mortgage Loan;
(5) Monitor to ensure that all of the exemption conditions are met
and take whatever actions are necessary to protect the rights of the
Plan and its participants and beneficiaries with respect to the
Purchase;
(6) Review the Qualified Independent Appraisal Report and confirm
that the underlying methodology is reasonable and accurate and that the
valuation of the Property was reasonably derived;
(7) Ensure that the Qualified Independent Appraisal Report is based
on complete, current, and accurate information; the Qualified
Independent Appraiser was prudently selected; the methodology used by
the Qualified Independent Appraiser is consistent with sound valuation
principles; and that it is reasonable under the circumstances to rely
upon the Qualified Independent Appraisal's report to determine the fair
market value of the Property as of the date of the Purchase; and
(8) Not have entered into, and must not enter into, any agreement
or instrument that violates either ERISA section 410, or the
Department's Regulations codified at 29 CFR 2509.75-4;
(d) The terms and conditions of the Purchase must be at least as
favorable to the Plan as the terms and conditions the Plan would have
received in an arm's length transaction with an unrelated and
independent party, each of which had full knowledge of the relevant
facts, and neither of which were under any compulsion to buy or sell;
(e) The Purchase must not be part of an agreement, arrangement, or
understanding designed to benefit Lodge 4 or the International
Brotherhood of Boilermakers;
(f) In the event the Purchase is financed with a Mortgage Loan,
then the Mortgage Loan must be approved by the Qualified Independent
Fiduciary, and its monthly payments must not exceed $10,000;
(g) The Mortgage Loan collateral is limited to a first mortgage
lien and assignment of lease and rents on the Property. The Plan may
not obtain a Mortgage Loan from a bank that has any pecuniary interest
in, or is owned, managed, or controlled in any degree by any party in
interest with respect to the Plan as defined in ERISA section 3(14);
(h) The Plan must not pay any commissions, costs, or other expenses
in connection with the Purchase subject to the cost sharing allocations
regarding the cost for this exemption as provided below in paragraph
(i);
(i) Lodge 4 and the Plan must each pay half of the costs associated
with the proposed exemption including but not limited to fees for
Qualified Independent Fiduciary services, fees for Qualified
Independent Appraiser services, and fees for preparing the Plan's
application to the Department requesting this proposed exemption, but
not including the Price;
(j) The Qualified Independent Fiduciary must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Fiduciary
by the Plan or other party for any failure to adhere to its contractual
obligations or to state or Federal laws applicable to the Qualified
Independent Fiduciary's work; or that waives any rights, claims, or
remedies of the Plan under ERISA, state, or Federal law against the
Qualified Independent Fiduciary with respect to the Purchase;
(k) The Qualified Independent Appraiser must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Appraiser
by the Plan or any other party for any failure to adhere to its
contractual obligations or to state or Federal laws applicable to the
Qualified Independent Appraiser's work; or that waives any rights,
claims or remedies of the Plan or its participants and beneficiaries
under ERISA, the Code, or other Federal and state laws against the
Qualified Independent Appraiser with respect to the Purchase;
(l) The Plan's trustees and the Qualified Independent Fiduciary
maintain for a period of six (6) years
[[Page 87608]]
from the date of any transaction related to the Purchase, in a manner
that is convenient and accessible for audit and examination, the
records necessary to enable the persons described in paragraph (m)(1)
below to determine whether conditions of this exemption have been met,
except that (i) a prohibited transaction will not be considered to have
occurred if, due to circumstances beyond the control of the Plan's
trustees and/or the Qualified Independent Fiduciary, the records are
lost or destroyed prior to the end of the six-year period, and (ii) no
party in interest other than the Plan's trustees or the Qualified
Independent Fiduciary shall be subject to the civil penalty that may be
assessed under ERISA section 502(i) if the records are not maintained,
or are not available for examination as required by paragraph (n)
below; and
(m)(1) Except as provided in section (2) of this paragraph and not
withstanding any provisions of subsections (a)(2) and (b) of ERISA
Section 504, the records referred to in paragraph (l) above shall be
unconditionally available at their customary location during normal
business hours to:
(i) any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(ii) the Plan's trustees or any duly authorized representative of
the Plan's trustees;
(iii) the Qualified Independent Fiduciary or any duly authorized
representative of the Qualified Independent Fiduciary;
(iv) any participant or beneficiary of the Plan, or any duly
authorized representative of such participant or beneficiary;
(2) Should Lodge 4 or any party refuse to disclose information to a
person on the basis that such information is exempt from disclosure,
such party shall provide a written notice advising that person of the
reasons for the refusal and that the Department may request such
information by the close of the thirtieth (30th) day following the
request;
(n) Within 30 calendar days after the Property is purchased, the
Qualified Independent Fiduciary must provide to the Department a
written certification that all of the exemption conditions have been
met and must provide to the Department the Statement documenting its
conclusion that the Proposed Transaction is in the Plan's best
interest; and
(o) All the material facts and representations set forth in the
Summary of Facts and Representations are true and accurate at all
times.
Exemption Date: If granted, the exemption will be in effect as of
the date the grant notice is published in the Federal Register.
Signed at Washington, DC, this 30th day of October 2024.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2024-25583 Filed 11-1-24; 8:45 am]
BILLING CODE 4510-29-P