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Secretary of Labor Thomas E. Perez
EBSA (Formerly PWBA) Federal Register Notice Prohibited Transaction Exemption 2001-23; Grant of Individual Exemptions; Retirement Plan of Plumbers and Steamfitters Local No. 489 of Cumberland, MD (the Plan) et al. [08/03/2001]

EBSA (Formerly PWBA) Federal Register Notice

Prohibited Transaction Exemption 2001-23; Grant of Individual Exemptions; Retirement Plan of Plumbers and Steamfitters Local No. 489 of Cumberland, MD (the Plan) et al. [08/03/2001]

[PDF Version]

Volume 66, Number 150, Page 40733-40735


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Exemption Application No. D-10876, et al.]

 
Prohibited Transaction Exemption 2001-23; Grant of Individual 
Exemptions; Retirement Plan of Plumbers and Steamfitters Local No. 489 
of Cumberland, MD (the Plan) et al.

AGENCY: Pension and Welfare Benefits Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications

[[Page 40734]]

for a complete statement of the facts and representations. The 
applications have been available for public inspection at the 
Department in Washington, DC. The notices also invited interested 
persons to submit comments on the requested exemptions to the 
Department. In addition the notices stated that any interested person 
might submit a written request that a public hearing be held (where 
appropriate). The applicants have represented that they have complied 
with the requirements of the notification to interested persons. No 
public comments and no requests for a hearing, unless otherwise stated, 
were received by the Department.
    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. 
App. 1 (1996), transferred the authority of the Secretary of the 
Treasury to issue exemptions of the type proposed to the Secretary of 
Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, 32847, August 10, 1990) and based upon 
the entire record, the Department makes the following findings:
    (a) The exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

Retirement Plan of Plumbers and Steamfitters Local No. 489 of 
Cumberland, Maryland (the Plan) Located in Cumberland, Maryland

[Prohibited Transaction Exemption No. 2001-23; [Application No. D-
10876]

Exemption

    The restrictions of sections 406(a) and 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, 
shall not apply to the sale (the Sale) of certain real property (the 
Property) to the Plan by the Plumbers and Steamfitters Local No. 489 
(the Union), a party in interest with respect to the Plan. This 
exemption is conditioned upon the adherence to the material facts and 
representations described herein and upon the satisfaction of the 
following requirements:
    (a) The terms and conditions of the transaction are no less 
favorable to the Plan than those which the Plan would receive in an 
arm's-length transaction with an unrelated party;
    (b) The Sale is a one-time transaction for cash;
    (c) The Plan incurs no expenses from the Sale;
    (d) The Plan pays the lesser of $100 or the fair market value of 
the Property; and
    (e) An independent fiduciary will approve and enforce the terms of 
the transaction.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice of Proposed Exemption published on April 16, 2001 at 66 FR 
19532.
    For Further Information Contact: Khalif Ford of the Department, 
telephone (202) 219-8883 (this is not a toll-free number).

ATGI 401(k) Plan (the Plan) Located in Houston, Texas

[Prohibited Transaction Exemption No. 2001-24; [Application No. D-
10970]

Exemption

    The restrictions of sections 406(a) and 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, 
shall not apply effective November 30, 2000 to: (1) The acquisition of 
Stock Rights (the Stock Rights) by the Plan in connection with a Stock 
Rights offering by Alpha Technologies Group, Inc. (ATGI); (2) the 
holding of the Stock Rights by the Plan during the subscription period 
of the offering; and (3) the disposition or exercise of the Stock 
Rights by the Plan. This exemption is conditioned upon the adherence to 
the material facts and representations described herein and upon the 
satisfaction of the following requirements:
    (a) The Stock Rights were acquired pursuant to Plan provisions for 
individually-directed investment of such accounts;
    (b) The Plan's receipt of the Stock Rights occurred in connection 
with a Stock Rights offering made available to all shareholders of 
common stock of ATGI;
    (c) All decisions regarding the holding and disposition of the 
Stock Rights by the Plan were made, in accordance with the Plan 
provisions for individually-directed investment of participant 
accounts, by the individual Plan participants whose accounts in the 
Plan received Stock Rights in connection with the offering;
    (d) The Plan's acquisition of the Stock Rights resulted from an 
independent act of ATGI as a corporate entity, and all holders of the 
Stock Rights, including the Plan, were treated in the same manner with 
respect to the acquisition; and
    (e) The price received by the Plan for the Stock Rights was no less 
than the fair market value of the Stock Rights on the date of the 
offering.
    Effective Date: This exemption is effective as of November 30, 
2000.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice of Proposed Exemption published on June 4, 2001 at 66 FR 
30014.
    For Further Information Contact: Khalif Ford of the Department, 
telephone (202) 219-8883 (this is not a toll-free number).

The Joliet Medical Group, Ltd. Employees Retirement Plan & Trust 
(the Plan) Located in Joliet, Illinois

[Prohibited Transaction Exemption No. 2001-25; [Application D-10990]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975 of 
the Code, by reason of section 4975(c)(1)(A) through (E) of the Code, 
will not apply effective November 1, 1999 to the past and continued 
leasing of a medical clinic (the Property) located at 2100 Glenwood 
Ave., Joliet, Illinois, from the Plan to Joliet Medical Group, Ltd. 
(the Employer). This exemption is conditioned upon the adherence to the 
material facts and representations described herein and upon the 
satisfaction of the following requirements:
    (a) The independent fiduciary has determined that the transaction 
is feasible, in the interest of, and protective of the Plan;
    (b) The fair market value of the Property has not exceeded and will 
not exceed twenty percent (20%) of the value of the total assets of the 
Plan;
    (c) The independent fiduciary has negotiated, reviewed, and 
approved the terms of the lease of the Property with the Employer;
    (d) The terms and conditions of the lease of the Property with the 
Employer have been and will continue to be no less favorable to the 
Plan than those obtainable by the Plan under similar circumstances when 
negotiated at arm's length with unrelated third parties;

[[Page 40735]]

    (e) An independent qualified appraiser has determined the fair 
market rental value of the Property;
    (f) The independent fiduciary has monitored and will continue to 
monitor compliance with the terms of the lease of the Property to the 
Employer throughout the duration of such lease and is responsible for 
legally enforcing the payment of the rent and the proper performance of 
all other obligations of the Employer under the terms of the lease on 
the Property; and
    (g) The Plan has not incurred and will not incur any fees, costs, 
commissions, or other charges or expenses as a result of its 
participation in the transaction, other than the fee payable to the 
independent fiduciary.
    Effective Date: This exemption is effective as of November 1, 1999.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice of Proposed Exemption published on June 4, 2001 at 66 FR 
30018.
    For Further Information Contact: Khalif Ford of the Department, 
telephone (202) 219-8883 (this is not a toll-free number).

ACE Business Travel Accident Plan (the Plan) Located in 
Philadelphia, Pennsylvania

[Prohibited Transaction Exemption 2001-26; Exemption Application No. L-
10955]

Exemption

    The restrictions of sections 406(a) and (b) of the Act shall not 
apply to the reinsurance of risks and the receipt of premiums therefrom 
by ACE American Insurance Company (ACE USA) from the insurance 
contracts sold by Life Insurance Company of North America (CIGNA) or 
any successor company to CIGNA which is unrelated to ACE INA Holdings, 
Inc. (ACE INA), to provide accidental death and dismemberment benefits 
to participants in the Plan, provided the following conditions are met:
    (a) ACE USA--
    (1) Is a party in interest with respect to the Plan by reason of a 
stock or partnership affiliation with ACE INA that is described in 
section 3(14)(E) or (G) of the Act,
    (2) Is licensed to sell insurance or conduct reinsurance operations 
in at least one State as defined in section 3(10) of the Act,
    (3) Has obtained a Certificate of Authority from the Insurance 
Commissioner of its domiciliary state which has neither been revoked 
nor suspended, and
    (4)(A) Has undergone an examination by an independent certified 
public accountant for its last completed taxable year immediately prior 
to the taxable year of the reinsurance transaction; or
    (B) Has undergone a financial examination (within the meaning of 
the law of its domiciliary State, Pennsylvania) by the Insurance 
Commissioner of the Commonwealth of Pennsylvania within 5 years prior 
to the end of the year preceding the year in which the reinsurance 
transaction occurred.
    (b) The Plan pays no more than adequate consideration for the 
insurance contracts;
    (c) No commissions are paid with respect to the direct sale of such 
contracts or the reinsurance thereof;
    (d) The Plan only contracts with insurers with a rating of A or 
better from A.M. Best Company. The reinsurance arrangement between the 
insurers and ACE USA will be indemnity insurance only, i.e., the 
insurer will not be relieved of liability to the Plan should ACE USA be 
unable or unwilling to cover any liability arising from the reinsurance 
arrangement; and
    (e) For each taxable year of ACE USA, the gross premiums and 
annuity considerations received in that taxable year by ACE USA for 
life and health insurance or annuity contracts for all employee benefit 
plans (and their employers) with respect to which ACE USA is a party in 
interest by reason of a relationship to such employer described in 
section 3(14)(E) or (G) of the Act does not exceed 50% of the gross 
premiums and annuity considerations received for all lines of insurance 
(whether direct insurance or reinsurance) in that taxable year by ACE 
USA. For purposes of this condition (e):
    (1) The term ``gross premiums and annuity considerations received'' 
means as to the numerator the total of premiums and annuity 
considerations received, both for the subject reinsurance transactions 
as well as for any direct sale or other reinsurance of life insurance, 
health insurance or annuity contracts to such plans (and their 
employers) by ACE USA. This total is to be reduced (in both the 
numerator and the denominator of the fraction) by experience refunds 
paid or credited in that taxable year by ACE USA; and
    (2) All premium and annuity considerations written by ACE USA for 
plans which it alone maintains are to be excluded from both the 
numerator and the denominator of the fraction.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the notice of proposed exemption published on June 4, 2001 at 66 FR 
30019.
    For Further Information Contact: Gary H. Lefkowitz of the 
Department, telephone (202) 219-8881. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemptions does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) These exemptions are supplemental to and not in derogation of, 
any other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 31st day of July, 2001.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 01-19490 Filed 8-2-01; 8:45 am]
BILLING CODE 4510-29-P